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Volume 1, Issue 10: Wednesday, December 22, 1999

  • "Y2K Will Take World by Storm"
    Newsbytes (12/21/99); Gold, Steve

    Although the U.S. and other Western nations have made extensive Y2K preparations, contact with countries that are not prepared will result in infrastructure problems, according to a report from BSC Consulting. Many governments and businesses have been complacent about Y2K or unable to fix the problem, BSC says. Since many countries did not test IT systems adequately or determine the potential ripple effects of Y2K glitches, BSC thought it was necessary to reevaluate international preparedness. Among the countries that BSC names as potential Y2K threats are Japan, Israel, Spain, France, Germany, the Netherlands, Sweden, the United Kingdom, and many others. BSC director Patrick Moore says previous Y2K readiness reports that have given favorable evaluations to many of the nations identified by BSC have not looked closely enough at the extent of a nation's testing. "We are now certain that the world is not prepared enough to avoid disruption and we will now have to wait and see how inconvenient this will be," Moore says.

  • "Compaq May Be Near a Plan to Build Tailor-Made PCs"
    Wall Street Journal (12/21/99) P. B4; McWilliams, Gary

    Compaq might be arranging a deal for Inacom to produce made-to-order Compaq PCs, after trying unsuccessfully for years to move into the customized PCs market now ruled by Dell. Inacom already makes customized Compaq PCs for its own customers, and experts believe the two companies might agree for Inacom to customize systems for Compaq's direct customers. Inacom says it frequently holds talks with Compaq, but no new partnership is being discussed. Meanwhile, Compaq CEO Michael Capellas says, "Our supply chain isn't working the way we want it." Improving the supply chain is critical to boosting the company's lagging corporate PC business. Compaq's other businesses are improving, Capellas says, and he plans an ad campaign to challenge competitors and promises higher visibility. Compaq has been criticized for having been slow to move to the Internet, but the company's new strategy is to distinguish itself for "leadership in Internet access, infrastructure, services, and solutions." Compaq is still the market leader in home computers and PC servers, and industry experts say Capellas and his team are turning the company around. Still, Compaq's share prices remain low and its fourth-quarter performance is expected to be weak. Although Compaq said earlier that it would cut $2 billion from annual expenses, the company has only attained 10 percent of this savings. Some analysts believe Compaq should improve its business before considering any new acquisitions.

  • "Government Warning About Y2K Hackers"
    Washington Post (12/21/99) P. E1; Schwartz, John; Cha, Ariana Eunjung

    Government Y2K experts plan to monitor computer systems closely on Jan. 1 for hacker attacks disguised as Y2K problems. Some of these attacks might come from hackers trying to break into networks as the date change occurs, but problems are more likely to stem from malicious programs such as viruses and worms that have already infected the Internet and corporate networks. Deputy Secretary of Defense John Hamre notes that hackers are using chat rooms to make plans for Y2K, and says, "We're apprehensive enough about it that we've put special plans in place." The FBI today will hold a briefing to address the potential threat of Y2K hackers. President Clinton's top Y2K adviser John Koskinen recently issued a request to hackers to not make problems during the date change. Although some hackers believe they serve a useful function in highlighting security flaws, Koskinen says New Year's "will not be a particularly good weekend to try to demonstrate the need for more information security." Several worms and viruses that are scheduled to deliver their payload on Jan. 1 have already been discovered, and many of these programs target Microsoft's Windows. A large number of Y2K attacks will hit on the first work days after New Year's, and experts say companies should be especially concerned with these days.

  • "Privacy Advocates Like New Crypto Regs"
    Newsbytes (12/20/99); McGuire, David; MacMillan, Robert

    Privacy advocates are giving the Clinton administration's second draft of encryption regulations a much better reception than the first draft, which was released earlier in the year. Americans for Computer Privacy (ACP) spokesperson Sue Richard says the group has some lingering concerns about the regulations, which will be hashed out with administration officials on Wednesday. The second draft does not contain the "monumental deal killers" of the first and comes close to delivering the promises made by the administration. The first draft was criticized for its loose definition of the term "foreign government or entity," to which strong encryption products may not be sold. The first draft was also criticized for limiting Internet sales of encryption products. "Products exported through mass-market distribution channels are inherently uncontrollable," according to the ACP, and the administration must come up with regulations that recognize this.

