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Volume 3, Issue 181: Monday, March 26, 2001
- "New Type of 'Farm' Irks Some in San Francisco"
Los Angeles Times (03/26/01) P. A3; Reiterman, Tim
New server farms in San Francisco are drawing community protests over the pollution from diesel generators and rapacious energy consumption. The city's planning department says 16 data centers are located in the city or are in the works. Pacific Gas & Electric reports that there are 100 server farms requesting hookups, most of which are located in Silicon Valley. Some others are targeting buildings in San Francisco such as the old National Guard armory and a WWII weapons warehouse--buildings secure against both break-ins and earthquake dangers. However, the location of some server farms in residential neighborhoods, especially areas that have largely been left out of the high-tech boom, has generated vocal resentment. People are concerned over the weekly testing of diesel generators, which the city's environmental director says emit as much air pollution yearly as 80 diesel buses. Additionally, city officials are worried about out-of-area businesses transferring their power needs to San Francisco by outsourcing Web hosting to the server farms. San Francisco's server farms use 100 megawatts altogether, or 10 percent of the city's peak demand. However, Keith Reed of PG&E says data centers often cite their absolute maximum capacity for marketing purposes to convince customers of their capability, but actually use less than half of cited consumption.
- "Price War Squeezes PC Makers"
Wall Street Journal (03/26/01) P. B1; McWilliams, Gary
Desktop computer manufacturers are facing their most competitive period since the inception of the industry in 1981, plunging into a price war that is cutting deep into corporate revenues. PC shipments worldwide have fallen from 15 percent growth last year to just 10 percent this year, International Data reports, and the U.S. home PC market fell 24 percent in February, signaling a long drought for manufacturers--the U.S. consumer market is seen as an industry indicator. Even sales in the corporate market have softened, with server sales hurting alongside the desktop market. Market leader Dell has cut its PC prices from 30 percent to 35 percent since October, compared to IBM's 20 percent markdown. The company is pursuing a campaign to gain a greater share of the market by underselling its competitors. "We believe we are the lowest-cost producer. We can do better than our competition in a tough environment," says Dell co-President Kevin B. Rollins. The competitive environment has already driven several PC makers out of the business. Micron Electronics announced its refocus on Web hosting and plans for selling off its PC business last Friday, for example. Secondary players such as Acer and Packard Bell bailed out of the market earlier in the late 1990s. The atmosphere has convinced many analysts that consolidation in the market is imminent, the question being, according to Bear Stearns & Co. analyst Andrew J. Neff, "will Dell keep the pressure on?"
- "Senate Panel Backs Relaxed Curbs on Tech Exports"
SiliconValley.com (03/22/01); Phillips, Heather Fleming
The Senate Banking Committee on Thursday approved a bill that would change how the government controls the export of advanced technology, a major victory for the tech industry. The industry has lobbied for years to make the restrictions less stringent, arguing that tight controls were harming domestic businesses in the global marketplace. Opponents of lessened controls said the government had a national-security interest in preventing some technology from being sold overseas. The new bill would end the practice of limiting exports based on how fast they could process data and would instead allow the president to establish a standard for what should and should not be exported. "We've got to build a higher wall around a smaller number of things," said Committee Chair Sen. Phil Gramm (R-Texas). Observers say the bill, which has the support of such national-security experts as Secretary of State Colin Powell and National Security Adviser Condoleezza Rice, is likely to pass the full Senate.
- "Even the INS Unsure Over H-1B"
Wired News (03/23/01); Iyengar, Swaroopa
Even Immigration and Naturalization Service officials are unsure as to the status of laid-off foreign workers who hold an H-1B visa. Some immigration attorneys have said the INS generally accepts new applications up to 30 days after the worker's former employment is terminated, but some lawyers claim that the exact time acceptable depends on the INS official reviewing the application. One way to circumvent the limit is to apply for a transfer to a B1 tourist visa--a process that takes six months but during which the foreigner has legal status to look for another job and reapply for the H-1B. For now, laid-off workers are stuck in an expensive conundrum. "I am paying the $1,000 visa transfer fee and the $2,000 attorney fee out of my own pocket," says one anonymous laid-off Silicon Valley worker waiting for a solution.
