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Volume 2, Issue 130: Wednesday, November 15, 2000
- "PCs Losing Connection to Star Status at Comdex"
Los Angeles Times (11/14/00) P. C1; Huffstutter, P.J.
The Comdex trade show this year shifted its focus toward Internet appliances and away from PCs. Some observers say PCs face a saturated market, as the technology has been around for almost 20 years and still offers more power than most users require. Vendors this year showed off the Internet appliances they discussed at last year's show. Dell Computer, for example, displayed a digital music receiver that plays digital music over a traditional stereo by connecting the stereo to a home PC. Meanwhile, Compaq demonstrated its iPaq Home Internet Appliance, 3Com displayed its Audrey digital pad designed for the kitchen, and America Online and Gateway showed off their jointly developed Touch Pad. Although these new devices are designed to make Internet access pervasive for consumers, some observers note that 57 percent of consumers who are not already online do not intend to ever use the Internet, according to a recent study from the Pew Internet and American Life Project. The Internet appliance market will bring in 20 percent as much revenue as the PC market at best, says Dell's Greg Nakagawa. Several vendors at Comdex also showed off technologies that distribute digital entertainment. Broadcom's Internet-on-a-chip device uses existing phone wires to send digital video to any PC or television in the home. Meanwhile, SimpleDevices showed off its SimpleFi wireless device that transmits digital music from a PC to a stereo, as well as a wireless Internet alarm clock. IBM's Internet appliance efforts are centered on its latest ThinkPad notebooks, which communicate with other wireless appliances.
- "Tech-Project Inefficiencies Found in Corporate Study"
Wall Street Journal (11/14/00) P. B18; Silverman, Rachel Emma
Companies that complain about the shortage of high-tech workers might need to make better use of existing employees, according to a study released yesterday by Gartner Group's TechRepublic unit. About 40 percent of all internal IT projects are cancelled or unsuccessful, meaning that an average of 10 percent of a company's IT department each year produces no valuable work, according to the study. An average canceled project is terminated after 14 weeks, when 52 percent of the work has already been done, the study shows. In addition, companies spend an average of almost $1 million of their $4.3 million annual budgets on failed projects, the study says. Employees working on a project often know six weeks ahead of time that it will fail, but management often does not know when to abandon efforts, according to TechRepublic. However, companies might be able to minimize canceled projects by improving training for project managers or developing a project-oversight group. The study looked at 1,375 North American IT professionals at companies in all industries.
Washington Post (11/15/00) P. E1; ElBoghdady, Dina
This week ICANN will be making decisions on new top level domains after pouring over 45 applications where upwards of 100 new TLDs were proposed. However, the organization's role in the process of choosing which new TLDs to add is a point of contention, sparking some 4,000 public comments to be filed. ICANN has already eliminated several proposals from contention including .xxx and .movie because the proposals did not have sufficient technical expertise or funding. The companies submitting the proposals that ICANN eventually chooses stand to make a lot of money. Network Solutions currently controls .com and has a $23 billion market capitalization. NSI has registered approximately 22 million .com domain names. Although there are other registrars, NSI is the only one that handles the database where all Internet addresses are stored. Therefore, ICANN's decision will provide NSI with a new competitor in this area for the first time. Competition could help reduce prices and improve customer service, but it would also provide the Internet community with more domain name choices. During the process, ICANN is attempting to add enough TLDs to generate competition while making sure confusion does not ensue. Filed comments pertaining to the process highlight people's anger over how ICANN has handled the situation, especially the idea that a limited number of new TLDs should be introduced, the $50,000 application fee, or the fact that NSI was permitted to bid. "We would be best served on many fronts by having more competition, which is something we've been endorsing for quite a while now," says NSI CEO Jim Rutt.
For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html.
- "HP's Shortfall Puts Tech Sector in Blue Mood"
Investor's Business Daily (11/14/00) P. A6; Riley, Sheila
Hewlett-Packard on Monday announced earnings below what analysts had expected, reporting a profit of 41 cents per share. The announcement caused a 13 percent drop in the value of HP stock, and analysts say investors' surprise at HP's shortfall led to yesterday's sell-off in the major indexes. Officials at HP said no one cause was responsible for the shortfall. The firm struggled to find new employees, said CFO Bob Wayman, and spent more than anticipated in hiring costs. Although HP sales did grow in some areas, Wayman said they were largely low-end, low-margin areas. Sales also increased in Unix-based servers as well as in PCs, which Wayman suggested may have dissuaded HP from issuing a profit warning. Overall, HP revenues increased 17 percent for the quarter that ended Oct. 31. Wayman also cited concerns about debt and overseas markets for lessening the firm's earnings. Yesterday also marked the end of HP's pursuit of the tech consulting division of PricewaterhouseCoopers. The decline in HP's stock value made the proposed payment-in-stock purchase of the consulting firm untenable. Independent analysts said outside pressure from both its competitors and from investors acutely aware of the bottom line contributed to HP's earnings shortfall.
