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Volume 3, Issue 187: Monday, April 9, 2001
"Tech Industry's Job Loss Expected to Get Worse"
Los Angeles Times (04/08/01) P. A1; Hamilton, Walter; Girion, Lisa
Job layoffs in the tech sector will get worse in the future, say many analysts, signaling trouble for the overall U.S. economy. The tech sector has cut 38,000 jobs from January through March, according to new statistics from the Department of Labor. Although U.S. tech firms employ 10.7 million workers, many analysts say the number of layoffs is bound to increase as the economy continues its plunge toward a full-blown recession. Those tech firms that are scooping up newly laid-off workers may be in for a rude shock in the near future, these analysts add, as the number of tech firms immune to the downturn continues to shrink. "We don't know how bad it's going to get," says Giga Information Group research fellow Rob Enderle. Analysts suggest that tech firms still have not caught up with the decreasing demand for their products, and the situation could get starker yet if the overall U.S. industry does not reverse its trend of reduced tech spending. That tech spending, which grew 25 percent last year, may fall 15 percent this year, says Ross DeVol of the Milken Institute. However, analysts say tech workers at non-tech firms could be hit hardest by the downturn. Morgan Stanley Dean Witter chief economist Stephen Roach foresees steady layoffs in this sector even after the economy begins to pull out of its contraction phase. The tech downturn is important to follow, analysts contend, because of the importance the sector has for the overall economy. The Milken Institute's DeVol says the tech sector has accounted for nearly a third of the U.S. economy's growth over the past three years. Also, because many tech layoff victims were making a significant amount of money, it will have a profound effect on the overall economy. Tech workers looking for new employment report that the market is not as bountiful as it once was. Salaries are down, perks nonexistent, and many prospective employees say they are having, sometimes for the first time in their life, to draw up a resume.
- "Tears in the Valley Send Shiver Through the Street"
Financial Times (04/09/01) P. 17; Abrahams, Paul
The downturn of the tech economy, with the tech-heavy Nasdaq market having fallen 66 percent in the past year, has had a devastating impact on the Silicon Valley area. The once booming property market in the Valley and in San Francisco has crashed, with properties in the South of Market district, once $90 per square foot, down to $30 per square foot. Those looking to sell their homes can no longer bank on demand driving up the value--sellers are now cutting their prices. Those tied directly to the tech industry are finding that last year's dreams of riches have largely turned out to be illusory now that their stock options have lost much, if not all, of their value. Layoffs have replaced the get-hired-in-a-minute atmosphere of the previous two years, with supposedly "safe" firms such as Inktomi and Ariba cutting their workforces. Columnist Paul Abrahams argues that the tech-driven U.S. economy is not yet in a recession but may head in that direction if consumer confidence does not hold up. So far, he says, consumers do not seem panicked. He argues that what the U.S. economy may be experiencing is not a recession but rather a correction for poorly allocated resources throughout U.S. industry, particularly for those firms that spent too much on technology.
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- "Democrats Counter Bush on Tech"
CNet (04/05/01); Ross, Patrick
Broadband access will be the focus of the Democrats' technology agenda, the party's leaders said on Thursday. Democratic leaders on the Hill held an online news conference in which House Democratic Minority Leader Richard Gephardt (D-Mo.) said the party wants every American to have access to broadband connections by the end of the decade. Sen. Jay Rockefeller (D-W.Va.) said he has a bill that would provide tax incentives of as much as 20 percent to companies that bring broadband to underserved areas. Sen. Byron Dorgan (D-N.D.), who compared the need for the availability of broadband to electricity, added that he has a bill that would devote universal service funds to the effort. Democrats suggested that the $1.98 trillion tax cut of President Bush does not provide any funding for tech initiatives. Senate Minority Leader Tom Daschle (D-S.D.) said he supports reasonable tax cuts for the tech industry. Democrats are big on research-and development for civilian projects and would like to double funding over the next 12 years. They said Bush's plan focuses more on military programs. Democrats did agree with Republicans on making permanent the R&D tax credit. Sen. Barbara Mikulski (D-Md.) took the time to unveil a $1.5 billion tech education bill. The party also wants to see a neutral Internet tax plan and less spam. The Progressive Policy Institute's Technology and New Economy Project helped the Democrat party develop its technology agenda. Gateway CEO Ted Waite co-chairs the group.