- "Imperfect Storm? Microsoft Charts New Web Course"
Wall Street Journal (03/26/01) P. B1; Swisher, Kara
Microsoft's new Hailstorm initiative seeks to consolidate Web services for the range of Internet-enabled devices--PCs, mobile phones, PDAs, and others. Making the Internet ubiquitous across devices means partnerships such as the one Microsoft has formed with eBay, allowing users to receive auction bids on their cell phones. Although Hailstorm will be focused on Microsoft software, the company says its foundation on open standards such as XML will make its framework useful for competitors as well. However, experts note that Hailstorm Web services will be closely integrated with Microsoft products and services such as MSN, Passport, and Windows software. Analysts suggest that partnerships such as the one the company has already made with eBay should be formed so that Microsoft can develop and profit from Hailstorm. For example, buying shares in Yahoo! and using that company's Internet presence as a portal for Microsoft-based services is one hypothetical situation. Analysts believe that linking with another Internet player will not only save Microsoft the struggle it went through to establish MSN, but will also give it a competitive advantage against its largest rival, America Online, which is also eyeing the emerging market for Web services.
- "IT Leaders Confident Despite U.S. Problems"
South China Morning Post Online (03/23/01); Nairne, Doug
Leaders of Asia's IT sector were optimistic despite the slowdown in the U.S. tech market as they gathered at the Asia Society conference this week. Many Indian software executives, for example, said tightened IT spending in the United States would force companies to look to outsource their programming work to the Indian market, where labor is cheap and readily available. Dewang Mehta, president of India's dominant software coalition, said India's IT business would continue its phenomenal growth, which was 55 percent last year. Representatives from Malaysia, the Philippines, and Vietnam also said that the opportunity for growth was at hand. However, other leaders at the Asia Society conference said now was the time to cut reliance on Western markets, even as one expert warned that Asian technology stocks would soon follow the Nasdaq's tumble. Global Internet Ventures Chairman Bill Melton said while U.S. stocks had fallen as much as 90 percent, Asian stocks only reflected a 30 percent cut so far, although he noted that growth in the Asian market was certainly sustainable. Hong Kong IT commissioner Francis Ho said the immediate goal was to strengthen ties within the regional market.
- "Survey: Denmark Most Wired; Men Go for Cars, Porn"
Denmark boasts a home Internet penetration rate of 54 percent, making the country the world's most Internet-enabled nation, followed by the United States at 50.9 percent, Singapore at 47.4 percent, Taiwan at 40 percent, and South Korea at 37.3 percent, according to a study of a dozen countries by NetValue. Home Internet rates in China and Spain are below 18 percent. The study determined that Yahoo.com and msn.com were popular Web sites in 10 of the 12 countries studied, which included the United Kingdom, France, Mexico, and Hong Kong. Nearly three in four citizens of Denmark use email, while 50 percent of South Korean Internet users play online games. In the United States, men account for 52 percent of the online population, while in Mexico the number is 66 percent. Web sites pertaining to cars, sports, and pornography are favorites among men in the dozen countries, while women prefer women-oriented Web sites and sites about fashion, beauty, or electronic greeting cards.
- "Is Streaming Video Dead?"
ZDNet (03/21/01); Wallace, Chris
Streaming video is a very strong method for providing corporate training and communications. It centralizes information so companies can quickly update it, and employees can view the content when necessary. However, the barrier keeping most companies from implementing this technology is the lack of available bandwidth. Many companies channel all their Internet connections through one gateway, and streaming video requires so much bandwidth that many businesses simply block all streamed content from passing through. The costs of T1 and T3 lines needed solely for the purpose of delivering streaming video outweighs the benefits. Additionally, multinational corporations have a hard time connecting global employees to streaming video through their intranet because its quality is partially dependent on proximity. Content delivery networks work well outside the intranet by placing media near users with "edge networking" designs. Intranet Content Delivery Networks (iCDNs) may solve this problem by circumventing gateway barriers. Eventually, as the bandwidth problems are resolved, corporate employees will be able to get content-rich, updated material on their desktops, and companies will save resources previously spent on developing CD-ROMs and videotapes. Streaming-media service revenue could be worth $12 billion by 2008, Paul Kagan Associates predicts.