  • "One in Four Online Purchases Thwarted"
    Reuters (12/20/99); Orr, Andrea

    Over a fourth of all attempted online buys are never completed because Web sites either cannot accept orders, crash during the process, are under construction, or otherwise unable to conduct transactions, according to an Andersen Consulting study. Andersen shopped at 100 large, well-known sites, and found that out of 480 attempted purchases, only 350 orders actually went through. The study originally aimed to study the time it took to complete and fulfill orders, but Andersen was surprised to find that reliability is a more significant issue than time. Pure-play e-commerce firms were better able to complete orders than traditional retailers overall, according to Andersen. In terms of delivering orders on time, Internet firms, which delivered on time about 80 percent of the time, again performed better than traditional retailers, which delivered on time only about 20 percent of the time, according to the study.

  • "Europe Closing E-Commerce Gap With U.S."
    E-Commerce Times (12/21/99); Spiegel, Rob

    E-commerce is expected to grow substantially in Europe over the next five years, according to Forrester Research, and by then should become half the size of the market in the U.S. The European market should grow 100 per year and reach 1.6 trillion euros by 2004. However, market observers believe that new e-commerce networks and groups of independent companies will have to provide answers to the questions that the technology presents. "To overcome its potential, Europe must overcome a number of real and perceived hurdles to sustained growth," says Dr. Terese Torris, director of European Internet commerce research at Forrester Research. "Companies need to ignore yesterday's cliches and hype and focus on pragmatic issues like hiring personnel with the right skills and building the necessary infrastructure for e-commerce to succeed." Europe will need networks that bring buyers and sellers together, that allow newcomers to do businesss online quickly, and help its companies compete with others around the world. Forrester, in the new report, "Europe: The Sleeping Giant Awakens," projects that by 2004 100 million Europeans will be shopping online. Retail sales on the Internet are also expected to surge ahead 140 percent annually. Consumer demand, rich Internet applications, and free Internet access are all factors driving up European Internet use.

  • "Sony Leads Record Industry Into Web Music"
    Electronic Engineering Times Online (12/18/99); Hara, Yoshiko

    In January, Sony Music Entertainment will incorporate the Electronic Music Management System into its Net-based music distribution service. Sony is the first major record label to offer its music over the Web and is looking to establish a model that avoids the MP3 format, which Sony says enables rampant copyright violations. "We want to establish a rule based on copyrights," said a company spokesman. For now, the service will feature only Japanese artists and only Japanese credit cards will be accepted for payment. The Japanese digital music distribution market is growing rapidly: Tokyo-based market research firm Seed Planning predicts it will reach 60 billion yen, or $600 million, by 2003.

  • "One in Three Europeans to Use Mobile Internet by 2004"
    Tornado-Insider.com (12/17/99); Middleton, Guy

    In five years roughly 219 million Europeans will be using mobile telephones for Internet access, according to a recent Forrester Research survey. The user-friendly SMS system has spurred faith that WAP services will grow. Mobile operators will be able to play the financial middleman in WAP-based commerce more easily than fixed-line operators, Forrester says. That is because the small size of the WAP handsets makes it easier to put limits on users' broad use of WAP services, as AOL-type online services once did. But Forrester Internet commerce director Therese Torris believes that such restricted menus will not last. Simplified access to expanded WML-based services will expand through the continent at varying speeds, driven by Net-savvy customers, she predicts. Now, the French mobile operators SFR and France Telecom put the most restrictions on access, she says. Although a data call can put users through to other gateways, operators are tempted to route their own customers through their own gateways so they will be in charge of billing. Thus, unlike fixed-line operators, they can price various services differently. The U.K. operator Orange plans to create a service that will put all WML-based Web sites into categories to eliminate the difficulty of keying in URLs on the phone.

  • "Venture Involving Compaq to Build Electronic Portal for Hong Kong"
    Journal of Commerce (12/22/99) P. 9; Bangsberg, P.T.

