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Volume 3, Issue 273: Monday, November 5, 2001
- "States Weigh Going It Alone in Legal Battle With Microsoft"
New York Times (11/05/01) P. C1; Labaton, Stephen; Lohr, Steve
State attorneys general for the 18 states suing Microsoft along with the federal government are still considering whether or not to litigate the issue further now that the Justice Department and Microsoft have reached a settlement. Judge Colleen Kollar-Kotelly has given the states until Tuesday to make a decision, which is being influenced by an angry group of industry executives who say the settlement is a huge win for Microsoft. Their criticisms are aimed at the fact that Microsoft has yet to acknowledge it is liable for antitrust conduct, despite two court affirmations that it is a monopoly, and potential loopholes in the draft's language that could leave too much latitude for Microsoft to decide what code it has to divulge to competitors. A portion of the settlement draft, for example, exempts Microsoft from releasing the source code for its digital rights management scheme, Passport authentification, and encryption products--all of which are technologies crucial to emerging online markets. Sun Microsystems Chairman Scott McNealy asks, "Does anyone think this settlement is going to change Microsoft's behavior?" However, Microsoft officials and the Justice Department argue that the three-person technical committee will keep a close watch on Microsoft's actions and believe the agreement strikes a balance that keeps the industry open to both competition and innovation.
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- "In Tech World, The Cool Ideas Are Now On Ice"
Wall Street Journal (11/05/01) P. B1; Swisher, Kara
The economic downturn, combined with market saturation, an overabundance of unproven products, corporate greed, and government regulation, is stifling innovation in the technology sector. Venture firms and large companies are trimming their research and development budgets and taking on less risky projects. Recently launched products such as Windows XP are little more than upgrades and enhancements to reliable applications. But innovation is the edge that has kept pioneers in Silicon Valley and other tech centers at the forefront of the industry. The free flow of information that blossomed before commercial concerns began to segment and limit the Internet sparked creative ideas, according to Stanford University Law School professor Lawrence Lessig. The bursting of the Internet bubble, brought on by too many investments in weak ideas, has led to tighter controls by content owners, distribution networks, and software companies. Lessig fears that corporations will only increase their control and choke off creativity in the future. "Innovation comes when there is a tender balance between chaos and bureaucracy, and not too much of either takes over," posits entrepreneur Brewster Kahle.
- "Businesses Tap IT After Staff, Budget Cuts"
Computerworld Online (11/02/01); Copeland, Lee
Many industries have had to lay off employees and trim their budgets as a result of the economic downturn, and are trying to stay afloat by leveraging their IT resources. Companies are pursuing fewer IT projects, and giving precedence to those that promise the most immediate return on investment, according to Ovum Research analyst David Bradshaw. CIOs say they are concentrating on projects that lead to immediate cost reductions and that are in tune with changing business models. United Air Lines, for example, was hard hit by both the slump and the terrorist attacks: Fewer people are flying, and the airline had to cut nearly 20,000 workers. This week, the company rolled out a restructured reservations system to improve customer service by easing passenger flight transfers. The system also takes some of the burden off an overtaxed reservations staff. "This is a revenue-generating mechanism to make flying more convenient," says United CIO Eric Dean. There is also renewed emphasis on EasyCheck-in self-service kiosks that allow passengers to obtain boarding passes without dealing with long lines or a dearth of ticket-counter employees.
- "Report: Dot-Com Job Losses Swell in October"
E-Commerce Times (11/01/01); Regan, Keith
Internet job cuts rose by more than 60 percent in October to 4,840, says Challenger, Gray and Christmas (CGC). The dot-com layoffs were mainly caused by struggling online travel companies and weak demand for B2B services and software. Some 95,000 dot-com jobs have been cut so far this year. The Sept. 11 attacks affected the dot-com sector as almost all other industries, says John Challenger, CEO of CGC. Job cuts fell to their lowest level in over a year in September, with 2,986 layoffs. Internet job losses crested in April with 17,000 and had dropped for five consecutive months. Consumer service firms, which include online travel sites, saw 2,055 job losses in October, comprising 40 percent of the total. The professional services and B2B sector accounted for 1,001 layoffs in the month.
- "Ferreting Out Virus 'DNA'"
Wired News (11/05/01); Delio, Michelle
Computer security professionals now have another tool in protecting systems against viruses, a program that identifies malicious programs by tracing their "DNA" code, derived from previous viruses or trojans. The STAT Neutralizer, developed by the TASC subsidiary of Northrop Grumman, borrows from the idea of DNA evidence used in biology to identify organic materials, their ancestors, and offspring. When installed on a computer, the STAT program also rejects commands that will do irreparable harm to the computer, neutralizing many computer viruses or unintentional human errors. David Sanders, TASC head scientist and former counterintelligence special agent, said the program was developed as a way to reduce extraneous files from a hard drive when investigators are looking for evidence on criminals' computers.