- "Mobile Phone Makers Join Handheld Computer Race"
Mobile phone manufacturers, such as Nokia and Motorola, are gathering with handheld computer makers at Germany's CeBIT technology fair to display their latest devices. As the mobile phone market slows, makers of cell phones are designing devices with more features, including music. Meanwhile, handheld computer manufacturers are designing more models with cell phone and wireless data capabilities. The increased competition from the handheld computer market is especially threatening to mobile phone manufacturers since they are already struggling due to falling demand. Nokia, Motorola, and Ericsson have seen their share prices drop more than 30 percent this year. While devices offering both phone and organizer features hold a small share of the market, annual sales have doubled, say market researchers. Analysts report cell phone companies are spending more on research and development, but gaining less from commercial sales of devices. For instance, Nokia has earned more from per-unit sales of its basic cell phone models than has from per-unit sales of its Communicator 9000 smart phone, which was introduced in 1996, according to WestLB analyst Adrian Hopkinson. While the economic downturn has also impacted large handheld computer makers, such as Palm and Compaq Computer, sales have increased. According to Gartner Research, PDA sales are expected to reach 33.7 million in 2004, more than triple current figures. Nokia, Motorola, and Ericsson also displayed some of the devices created through their Symbian alliance with Psion, the leading handheld computer maker in Europe.
- "E-Marketplaces: At What Cost?"
E-Commerce Times (03/22/01); Enos, Lori
A report from Forrester Research estimates that business-to-business (B2B) e-marketplace integration will cost business purchasers between $5.4 million and $22.9 million each over the next five years. Most of these investments will be spent on integrating e-marketplaces into the companies' internal systems, B2B applications, e-marketplace transaction fee payments, and internal procurement system conversion. "Companies can make the most out of these outlays by documenting workflows, leveraging their integration efforts, and pushing their purchases online," says Forrester analyst Matthew Sanders. Forrester has identified three distinct types of business purchasers and the individual spending strategies they will probably follow: baseline buyers--e-marketplace procurement newcomers--will probably spend $5.6 million on internal staffing, integration software, and transaction fees as a way to cut maintenance, repair, and operations (MRO) transaction costs; spot market dabblers who seek to streamline inventory management and dodge shortfalls by spot-purchasing direct materials online are likely to spend $10.7 million to install software and hire consultants; and aggressive spenders will spend $22.9 million on average for e-marketplace implementation services because they plan to manage all their purchasing online. Meanwhile, a separate study from Boston Consulting Group predicts productivity gains from B2B e-commerce will equal 1 percent to 2 percent of sales by 2004 and 6 percent by 2010. Furthermore, a January report from Jupiter Media Metrix forecasts B2B e-marketplace spending to skyrocket from $2.6 billion to $137.2 billion between 2000 and 2005.
- "Privacy Laws Aim to Protect the Hunters as Well as the Hunted"
International Herald Tribune--BizTech (03/23/01) P. 1; Oakes, Chris
The United Kingdom is one of several European Union countries to have adopted the European Commission's 1995 Data Protection Directive. France has not yet adopted the directive but does have its own legislation on the matter, the 1978 Data Protection Act. Two Internet companies, France's Datatrader and London's CrushGuide, are paying close attention to data-protection regulations. In their initial stages of formation, both companies benefited from counseling from their countries' data-protection commissions, France's Commission Nationale de l' Informatique et des Libertes in the case of Datatrader, and the U.K.'s Office of the Information Commissioner in the case of CrushGuide. Because of the consultations, both companies are now sure they are in compliance with data-protection laws. Datatrader CEO Alexis Helcmanocki says data protection has become a big trend among Internet companies in France, especially since the onset of the tech market troubles. Indeed, an assessment of the privacy and security practices of 100 French Internet companies was determined to be "not that bad," according to a member of the French data protection commission. Of 45 French sites that share personal data, 43 notified customers that they could opt out of participating. European privacy laws have produced better industry practices, says Electronic Privacy Information Center analyst Sarah Andrews.