- "The Really Early Midlife Crisis"
Wall Street Journal (11/15/00) P. B1; Bounds, Wendy; Silverman, Emma
The shakeout in the dot-com industry is leading to a premature midlife crisis for many young tech workers who rose quickly in their careers and never experienced a downturn until now. Many workers under the age of 40 worked long hours and neglected their personal lives in exchange for the promise of instant wealth. In recent years, the media has featured many young billionaires who earned their fortunes from dot-com IPOs. However, the focus has now turned to dot-com failures and layoffs, falling stock prices, and reluctant venture capitalists. The Industry Standard's Web site reported that as of yesterday, 22,155 workers have been laid off at 245 dot-coms since the end of last year, and 42 of the dot-coms have collapsed. The recent events have left young workers feeling that the high point of their professional careers is over. "We will never in our lifetime [again] experience what's happened these last three or four years," says Seth Baum, a 29-year-old who rejected a $150,000-a-year consulting job to work at Petstore.com, which has since collapsed. In addition to worrying that they are past their professional prime, dot-com workers are often dissatisfied once they achieve what they set out to do. Dot-com workers "bought into a dream, but the dream didn't give them what they thought," says Rev. Greg Cootsona, whose Presbyterian Church held a lecture dealing with personal issues for dot-com workers this fall. Many disillusioned dot-com workers are turning to spirituality, while others are moving into other fields such as teaching and music. Meanwhile, many others are returning to the stability of jobs at brick-and-mortar firms.
- "Skills Shortage Hampers Asia IT Growth"
Asia CyberAtlas (11/14/00); Schwankert, Steven
A shortage of skilled workers is preventing Asia's high-tech industry from growing faster than its current rate of 18 percent, according to a study released by International Data on Monday. Asia's IT industry continues to lack an adequate number of workers with technical skills, project management expertise, knowledge of the industry, and strategic planning skills, the report said. The worker shortage "not only delays projects, but increases their costs," says IDC analyst Caron Harrison.
- "Public Records Questioned on Web"
Associated Press (11/15/00); Jesdanun, Anick
Currently, everyone that registers a domain name must provide a name, email address, postal address, and telephone number and that information is posted publicly on the Whois database, which can be accessed by anyone with an Internet connection. Privacy advocates are concerned about this dilemma, saying that obtaining space online should not require a loss of privacy and that Internet users ought to have the right to choose. The European Union (EU) passed a law forbidding data to be transferred to the United States and other countries that do not protect personal information well enough to meet EU standards. However, the Whois database is helpful for registration companies that use it to let customers know what domain names are available and to lawyers attempting to determine where trademark rights are being violated online. The issue might be a moot point in the future, as technology could permit law enforcement officials and trademark owners to locate abusers while simultaneously protecting the privacy of individuals otherwise, says VeriSign Global Registry Services vice president Chuck Gomes.
- "Discovery.com Lays Off 40 Percent of Its Staff"
Washington Post (11/14/00) P. E1; Johnson, Carrie; Irwin, Neil
Discovery Communications yesterday laid off 40 percent of the workers running its Discovery.com Web site, saying revenue in the Internet business is not meeting the company's expectations. Discovery plans to redesign its Web site in the coming months to emphasize the firm's popular cable TV channels such as Animal Planet and the Learning Channel. Like many other online firms, Discovery based its Internet business model on developing online content to attract consumers to the site, which in turn would bring in advertising revenue. However, many companies have grown skeptical about the value of online advertising, and the dot-com shakeout has reduced the number of high-tech companies that are most likely to advertise on the Internet. Discovery's e-commerce efforts will now be included in the new Discovery Commerce unit, which also handles retail-store and catalogue operations.
- "Will the Developing World Dominate the 'Net?"