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- "IT Shines in March Job Picture"
InternetWeek Online (04/06/01); Mosquera, Mary
Although layoffs in the overall economy reached a 10-year high last month, hiring remains strong in the IT sector, according to new statistics from the Labor Department. Hirings by computer and data-services firms increased by 11,000 from February to March, even though several major tech firms and dot-coms have recently announced layoffs. However, the overall economy saw a net loss of 86,000 jobs last month, the largest total loss since November of 1999. Analysts had previously predicted a net job gain for March of 60,000 jobs. Although many analysts see the March figures as a sign that the economic downturn has spread past the manufacturing sector, Bank of America chief economist Mickey Levy says layoff figures follow production downturns rather than predict future events.
- "Rivals Say VeriSign Still Has Advantage"
New York Times (04/09/01) P. C4; Stellin, Susan
ICANN's decision to extend VeriSign's monopoly control of the .com database through 2007 is coming under increased criticism as VeriSign's selling and reselling practices have blocked domain name buyers from a predictable purchase of expired domain names. While VeriSign routinely charges around $35 to register a domain name, expired domain names coming back onto market can often garner prices much higher than that, as in the case of zorba.com, which expired and was bought by domain reseller BuyDomains.com, now listing it for $4,688. VeriSign's refusal to set specific sale dates for expired domain names, combined with its recent purchase of reseller GreatDomains.com, has led many to wonder whether VeriSign is hoarding the best expired domains for its own subsidiary's purchase. VeriSign's promotion of GreatDomains.com on the VeriSign Web site is only adding fuel to this speculation, which VeriSign denies. Purchasers of expired domain names often monitor VeriSign's Web site daily in hopes of securing an expired domain, which is put back on the market sometime after a post-expiration 60-day grace period, and this has lead to the creation of companies offering monitoring services for prospective buyers. One such company, DomainsBot.com, was created by a 19-year-old Canadian college student and provides daily updates to individuals and reselling firms for $19.95 per month. ICANN's decision to extend VeriSign's .com monopoly still awaits U.S. Department of Commerce approval.
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- "Counting the Human Toll Among the Internet Carnage"
International Herald Tribune (04/09/01) P. 16; Knowlton, Brian
Tech experts at last week's World Economic Forum expressed dismay at the impact the current tech downturn is having on some of the sector's brightest talent but displayed some optimism that the sector will turn around--and sooner rather than later. Although Internet co-inventor Vint Cerf said the tech downturn may be beneficial because it will cast away bad business ideas and let stronger ones grow and prosper, he agreed with John Gage, chief researcher at Sun Microsystems, who said the downturn has a tremendously negative effect on "intellectual capital." Very bright tech workers who have much to contribute are now sitting around without a job, dejected, perhaps even broke. It will be difficult for many of these workers, many of whom left established companies to found their own dot-coms and tech firms, to say they made a mistake and return to one of the stalwart companies. "How can we reintegrate the intellectual capital?" Gage asked. Still, Cerf, Gage, and Gartner Group vice president Kenneth McGee agreed that the Internet's spread into the business world is unstoppable now. McGee even managed some light humor for the event. "What do you call someone who was president of a dot-com company last year?" he asked. The punchline: "Waiter!"
- "An Internet Critic Who Is Not Shy About Ruffling the Big Names in High Technology"
New York Times (04/09/01) P. C6; Markoff, John
Software pioneer David Winer says Microsoft is abusing its industry dominance in creating standards and protocols that give the company an unfair advantage. On his DaveNet Web site, widely read in high-tech circles, Winer contends that Microsoft's strategy is to corral programmers into proprietary software protocols. He points to recently proposed changes in the Simple Object Access Protocol (SOAP) for XML as proof that Microsoft has aims to make its .Net initiative exclusive. Microsoft vehemently denies the allegations, saying Winer misunderstands the company's new Internet focus. Microsoft XML architect Andrew Layman says interoperability has been his goal for three years. XML SOAP is meant to let computers exchange XML data. Instead of its PC-centric focus, Microsoft is pursuing the Internet with hopes to link personal computing integrally with the Net. An example of this is the recently announced Hailstorm initiative that stores user's personal information on the Internet so it can be accessed from many disparate devices.