- "Changes Afoot Say the IETF"
Network World Fusion (03/21/01); Marsan, Carolyn Duffy
Harald Alvestrand took the helm of the Internet Engineering Task Force (IETF) on March 21 to become the first non-American chair of the IETF. The IETF is working on new projects. It has also seen reduced participation levels. There were 3,000 people in attendance at the IETF's December 2000 meeting, but only 2,000 attended its most recent meeting. The lower attendance level likely stems from the financial hard times facing many Internet vendors, according to IETF participants. However, IETF leaders believe that their companies will invest in the IETF even if the economy gets worse. The IETF is also starting to focus on internationalization. The IETF is currently trying to develop a method of supporting non-English languages online. One solution is to convert the foreign languages into Unicode, encode them in ASCII, and then transmit them online. Another idea is to realize the translation function by developing a directory layer on top of the DNS. For multilingual domain names to become a reality, the IETF will have to re-write all the well-known online applications such as Web browsing and email.
- "Business Will Drive the Wireless Web"
eMarketer (03/20/01); Mulligan, Paul
Even as the consumer market led the business market in commercializing the Internet, the business market will drive development of the wireless Web. Despite the phenomenal success of NTT DoCoMo's i-mode in Japan--20 million users in only two years--the wireless consumer market is unlikely to follow suit. Jupiter Media Metrix predicts that there will be 96 million people in the United States equipped with Web-enabled mobile devices in 2005, up from 4.1 million in 2000. But not all those people will use their gadgets to go online, as 78 percent of those units will be voice-centric mobile phones. Rather, the market for the wireless Web will grow fastest in the business sector, where 84 percent of Fortune 1000 company executives saw their firms' use of the wireless services grow significantly, according to Wirthlin Worldwide. Whereas consumers will be hesitant to pay high costs for currently limited capabilities, the wireless Web is tailor-made for business applications such as sales. As the business sector grows the infrastructure of the wireless industry, the consumer sector will follow.
- "Companies Set to Take a Flier on Service for Airplanes"
Investor's Business Daily (03/23/01) P. A8; Benesh, Peter
Tenzing Communications, Boeing, and In-Flight Network are each moving forward with plans to provide Internet access to airline passengers. Although there is little doubt that many commercial airline passengers, particularly business travelers, would be interested in in-flight Internet use, questions and doubts do exist in the minds of some as to whether the current technology works well enough and, perhaps more importantly, whether the service can be delivered at a price people are willing to pay. Details of pricing strategies have yet to be worked out by the three service providers, although Tenzing COO Alan Pellegrini says the company is leaning toward offering its service directly to passengers for $15 an hour. In-Flight Network, a joint venture of News Corp. and Rockwell Collins, is planning to sell to the airlines while Boeing has yet to determine to whom it will sell its Connexion service, or at what price. The price issue may actually turn out to be largely irrelevant, at least to passengers, says Roger Rusch, head of satellite communications consultancy TelAstra. "Airlines might accept the fact that this is a service they must offer," due to customer demand, and therefore will absorb part or all of the attendant costs, he says. Boeing and In-Flight Network are both planning to support real-time, broadband Internet access, which will allow passengers to surf the Internet, send and receive emails, and eventually watch movies. Tenzing's strategy, at least initially, is more modest. The company plans to send and receive bursts of data, likely in 15-minute intervals, although the company says it is fully capable of offering real-time service, assuming it can find buyers for the more expensive option. "The strength of our strategy is that many airlines want to start slowly and grow over time," says Pellegrini. And Tenzing is the first of the rivals to put its service into service; five Air Canada planes flying between Montreal and Toronto and between Toronto and Los Angeles are equipped to offer Tenzing's limited Internet service.
- "Escaping the Web"
Industry Standard (03/26/01) Vol. 4, No. 12, P. 60; Roberti, Mark
Midsize companies--those with annual revenue between $20 million and $500 million--are pulling back from their Web efforts. Action Performance CEO Fred Wagenhals recounts his company's hasty retreat from its GoRacing.com site that sold miniature NASCAR replicas and served racing fans with content and community services. After raising $80 million in capital for the venture, GoRacing quickly acquired a staff of nearly 100 people, an auto-racing site startup, and a building. But the company pulled back from a scheduled IPO as Wagenhals realized that sales through the company's primary channel--its stores--were plummeting due to neglect. "Everyone in the building lost focus on what we should have been doing," he reflects. In all, the company lost $20 million before Wagenhals cut all the newly hired staff except one and eliminated all the site's features save the order-taking function. Pioneer Behavioral Health, which runs psychiatric services in several states, launched a Web portal that the company hoped would eventually spin-off and earn double the parent company's revenues. When the investor confidence fell and caused Pioneer's stock to be delisted by Nasdaq in November, company executives took a different tack. They retooled the chat room technology, for example, to remotely link doctors and patients. Its content and services now are specifically directed toward its hospitals and clinics. Pioneer's Web activity is primarily a value-add to the core business and a factor that distinguishes it from its competitors, says Pioneer president Bruce A. Shear.