Reuters (11/13/00); Wong, Jacqueline
Wireless technology and Internet usage will be dominated by less developed nations in the near future, according to MIT Media Lab director Nicholas Negroponte. "Demographics of the Internet will change, where the dominant player on the Internet will be the developing nations," Negroponte says. Although both China and India have incredible Internet potential, while India is busy developing a mirror image of Silicon Valley in Bangalore, the Internet's impact has not been fully understood in China, says Negroponte. Consumer-to-consumer Web sites such as auction sites retain some potential, while business-to-consumer sites have slowed down a little, says Negroponte. The rate of developments in mobile services would define Asia's e-commerce future, according to Strategic Intelligence chief strategist Yuwa Hedrick-Wong. Within five years more than 50 percent of the 500 million mobile users in Asia will be broadband enabled, Hedrick-Wong added. Markets in Asia will lead implementation in the third generation, says Hedrick-Wong.
- "E-Mail Campaign Targets International Cyber-Crime Treaty"
Newsbytes (11/13/00); Krebs, Brian
The Council of Europe is struggling to create the world's first international cyber-crime treaty amid concerns from business, privacy, and human rights groups regarding consumer privacy on the Internet. The treaty's regulations include the harmonization of laws, cooperation between sovereign law enforcement agencies, and harsher penalties for cyber-criminals. The treaty will not lead to the end of privacy on the Internet, says the Council of Europe's economic crime unit deputy chief, Peter Csonka. "People have completely misinterpreted this document, reading it as general legal obligation for ISPs to retain any kind of subscriber data," says Csonka. Members of the Global Internet Project are asking that the council postpone the deadline for the cyber-crime convention because of the unnecessary economic and legal burden it would place on ISPs. The current treaty could also spell disaster for countries like China and other East Asian nations, since any country with poor human rights record would have to receive authorization from all 41 European Council states as well as the countries that signed the treaty. It could be several years before all countries have altered their laws enough for the treaty to be ratified, according to Csonka.
For information regarding ACM's activities on behalf of privacy matters, visit http://www.acm.org/usacm/privacy.
- "Ho Ho Whoa!"
Washington Post (11/14/00) P. G3; Streitfeld, David
Analysts are not sure how the continuing shakeout in the e-commerce market will affect the upcoming holiday season. Although many predict increased online shopping this Christmas, with sales growing as much as 50 percent from last year, others say online shopping has grown stagnant and still must prove itself after last year's debacle. Last Christmas many prominent e-retailers were unable to fulfill orders. Toys "R" Us, for example, was forced to pay a $350,000 fine to the FTC for failing to deliver products. The mystique of online shopping has disappeared, some analysts contend. Few e-retailers can still afford to offer the drastic price reductions that marked the first years of e-commerce, and many customers now view online shopping as no different from catalogue shopping. Moreover, analysts say the advantage has clearly shifted from pure-play e-retailers, the primary victims in the recent dot-com failures, to established offline retailers that have opened online channels. Gartner Group analyst Rob Labatt says an offline base allows retailers to "spread the cost of infrastructure, staff, and customer acquisition over a much wider base of revenue." Offline retailers can attract customers by offering in-store returns of merchandise purchased over the Internet. Overall, online retailers have increased customer service offerings to compensate for the failures of last year, with the percentage of e-retailers that offer order tracking and real-time customer service both increasing by 20 percent, according to International Data.
- "Domain Fights Could Get Nasty"
Wired News (11/13/00); Cisneros, Oscar S.
As ICANN moves toward making final decisions on new top level domains, the organization finds itself facing a number of legal claims that could influence its choices. Lawyers representing biz.com claim that ICANN will be participating in trademark infringement by proxy if .biz is chosen as a new TLD. Economic Solutions takes the debate one step further, claiming possession of .biz because it has exclusive rights to Belize's TLD, .bz, which could be confused by consumers as sounding like .biz. U.S. Patent and Trademark Office guidelines favor the idea that not every dot can be trademarked. "If a mark is composed solely of a TLD for 'domain name registry services,' registrations should be refused under Trademark Act...on the ground that the TLD would not be perceived as a mark," according to the guidelines. In the court case Image Online Design v. CORE, these guidelines were upheld as Image Online was not able to gain trademark rights over .web, which still is not an official TLD. Website.ws, which sells domain names complemented with the country code TLD originally developed for Western Samoa, claims that .web and .site should not be approved as new TLDs because it has marketed the term 'Website' for nine months while promoting the .ws TLD. ICANN's response is that the confusion users could have over .ws referring to Website is ironic, as the ccTLD was meant to represent Western Samoa. Another company sued ICANN for warning against pre-registration of domain names using yet-to-be-announced TLDs, and a company called e2p claims undisclosed patent rights to a particular technology that might make it possible for every word or even letter to be used as a new TLD.