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- "META Group Ranks States by IT-Friendliness"
Government Technology Online (04/05/01); MacMillan, Robert
A new report from META Group ranks Massachusetts, California, Maryland, Colorado, and Washington as the most IT-friendly and digitally competent of all 50 states. Howard Rubin, executive vice president of META Group, says traditional standards used to judge states' success do not account for important factors in the New Economy such as globalization, technological competitiveness, and the lure for high-tech companies. Many states that led in some areas failed to score highly in others. Massachusetts, for example, won the No. 1 overall ranking but didn't place in the top five for globalization or digitizing the economy.
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- "Fine Print Not Necessarily in Ink"
Wired News (04/06/01); Manjoo, Farhad
Legal experts say many of the "terms-of-service" agreements that Web sites post may not prove sturdy enough to pass a stormy lawsuit. Businesses, lawyers, and the public are starting to pay more attention to exactly what is entailed in terms-of-service agreements, especially after Microsoft recently changed the posted policy for its Passport site, which had said the company had the right to "use, modify, copy, distribute" and even resell customer data. Although the terms of service had been posted for a long time, no one seemed to care until last week. Henry Beck, a lawyer with Heller Ehrman White & McAuliffe, contends that many terms-of-service agreements are fairly enforceable but that some, such as Microsoft's recent Passport agreement, cross a "kind of fuzzy line." He says, as with other matters of contract law, there must be a clear understanding of what exactly is offered and what is accepted. For most Web sites and services, people expect rules regulating their use of the site and indemnity for what the user may encounter while surfing the site. Beck says Microsoft's proposal to own all of customers' personal data was overreaching beyond what normal Internet users would expect when they blithely hit the "I accept" button.
- "Hired Hands Corral Corrupters of Company Data"
Washington Times (04/09/01) P. A5
Kris Haworth, manager of Deloitte & Touche's computer forensic office in San Francisco, recently had to rummage through a company's computers in search of deleted emails to find if the business had illegally inflated its revenues. Using software so powerful that they once were considered government secrets, she is able to pinpoint sources of the misstated earnings, find purveyors of trade secrets, locate hackers, and reveal improper use of the Internet at work. SilentRunner, designed by Raytheon for intelligence agencies, allows Deloitte to analyze the information on a computer's network in real time. Haworth says, "We could find or recover anything on a hard drive." FBI statistics show that financial losses from computer crimes reached $378 million last year, 43 percent more than the year before, and while 85 percent of businesses and government departments detected security breaches, only about one-third of them reported the lapses.
- "U.S.: E-Commerce Is Key to Free Trade in Latin America"
E-Commerce Times (04/06/01); Mahoney, Michael
U.S. Commerce Secretary Don Evans, addressing members of the Free Trade Areas of the Americans (FTAA) in Argentina, urged that smaller Latin American companies and economies must be allowed to benefit from e-commerce if free trade is to prosper in that part of the world. "President Bush recognizes, as do I, that e-commerce will continue to be one of the driving forces of economic growth in the 21st century," Evans explained. "I'm here to support negotiations that will move us closer to finalizing a [trade] agreement and to see that all elements of trade and commerce, especially e-commerce, are given due consideration." An eMarketer report pegs the region's Internet penetration rate at a mere 2.7 percent, compared to the U.S. rate of almost 40 percent; but Evans cited a recent study estimating that, as of last December, 2.5 million Argentineans were Web-surfing at least once a month, while only 1.9 million were doing so in the previous March. Rising levels of deregulation and telecom privatization in Latin America are fueling this expansion. According to Evans, business-to-business and business-to-consumer e-commerce in Latin America is on a course to total $7 trillion by 2004. The FTAA has been pushing for more telecom privatization, national e-commerce strategies, and local Network Access Providers. The United States has also contributed, Evans noted, by hosting orientation programs for Latin American government officials, business seminars, IT trade missions, and an Argentinean Web site designed to connect local buyers with U.S. suppliers. Furthermore, Argentina has implemented "Digital Argentina," a $1-billion program to boost the country's PC penetration by 1 million units through 2004, Evans said. E-commerce in Latin America still faces significant hurdles, Evans pointed out, including the need for improvement in the region's value chain and transportation infrastructure. He stressed the importance of expediting express shipments as a way to encourage e-commerce growth and the value of e-signatures free of liability and licensing regulations.