- "Women in (or Not in) IT: a Variety of Views"
Computerworld (03/19/01) Vol. 35, No. 12, P. 44; Melymuka, Kathleen
Columnist Kathleen Melymuka supports the findings of the recent Arthur Andersen study, "Growth and Retention of Women," which reveals that the IT field is generally unappealing to girls unless they see how it can be used to improve other fields. However, Melymuka's readers are of mixed opinions. Some contend that girls are not interested in the computer sciences--and thus, when they are adults, avoid the IT field--simply because they do not like it. Others accuse Melymuka of trying to bring a standard of political correctness to a sector of the economy that is already diverse. However, other readers support the idea that women are unwelcome in the IT field, and thus show no interest in it. "I have worked nights, weekends and holidays in windowless, too-cold/hot/stuffy ever-shrinking cubicles, squinting 10 hours a day at lousy monitor screens, while being paid less than the men in the department and continually passed over for promotions," writes Jane (no last name given), a 20-plus-year IT veteran. Another reader suggests that girls follow their IT interests, especially the application of IT to their other fields of interest, and ignore the dictates of corporate America.
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- "Living in Limbo"
Electronic Business (03/01) Vol. 27, No. 3, P. 54; Harbert, Tam
Although the tech industry triumphed last year's legislation that raised the cap on the number of H-1B visas given to highly skilled foreign workers from 115,000 to 195,000 per year, those already holding these visas were pleased that several other provisions were also passed that could facilitate their receiving green cards. The H-1B legislation included provisions to increase the number of green cards given to H-1B holders, who would otherwise have to leave at the end of their three- or six-year term, to allow certain H-1B holders to remain in the country while waiting to receive those green cards, even after their term is up, and to prevent H-1B holders from losing their place in the H-1B application line by switching jobs. The Immigrants Support Network estimates that, until the new legislation passed, some 300,000 H-1B holders would have been forced to go home by 2003. However, the immigrants' advocacy group is worried that the number of green cards that can be given to H-1B holders each year, 140,000, is not enough to meet the demand. Already, there are some 420,000 H-1B holders working in the United States, and the new legislation could add nearly 600,000 more within the next three years. Furthermore, the policy of the Immigration and Naturalization Service (INS) had formerly been to restrict the percentage of green cards given to residents of any one country at 7 percent. This has a direct impact on H-1B holders, as 43 percent of them are from India. Although the new law reformed this policy, the advocacy group fears that the backlog of H-1B holders waiting for green cards, some of whom have been waiting five years or more, combined with the confusion over what the new regulations mean and the usual slow pace at which the INS implements new regulations will prevent the situation of H-1B holders from improving. The group notes that few tech companies have come out in support of their cause, even though without helping current H-1B holders, they stand to lose valuable employees.
- "Data Centers Gain Ground"
InternetWeek (03/19/01) No. 853, P. 10; Boyd, Jade
Even as U.S. corporations hold back on other tech spending, CIOs are still looking to outsource elements of IT to data centers as their companies delve deeper into the Information Age. Physical data center space will double this year to 66 million square feet, according to Tier 1 Research. In the U.S., some of the largest expansions are with telecommunications firms that are eager to enter the Web hosting market. Sprint, Qwest, and AT&T all have announced significant additions to their data center capabilities. Tier 1 Research's study shows that demand for simpler solutions such as mere collocation will drop by 2005 as markets for managed collocation and fully managed services will grow dramatically. The report estimates sales of fully managed services will total more than $11 billion in 2005, up from $200 million last year. Growth in overseas markets will foster sales of fully managed services in Europe and Asia so that customers there can access company sites faster. One Web hosting firm, Relera, is preparing to serve under-developed areas with local data centers in regions surrounding Las Vegas, Salt Lake City, Antonio, and Cleveland. CIOs in those cities will still want to keep mission-critical applications physically near, explains Relera COO Ron Cooper.