For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html
- "Governor's Tax Work Gets Lukewarm Response in Md."
Washington Business Journal (11/09/00) Vol. 19, No. 26, P. 12; Reed, Keith T.
Retailers in Maryland generally support the effort of the National Governors Association (NGA) to streamline tax collection efforts, but they are not ready to back legislation that would update sales tax guidelines until they see the bill. "What's unknown is whether there will be more things taxed, so we still don't know what kind of effect this thing will really have," say Tom Saquella, president of the Maryland Retailers Association. The degree of support of the Maryland retailers' group for the draft model legislation that is supported by Gov. Parris N. Glendening (Md.), who chairs the NGA, underscores the lukewarm response in the state to the initiative of the governors' group. E-commerce companies are against the Streamlined Sales Tax Project. Odin Wortman of Web design and consulting firm Internet Marketing Solutions speaks for many e-commerce companies when he calls the NGA initiative a new tax on the Internet. The U.S. Conference of Mayors is also against the NGA effort because it does not address the tax bases of cities, suburbs, and rural surrounding areas and their needs in relation to their dependence on sale taxes.
- "Setting Patents Free"
Interactive Week (11/06/00) Vol. 7, No. 45, P. 126; Wayne, Peter
Open source software developers are looking for new ways to license patents, as traditional licensing inhibits the free sharing of ideas that characterizes open source development. Inventor Ralph Levien, for example, earlier this year decided to give a free license to anyone who uses his patents in open source projects. While Levien profited from royalties on his patents, he also recognized the value of open source development. Meanwhile, many companies are exchanging patents with one another to avoid paying royalties. However, the open source community will have difficulty patenting ideas as a result of this widespread sharing, says Eben Moglen, a Columbia University law professor and volunteer general counsel at the Free Software Foundation. Open source leader Richard Stallman is trying to create a patent pool that would allow people who contribute patents to freely use other ideas in the pool. Although Stallman believes a large pool would be a success, he says it is difficult to convince developers to contribute at first when the pool contains few valuable patents. Antitrust issues are also a concern for patent pools because companies could form a monopoly by sharing patents, says open source programmer Mark Shewmaker, who is also working on a patent pool through his Open Patents License. In addition to finding new ways to license patents, some developers are pushing for stricter policies on the type of ideas that can obtain patents. Congress has suggested that it supports limiting broad patents, and sites such as BountyQuest are offering monetary rewards to companies or individuals who can prove that a patented idea is obvious or was in use before the patent.
- "High-Tech Agenda Unaltered by Vote"
Computerworld (11/13/00) Vol. 34, No. 46, P. 7; Thibodeau, Patrick
The recent election leaves little impact on the high-tech industry's legislative agenda, as the industry expects bipartisan support for its issues to continue. Privacy will be a major concern for the next Congress, but the tech industry is divided on the issue. Intel and several others support limited privacy regulations, in part because they believe federal regulations will supersede a potential patchwork of conflicting state laws. However, industry groups such as the Information Technology Association of America (ITAA) object to any significant federal privacy regulation. Supporting federal legislation as a way of overriding state laws is "the worst of all possible worlds" because Congress might not want to anger the states by preempting state laws, says ITAA President Harris Miller. Meanwhile, the next president's influence on tech policy will stem largely from his appointments to posts such as chief of the Department of Justice's antitrust division. Still, a new antitrust chief would probably not have a large impact on the Microsoft antitrust appeal, because oral arguments in the case are scheduled for Feb. 26 and 27, before a new antitrust chief could be confirmed, says Software &. Information Industry Association President Ken Wasch. Even if the new administration tries to change the course of the Microsoft case, the appeals court is likely to issue a decision before any such attempt could have an effect, says Stephen D. Houck, former lead counsel for the 19 states suing Microsoft.