- "Helping Software Companies Be as Open as They Want to Be"
New York Times (11/05/01) P. 4; Gallagher, David F.
Major corporations, especially those in the software industry, have gone from viewing open source as the anathema of their business to a productive philosophy that can speed a more accurate product development cycle. Their willingness to go open source is limited, however. Two open-source companies have launched collaborative programming tools to let them coordinate open-source projects with a limited scope, often including their partners or customer companies. CollabNet and VA Linux both sell open-source development services that limit access to privileged parties. The VA Linux "enterprise edition" of its free SourceForge.net service lets companies host the collaboration on their own servers, but its price tag is mostly to help managers feel as though they are investing in something tangible, says VA Linux board member Eric S. Raymond. Microsoft, one of the largest proprietary software firms, is also adopting a "shared source" development philosophy for many of its projects, including Windows.
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- "For Clarke, a Career of Expecting the Worst"
Washington Post (11/04/01) P. A10; Cha, Ariana Eunjung
President Bush recently named career federal civil servant Richard Clarke the U.S. cyberspace security czar, a post that will position Clarke as an analyst and advocate of computer security measures to be undertaken by government and recommended for private industry. Clarke, who will answer to both national security advisor Condoleezza Rice and homeland security director Tom Ridge, was assistant secretary of state under the elder George Bush, counter terrorism chief officer under President Clinton, and is known for aggressive and outspoken views on computer security. Clarke has been campaigning for tighter computer-industry security since 1998, when he drafted a "National Plan for Information Systems Protection" security blueprint; but according to associates, Clarke's ideas during the dot-com boom mostly fell on deaf ears. After assuming his current position, Clarke has asked telephone companies to give emergency workers priority lines, and advocated a separate, more secure Internet for government systems. Last week Clarke made a tour of technology industry leaders, cautioning that information disruption may become a new frontline. "Sept. 11 has been a wake-up call to an economy that's been a little lazy and complacent about security in the past," says VeriSign's Michael Aisenberg.
- "NET Guard Calls Techies Into Service"
SiliconValley.com (11/02/01); Ackerman, Elise
Spurred by the communications disruption triggered by the Sept. 11 attacks, Sen. Ron Wyden (D-Ore.), has proposed the creation of the National Emergency Technology (NET) Guard, a task force of technology experts who would restore and repair communications networks in times of crisis. The chief source of support for the NET Guard would be privately-owned technology companies, according to Wyden, who has spoken to several tech executives about the possibilities. However, reaction has been mixed: Wyden says the proposal sits well with Intel's Andy Grove, but Information Technology Association of America President Harris Miller argues that corporate tech workers simply cannot make the leap to emergency workers, while WorldCom executive Vint Cerf says that some networks are too intricate for experts to handle. The SRI Computer Science Laboratory's Peter Neumann believes Wyden's proposal is sound if it helps promote more education and training in information security. Wyden, who is chairman of the Senate Commerce Subcommittee on Science, Technology, and Space, is planning to conduct a hearing on his proposal. He believes that the NET Guard should be comprised of volunteers, while their employers would contribute the equipment they need. "The government's role is to ensure we tap all this potential for patriotic acts and helping," Wyden asserts.
- "Linux Goes to the Movies"
Salon.com (11/01/01); Hammel, Michael J.
Hollywood, in the form of the visual-effects (VFX) industry, is embracing the Linux open source operating system. For example, Dreamworks Animation rendered its hit movie "Shrek" using Red Hat Linux; VFX giants Industrial Light & Magic and Pixar are also using Linux or have taken an interest in it. These companies do not exploit Linux for marketing purposes, but simply to get the job done cheaply and efficiently. An industry-wide switchover to Linux involves more than having studios rewrite their software, but requires collaboration between studios to get application vendors such as Alias-Wavefront and SideFX to port a number of popular applications. Hosting Linux summits at VESTECH conferences has helped foster a cooperative atmosphere among the studios. There would be less difficulties for staff to migrate to Linux, since many are experienced with the Unix variant IRIX. One of the risks the effects houses have to deal with is angering the open source community: "What we have to contend with is the involvement of the open source community with respect to the shared proprietary concerns of the industry, without getting everyone upset that those proprietary pieces aren't given back to the community," explains Visual Effects Society technology chair Ray Feeney. This issue can be resolved by issuing the right kinds of industry licenses.