    Compaq and Hutchison Telecom, a large conglomerate in Hong Kong, won a five-year contract from Hong Kong's government to build a system called ESD that will offer both government services and commercial applications. The ESD system will provide a portal for companies to engage in electronic transactions, and aims to promote e-commerce in Hong Kong. In developing the ESD system, Compaq will collaborate with other companies including Microsoft, Oracle, Nortel, and Computer & Technologies Holdings. Hutchison will provide Internet and telecom networks and will be responsible for operation management, sales, and marketing. Meanwhile, Compaq will supply technology, including more than 40 Windows NT-based servers and some servers running Unix. Compaq will also provide its own storage subsystems, e-business architecture, and systems integration technology. The initial phase of the system will launch in October of 2000, allowing users to conduct electronic transactions with 10 government departments. The system will provide public services such as government bill payment, tax return submission, job searches, license renewals, and voter registration.

  • "Akamai to Help Road Runner Speed Up in Hot Market"
    C|Net (12/21/99); Farmer, Melanie Austria

    Akamai Technologies today announced a partnership with Road Runner through which it will provide faster delivery of Internet content and application services to Road Runner's broadband subscribers. Road Runner, competitor to ExciteAtHome in the cable broadband market, is increasingly challenged by local phone companies that provide high-speed DSL connections. The market for high-speed Internet connections is growing, and over 27.3 million users globally will use DSL by 2003, compared to 70,000 users last year, according to International Data. Akamai announced a similar deal with CMGI last week, in which the two companies will jointly create and sell applications that improve Internet content delivery services.

  • "Living in the Global Goldfish Bowl"
    Economist (12/18/99) Vol. 353, No. 8150, P. 49

    Businesses that monitor the email of employees without their knowledge may just be the beginning of privacy concerns that have become the focus of attention as computer technology moves ahead. Although the business world insists that gathering as much information as possible on consumers will enable them to offer products that appeal to individual tastes, consumer groups and privacy advocates have become increasingly alarmed about how easy it could become for anyone to find out information about someone else like never before. While the European Union has taken a stand for privacy, having passed the Data Protection Directive in 1995, the U.S. has said in trade talks that the most comprehensive and stringent privacy laws in existence could become an obstacle to the transmission of information across the Atlantic because it bans the export of data to countries that do not have strict regulations. The U.S. favors self regulation to foster data exports. Even with its data-protection law, a European country such as Britain is susceptible to snooping. In fact, a private investigator, who ironically wanted to remain anonymous, was able to find out this journalists' address, phone number, partner's name, former partner's name, and mother's name among other personal information using a computer, all in less than seven hours during a span of a week. The EU directive will go into effect next year. But there are many concerns of how effective the law will be with the volume of information that is being made available by the "reference industry" in the U.S. And the emergence of Web sites that trace IP addresses of computers, and Web sites that implant cookies on computers have become just as great a cause for concern among privacy advocates.

  • "Is Your Company Ready?--E-Businesses Must Tackle Three Megatrends This Year"
    InternetWeek (12/20/99) No. 794, P. 33; Karpinski, Richard

    As companies go online, they must pay heed to three major trends of the coming year, writes InternetWeek's Richard Karpinski. First, supply chains have become integral in the shift toward e-business. The Internet enables companies to add new vendors to a supply chain more easily via online marketplaces. "Electronic marketplaces are the future of the supply chain," says IBM Research's Sesh Murthy. "A marketplace does two things that are interesting: It creates liquidity and brings buyers and sellers together by providing a standard way for them to talk with one another." Another trend is to combine online sites with real world stores, forming "click and mortar" ventures. Real world chains such as Wal-Mart and Toys "R" Us are proving that traditional brand value extends to e-commerce, as the retailers' new sites are among the most popular on the Internet, despite notable delays in their launches. Yet this automatic loyalty will most likely decline as users begin to discover the most effective sites rather than the most well known, says Karpinski. To keep loyal customers, retailers must be careful to provide top-rate service to their online customers, because Internet shoppers tend to have higher demands than traditional consumers, Karpinski says. Overall, attention to customers is key to online success, says Karpinski. While customer service has until recently been an afterthought for many online companies, e-commerce ventures are now developing services as soon as possible. Companies are now implementing customer relationship management and customization products to determine user interests.