- "Tech Employers Look Beyond Stock Options to Lure Workers"
Investor's Business Daily (04/09/01) P. A10; Lacy, Deborah
Tech companies that offered employees stock options as an incentive when the market was skyrocketing are searching for new methods to motivate and retain workers now that stocks are foundering. Dave Pace, I2 Technologies senior vice president for human resources, says his company allows employees to trade in their old options for new ones at current prices, which are down to $14 from nearly $100 a year ago. Fred Studier of consulting firm Bain & Co. says a team-building culture is more important now than ever, meaning managers need to foster employee's self-initiative by giving them challenging projects and a strong leadership. Ramesh Sekar, Portal Software's senior director of worldwide sales, argues that transparency in the workplace is also necessary for companies experiencing pressure. He and his managers have regular meetings with staff to discuss the position of the company in order to preempt employee cynicism and insecurity. Reputable, stable companies offering career growth opportunities are on job-seekers' minds again, says Dudley Brown, managing director at the executive recruitment firm BridgeGate. "Suddenly working for a Ma Bell sounds like a good idea," he says.
- "IBM and Detroit's Compuware See Rebound in Demand for Mainframe Computers"
Detroit Free Press (04/07/01); Bennett, Jeff
Increasing levels of e-commerce, consistently high performance standards, new units capable of running on multiple languages, and greater access among consumers will lead to a resurgence for larger mainframe systems by mid-2001, according to analysts. Such a development would allow Detroit software maker Compuware to bounce back from a rough fiscal year and resume its position as a top high-tech stock. Fueling the rising demand for mainframes is the introduction of IBM's most powerful mainframe to date, the z900, which can process 2,500 million instructions and 2,000 secured, encrypted Web transactions each second; in comparison, the S/390 mainframe can only handle 1,500 million instructions and 125 transactions per second. A shift in pricing strategy is also boosting mainframe popularity; z900 customers only have to pay for the applications they use rather than a single fee that covers the computer's entire range of features, regardless of whether they are employed or not. Compuware plans to offer its customers pricing options similar to IBM's licensing plan, which is based upon a required workload capacity determined by each client. Its multi-language software is particularly attractive to businesses that use disparate software and hardware.
- "Spam Under Attack"
Toronto Globe and Mail (04/05/01) P. T1; Chase, Steven
Regulatory attempts meant to halt the progress of spam have thus far proved unsuccessful. Experts point out that even if one country passes a specifically anti-spam law, junk emailers will send spam from offshore locations. "We're going to find people living in Nigeria who are going to start sending emails and promotions," says Ferris Research President David Ferris of San Francisco. "Big deal if there's a law in America." Some 20 U.S. states have passed anti-spam laws, and several of these measures are being contested in court. Congress is currently addressing two anti-spam bills, but University of Ottawa Law School Professor Michael Geist says such legislation will have little impact to end users. Canada recently passed a new privacy law, the Personal Information Protection and Electronic Document Act, that forces data collectors to notify Web users about who is collecting data, why the data is being collected, and for what purpose. Much of the cost of sending spam solicitations, unlike sending solicitations via print mail, is borne by the ISPs and network servers delivering the spam. A new European Union study calculated that spam costs Internet users worldwide a total of $14 billion per year. Filtering technology to block spam emails installed at email addresses is a potential solution to the problem, though the perfect one has yet to be invented and filtering programs do make mistakes.
- "Linux Web Hosting Market Set to Boom"
Software firm Idaya says that the Linux platform is poised to take over the Web hosting market by mid 2002. Idaya conducted a survey of 1,000 ISPs and found that two-thirds believed Linux robust enough for enterprise-level applications and 45 percent viewed open-source software as the choice operating system for Web hosting by 2003. The report also revealed two barriers to Linux adoption: lack of distribution support and market uncertainty. Idaya is a major backer of the open-source Web hosting platform, VSD. The company cites significant Linux investments by tech leaders such as IBM, Hewlett-Packard, Oracle, and Dell as evidence of the Linux trend. Lineo, another Linux developer, also released the Lineo Embedix Software Development Kit 2.0, which is expected to further the use of Linux in embedded devices. The kit lets programmers create applications using a "snap-in" format for GUI, Bluetooth, and USB technologies.