- "German Creators of MP3 March to Different Tune"
International Herald Tribune (11/05/01) P. 11; Schmid, John
Scientists at Europe's Fraunhofer Institute for Integrated Circuits developed the MP3 audio compression format in the early 1980s, and have remained an influential, if not well-known, player in the development of online music. MP3 compression filters out about 90 percent of a sound file's content, but reproduces the track with very little difference to the human ear, and thus allowed online music sharing to take off with the advent of services such as Napster. However, Fraunhofer researchers alerted the Recording Industry Association of America (RIAA) in 1997 to the possibilities of misuse of the MP3 format and have since collaborated on projects such as the Secure Digital Music Initiative in 1999. The RIAA has been slow to respond to the threats and opportunities posed by the MP3 format, says Fraunhofer professor Karlheinz Brandenburg, and not proactive enough in providing legitimate digital music services.
- "IT Budgets Stabilize, CIOs Focus on IT Contingency Plans"
CIO.com (11/01/01); Ware, Lorraine Cosgrove
CIO Magazine's October survey of 231 top executives shows improvement in tech spending projections for the next year, though the fourth quarter will likely remain at low levels. All seven areas of IT technology registered lower expected spending increases, with the exception of computer hardware, of which 37.8 percent of the panelists said would increase over the next year. Disaster recovery and business contingency plans received a boost from the Sept. 11 attacks, according to most CIOs, who cited off-site redundant systems and back-up as the most popular contingency applications. Overall, IT budgets for the next year are expected to rise 4.7 percent, compared to the 3.7 percent projected from last month. Internet-related expenditures, which were expected to consume 14.3 percent of annual IT budgets in September, fell to 12.2 percent, while the expected revenues from Internet-related business also fell, from 10.4 percent of total revenues last month to 7.4 percent in October.
- "Microsoft, IBM Collaborate on Web Standard"
ZDNet (11/01/01); Wong, Wylie
IBM and Microsoft are teaming up to develop WS-Inspection, a new Web services standard. The new technology will allow companies to locate each other's services online. It is the fourth Web services standard created by the two firms to promote subscription-based software and services over the Internet. Using WS-Inspection, a company could, for instance, find a credit validation service by browsing a bank's Web site and then include it in its e-commerce Web site. The previous three standards have garnered support from such major software companies as Oracle, Sun Microsystems, and BEA Systems. These companies hope that in the future, software can be available as a service through PCs, cell phones, and other handheld devices. The new online standard combines the competing technologies of IBM and Microsoft, says Philip DesAutels, Microsoft's product manager for XML Web services. Although the standards are interoperable, Microsoft expects to lead companies to services based on its own brand of programming while IBM, Sun, Oracle, and others support models based on Java programming.
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- "Public Data Gets Pulled Off Web"
SiliconValley.com (10/27/01); Johnson, Steve; Woolfolk, John; Ostrom, Mary Anne
The threat of terrorism has prompted government agencies to yank potentially sensitive public data from the Internet, ranging from well water contamination to airport security violations to chemical storage to air quality. This could be the tip of the iceberg: Federal agencies are currently debating whether to restrict information access to public libraries, and California Gov. Gray Davis wants state agencies to audit their Web sites for information that could be used by terrorists. Although the government may have a right to remove certain online information, it owes the public an explanation as to why such measures are being implemented, argues OMB Watch executive director Gary Bass. "It seems clear that the bureaucratic tendency to hoard information is being given free rein," warns Steven Aftergood, director of the Project on Government Secrecy in Washington. "Until we have a better understanding of what the real security situation is, a lot of people will err on the side of caution." There is also concern that federal agencies will use the terrorist threat as an excuse to pull potentially embarrassing information from the Web.
- "Robots Could Join Fight Against Terrorism--U.N."
Robots could play a bigger role in the fight against terrorism, says expert Jan Karlsson at the United Nations Economic Commission for Europe. Robots can handle harmful substances, make inspections, and conduct surveillance for both antiterrorism and maintenance purposes, he says. Yearly sales of robot units are estimated at $5 billion to $6 billion, and the entire industry may be worth as high as $25 billion, the ECE expert says. Approximately 50 systems of robots for firefighting and bomb-removal have been sold globally in 2000, Karlsson says, and 120 systems could be sold by 2004, according to the ECE survey, "World Robotics 2001." The survey found that over 750,000 robots unit are currently in use around the world, with 100,000 added last year alone. Robots are in use in a wide range of industries, including the Postal Service, farming, security, and health care. Karlsson says, "Robots are getting cheaper and cheaper and better and better. At the same time, labor costs are more and more."