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- "The Persuader"
Industry Standard (11/13/00) Vol. 3, No. 47, P. 153; Perine, Keith
Many people credit negotiator and former FTC commissioner Christine Varney for setting Internet companies straight over the issues of online privacy and helping the Online Privacy Alliance (OPA) develop a regulatory bill that is currently going through Congress. Varney's previous experience included educating business leaders on the importance of children's privacy on the Internet, which contributed to the passing of the Children's Online Privacy Protection Act. Varney also helped convince the European Union to adopt a "safe-harbor" standard for American companies rather than adhere to its more restrictive Data Protection Directive. Lawyers and representatives of America Online, Hewlett-Packard, and IBM--the founding members of the OPA--met in the spring of 1998 to strategize self-regulatory guidelines, and hired Varney as negotiator to smooth over their various differences and agendas. The OPA eventually approved a set of voluntary guidelines that would require companies to post privacy notices on Web sites and offer visitors the choice to opt out of providing personal information. However, the guidelines were not universally adopted and were generally considered a failure. The OPA has since reversed its policy and decided to support a new federal privacy law proposed by Sen. John McCain (R-Ariz.). Spurring the OPA's reversal were several FTC reports indicating that commercial Web sites were lax in posting privacy notices and opt-out options, as well as a general feeling that the sites did not consider consumer privacy a high priority. After a long period of resisting the notion of government regulation, Varney testified before the Senate Commerce Committee in May, admitting that the OPA's standards had to be revised or replaced with a stronger type of law. McCain's proposed law exempts businesses that implement self-regulation policies similar to the OPA's guidelines and enforces the posting of privacy policies and opt-out options. In response, Sen. Ernest Hollings (R-S.C.) has proposed a stricter bill that features an opt-in regulation favored by many privacy advocates. Despite the long, rocky road online privacy regulation has traveled, Varney is confident that the OPA process has been successful.
- "Promise of E-Democracy Begins to Take Hold"
Washington Technology (11/06/00) Vol. 15, No. 16, P. 1; Emery, Gail Repsher
The Internet is changing the way people relate to government through innovations such as online campaign contributions, driver's license renewals, and voter registration. EContributor's Trey Richardson says that the Internet is made for participation, and that governments should make use of its technology to communicate with constituents and provide services. GartnerGroup predicts that e-government spending will rise 33 percent each year for the next five years, from $1.5 billion to $6.2 billion, and that 60 percent of the nation's governmental agencies will have some kind of transaction available over the Internet by 2003. A new study by the Council for Excellence in Government indicates that 56 percent of the public, 62 percent of Internet users, and 92 percent of government officials believe that e-government will improve how government operates. The study also found that citizens believe that e-government will change their interactions with the government, both as citizens and as customers. A study from E-thePeople.com shows that one in eight American households used email to contact a government official during the past year, and one in 14 signed an Internet petition asking the government to change something. E-thePeople.com President Alex Sheshunoff says that making something easier means that more people will do it. A survey by Active Research shows that 82 percent of online consumers surveyed said they would vote online if they could, and 63 percent said they would increase the number of elections they vote in if online voting were available. GartnerGroup analyst Mark Smolenski says that while e-government is off to a good start, it is still in its infancy.
- "Blurring the Lines"
Federal Computer Week (11/13/00) Vol. 14, No. 39, P. 20; Matthews, William
The growth of e-government services has led the federal government into conflict with private-sector businesses. A recent high-profile example pitted the Internal Revenue Service against tax-preparation businesses. The potential savings provided by online tax filing, eventually as much as $2 per return, is driving the IRS to maximize its online solutions. One solution it discussed was providing tax-preparation services to facilitate the use of its online service. The Computer and Communications Industry Association reacted strongly to this speculation, as its chief Edward Black said the IRS must not use "tax revenue as venture capital to undermine existing private companies." Although the standard test for whether a government agency should offer a certain service has always been whether that service was inherently governmental, the Internet has altered the boundaries of what is or is not governmental, Stephen Goldsmith, former mayor of Indianapolis and Bush administration IT expert, says. For example, the U.S. Postal Service has lost substantial revenue since the advent of email and other services, with $300 billion lost from payments that were paid online rather than mailed. However, its reaction, eBillPay, an online bill payment service, has brought the same cries of outrage from the private sector as the IRS' proposals. As the cost of paying a bill online is nearly 80 percent less than the cost of paying it by mail, several companies see substantial profit to be made on online bill payment services. Although industry observer Peter Orszag argues that online bill payment is not an inherently governmental service, the Postal Service claims it has no other way to keep up with today's Internet-based economy. It notes that it has a level of trust and established practices that a startup company cannot match. Even the recently launched federal government portal, FirstGov, has encountered criticism from search engines that wanted to corner the market on government information online. Government agencies protest that forcing them to abide by a strict non-competitive standard is impractical. The private-sector should realize that the government is entering a time when it is possible to eliminate the "middleman" from a great many of its transactions, which will necessarily change the way government does business, according to Ari Schwartz of the Center for Democracy and Technology.
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