- "Hiring Gets Sane"
Computerworld (04/02/01) Vol. 35, No. 14, P. 44; Goff, Leslie Jaye
IT hiring managers say the employment market has definitely turned to their advantage in recent months, with dot-com layoffs and other factors having added more qualified applicants to the labor pool and prompting many prospective workers to seek stable work environments. "The economic climate is affecting our recruiting efforts in two ways," says RMIC CIO Deron Streitenberger. "The candidates that would be on the market regardless are seeking more job security...We've found it easier to acquire new people than it's been in a long time, and...at salaries that make sense." A Computerworld survey reveals that companies are generally able to fill IT spots in six weeks to three months. Moreover, while the economy may have entered a down cycle, many firms are still working to Web-enable their business processes and customer-relationship strategies to ensure that they still remain players in the new economy. The fact that so many firms are concentrating on these areas means that some IT workers are still in demand and may find the market more attractive than other job-seekers. These workers include project managers and business analysts, and programmers who know Java, Visual Basic, Oracle, Cold Fusion, and Microsoft ASP.
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- "Is the World Finally Ready for Tablets?"
Business Week (04/09/01) No. 3727, P. 38; Greene, Jay
After failing miserably a decade ago, the tablet PC may have new life. Last week, Microsoft said it is bringing back the full-size writing tablet, a device that market researchers saw as holding such promise years ago that Dataquest Gartner once projected $10 billion in sales for tablets by 1995. Go founder and tablet computing pioneer Jerry Kaplan says poor resolution, short battery life, and the problem of moving handwritten notes to another device were the downfalls of tablets 10 years ago. Microsoft's foray into the category looks very promising because resolution has been improved and power consumption has been reduced. In addition, Microsoft's device will offer Web and email access, and it uses software that is similar to and sometimes the same as that used on traditional PCs. Still, Microsoft has not been able to improve handwriting recognition enough to keep the software from making errors when translating handwriting into type. Microsoft Chairman Bill Gates is convinced that computer tablets, which look like oversized handhelds, will replace laptops. Users will be able to pull out the device at a meeting and use it as a notepad to write on or surf the Web. When it is plugged in, the tablet becomes a fully functioning PC. The tablet, which costs $3,000 and weighs 2.5 pounds, comes with a portable keyboard and stand that will give it the look of having a traditional monitor.
Gates and associates demonstrated the powers of the tablet PC at ACM's SIGCHI 2001 conference last week. For additional information and photos of the device, visit
- "Patent Reform Pending"
Industry Standard (04/09/01) Vol. 4, No. 14, P. 62; Pressman, Aaron
The U.S. Patent and Trademark Office has come under severe criticism in recent years for giving business-method patents to high-tech companies for such "pedestrian" techniques as pop-up advertising and one-click shopping systems. However, the office appears to finally be issuing fewer patents by implementing a second layer of review of business-method patents, resulting in the approval of 47 percent of all such patents so far this year, compared to 57 percent last year. The office's overall patent-approval rate is 67 percent. Regardless, critics contend that the patent regulators still approve 19 patents out of 20 after the second review, with recent examples including such seemingly mundane business methods as harvesting data from customers of interactive television services and establishing "semi-anonymous" online chat rooms. There is a movement in Congress, particularly among Democratic lawmakers, to raise the novelty standards in granting business-method patents. The proposed legislation would prohibit the granting of patents for "known processes" that are new only because they are being used online for the first time. The House is scheduled to hold hearings on patent reform on April 4, while the Senate expects to hold hearings in early May.
- "Paradise Lost?"
Business 2.0 (04/03/01) Vol. 6, No. 7, P. 50; Sandlund, Chris
NEC Research Institute (NECI), located in Princeton, N.J, is shifting its focus in accordance with the wishes of corporate headquarters back in Japan. NECI President David Waltz is taking steps to speed the development of technological discoveries with potentially quick pay-backs in order to help boost NEC's profits--the company lost $1.3 billion in 1999. To do that, NECI is devoting 60 percent of research funds into computer science, as opposed to the 50-50 split between computer science and basic science the institute had previously set. Currently, the 30 resident scientists are working on developing commercially applicable technologies such as facial recognition and creating 3D environments from 2D images. Scientists are also pursuing ferroelectronics, or materials that will save data even after a device is powered down. Waltz recently rebudgeted to move 20 percent of funds toward developing technology, a move that helped an optics project that aims to fit light through metal with holes narrower than light wavelengths. This could prove a breakthrough in optical storage technology as well as result in finer scanning and better semiconductor manufacturing. Waltz also hopes that some of the new breakthroughs will be passed on to the NECI's venture development center, set up in 1999 for spinoff companies created around new technology. So far, however, no startups have been birthed out of the NECI.