  • "Cutting Out E-fraud"
    PC Week (12/13/99) Vol. 16, No. 50, P. 99; Seminerio, Maria

    An increasing number of entrepreneurs are taking their business online, even though they will be exposing themselves to the dangers of fraud on the Internet. A lack of affordable fraud detection services has done little to convince many entrepreneurs to postpone their startups. As a result, some have had to learn the hard way. Beyond.com, which was on good enough of a financial footing to develop its own fraud detection system, was losing more than half of its products to online fraud within six months of its launch. Still, for larger companies on the Web such as Beyond.com, online fraud may not be as devastating an issue as it would be for small and medium-sized Internet companies. Larger companies can expect to see more fraud, but then again, they can expect to attract much more business. With fraud detection systems costing tens of thousands of dollars in addition to per-transaction fees, some Internet companies have been forced to make do with their own plans to prevent fraud. Falcon Northwest Computer Systems, a $3 million company in Ashland, Ore., has been placing a heavy emphasis on tele-sales. The company expects its salespeople to stay on the phone on average of an hour with each customer, asking certain questions during the telephone ordering and billing process. "Now we ask for the 800-number listed on the back of the card, along with the last four digits of the customer's Social Security number or their mother's maiden name," says President Kelt Reeves. "It makes some people nervous, but they provide it. If they hang up, we're pretty sure its would have been a fraudulent transaction." Experts says such customer service techniques can help reduce fraud. The good news for companies online, and not just small ones, is that new, affordable technology is becoming available. However, the bad news is that online consumer fraud could cost entrepreneurs $1.5 billion this year, according to Meridien Research. And by 2003, online fraud could cost them $15 billion.

  • "One-Stop Shops for Web-Site Development"
    InformationWeek (12/13/99) No. 765, P. 128; Wilde, Candee

    Companies in need of a Web application development platform often look for one-stop shopping rather than best-of-breed components from different vendors, due to pressures such as time-to-market and a lack of skilled developers. Companies can reduce expenses and save time if non-technical workers are able to update and maintain Web sites while high-tech employees work only on difficult development tasks. Vendors are responding to this by offering a wider range of products and making their technologies easier to use. For example, Allaire offers ColdFusion Studio for professional developers and HomeSite, an HTML editing tool, for less technical users. Many Web technology vendors are buying companies or forming partnerships to help fill out their offerings. Allaire recently merged several acquired technologies, including Spectra, into ColdFusion. Enterprise users will increasingly buy Web development tools from the same vendor, causing the marketplace to consolidate, says IBM's Joe Damassa. IBM's WebSphere Studio allows users to develop, manage, remotely debug, and implement multi-platform Web applications. Microsoft is also following a multi-platform approach to Web application development by including systems in Windows Distributed interNet Applications for the presentation layer, business logic, and back-end integration. Companies are looking to minimize the technical support needed to build and maintain Web sites, and they want product managers to be able to quickly control what happens on the sites, says Open Market's Bob Warren.

  • "A Time of Energy and Enterprise and Now E-Everything"
    New York Times (12/20/99) P. C2; Abelson, Reed

    Eight prominent business leaders were recently asked to reflect on the outgoing century and look forward to the next with an eye toward what phenomena have motivated change. Technology, especially the airplane, television, computers, and the Internet, was a common answer. Regarding the Internet and the communications revolution, the overwhelming sense among the group was that of cautious confidence based on a belief that the Internet could be a powerful equalizer in society but also could be used to engender divisiveness. Fannie Mae CEO Franklin D. Raines said science and technology played an unprecedented and very personal role in the lives of individual people. Raines also lamented the fact that, despite its potential to bring people together, the Internet has followed most other technological and economic advances in its unequal distribution. Media executive Stan Lee expressed concern that the Internet is just as easily used to disseminate the negative as well as the positive. Walt Disney CEO Michael D. Eisner described a fundamental change in the way people communicate with each other because of technology that has freed them from the constraints of person-to-person contact, thereby altering the way communication is conceived. Martha Stewart also spoke of these changes, but with more trepidation. AOL Chairman Stephen M. Case agreed with the others that the key to making technology work for society is to develop ways to increase access by encourage those who have been left out to participate, and by helping them get there.

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