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- "Up to 30 Percent of European Dot-Coms Face Failure--Report"
Newsbytes (11/01/01); Gold, Steve
As many as 30 percent of European Internet companies lack the cash needed to stay afloat, according to a PriceWaterhouseCoopers study. What could be worse, the study suggests, is that further dot-com investment opportunities are extremely limited. In addition, the number of profitable companies in the Internet 150 fell to 24 percent in the first six months of 2001, says PwC. In comparison, 38 percent of companies in the Internet 150 were profitable in 2000. The Internet 150 includes the top 150 publicly quoted firms in Europe. The average trading life expectancy of Internet 150 companies fell to 11 months in the second quarter of this year. At the turn of last year, the figure was 17 months. The study also notes that sales growth for B2B Web firms has been stalled for the past 12 months while B2C companies continue to grow.
- "Take It All With You"
InfoWorld (10/29/01) Vol. 23, No. 44, P. 38; Moore, Cathleen
Corporate information portals are being used for information and communications access. This could be the key to user-oriented Web services, the most basic of which could roll out within six months to a year. Analysts say that corporate portals have essential data about users' identity that facilitate the delivery of Web services. Delphi Group senior advisor Larry Hawes says that Web services can help ease some of the difficulties of portal integration because they are self-describing and self-discovering. "Web services will bring better ROI to portal projects and making changes will be easier," predicts OnePage COO Michael Marubio. "Once you have every IT resource talking as a Web service you can weave them together to create rich business content."
- "Hidden Assets"
CIO Insight (10/01) No. 6, P. 26; Kindley, Mark
Erik Brynjolfsson, co-director of MIT's Center for eBusiness, believes that the key to successful IT investments is the intangible assets that make up organizational capital. These assets include business processes and the implementation of supply-chain systems, accounts-payable procedures, and inventory-management systems--all things that yield long-term benefits such as greater efficiencies, lower costs, more management transparency, and improved customer responsiveness. A study of over 800 Fortune 1,000 companies conducted by Brynjolfsson shows that firms with the most IT investments exhibited the greatest improvements in quality; unfortunately, these assets are often overlooked, leading to lower valuation of IT productivity. Organizational capital does not necessarily translate into new technology or new economy because many of the old economy processes can still be valuable. By focusing on technology and hardware costs, CIOs may be giving organizational capital investments short shrift, according to Brynjolfsson. His studies indicate that the ratio of organizational capital to technology capital is about $10 to $1, reflecting IT's disproportionate effect on the economy when compared to IT spending. Brynjolfsson argues that productivity is likely to grow as more organizational capital is leveraged.
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- "Is Grid a Lock?"
CFO (10/01) Vol. 17, No. 13, P. 34
IBM is confident its "Grid" network computing architecture will extend beyond the rarified world of supercomputing and become a mainstream corporate IT solution very soon. IBM vice president of Internet technology John Patrick says that within two years Grid will be popular with corporations, which will be sold on the superior economies of scale Grid offers as well as its ability to manage any workload, removing the need for companies to have to anticipate future demands on their computing and Internet infrastructures.
IBM also anticipates that its Global Services division may re-architect itself around the Grid model and sell e-business software solutions to customers as outsourced services. Also, as companies become increasingly dependent on their Internet and e-business systems, the concept of a reliable information technology utility becomes increasingly attractive.
The National Science Foundation is already sold on IBM's Grid idea and is paying the company $53 million to build a Grid capable of 13.6 trillion calculations per second. IBM says companies may build their own Grids or access a shared network just as they do to obtain electricity.
- "The Advanced Technology Program: It Works"
Issues in Science and Technology (10/01) Vol. 18, No. 1, P. 59; Wessner, Charles W.
Companies that wish to undertake research projects involving high-risk technology are securing federal funding thanks to the Advanced Technology Program (ATP). However, support for the ATP has been in a state of flux, due to dissenting opinions on whether government has the right to choose commercial technologies and firms to champion them. Government-funded research into new technologies has historically had a positive effect on the economy; there would be no telegraph, computers, or Internet without such funding. Several reviews demonstrate that the ATP has proven itself successful: According to an evaluation of the first 50 completed projects funded by the ATP, the strong performers yielded benefits that exceeded the group's performance as a whole. The National Research Council's Board on Science, Technology, and Economic Policy concludes that the ATP adheres to a high standard of internal and independent external review, uses criteria that allow it to select projects that fulfill wide-ranging societal objectives, and helps promote high-risk R&D that companies would otherwise shy away from. The committee also notes several ways the ATP can improve on its success, such as more flexible award application windows and shortening the decision-making process; allocating some funds to specific areas; stabilizing funding; continued emphasis on small businesses; and more collaboration on national projects.