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Volume 2, Issue 9:  Monday, January 24, 2000

  • "Developers Rush to Meet Demands of E-Commerce"
    New York Times (01/23/00) P. 3; Murphy, Todd

    With e-commerce retailers expanding at a rapid clip, some real-world issues are emerging. A primary concern is finding sufficient warehouse space in different parts of the country to ship consumers' merchandise within hours of orders being placed online. This need is creating a bricks-and-mortar demand that commercial developers are acting quickly to fill. Trammell Crow, for example, has joined with AMB Property in developing two commercial buildings in Portland, Ore., to lease to e-retailers and to the companies that provide warehousing and delivery for them. When completed, the buildings will be located on the grounds of Portland International Airport and configured to make it easy for loading equipment to maneuver and pick up goods. Trammell's Steven Bradford says, "We feel like it's the next generation. It's the logical extension of e-commerce. The closer you can get to the air cargo center, the quicker your delivery time." However, most airports have limited land available. This makes the properties surrounding major terminals even more valuable. Still, for some e-businesses proximity to large airports is not as important. Amazon.com, for instance, added approximately 2.7 million square feet of distribution space nationwide in the last year in such remote areas as Coffeyville, Kan.; and McDonough, Ga. The firm pays more attention to being geographically close to potential customers and delivering to them through the Postal Service.

  • "Wiretapping Unwarranted?"
    Wired News (01/21/00); McCullagh, Declan

    Privacy groups have filed a brief with the U.S. Circuit Court of Appeals for the District of Columbia to strike down surveillance rules created by the FCC on grounds that the rules give law enforcement agencies too much tracking and surveillance power, including the ability to know what numbers are dialed during a phone call. The Justice Department is defending the FCC on the lawsuit, and argues that police should have the ability to monitor the Internet and other packet communications. The ACLU, Electronic Frontier Foundation (EFF), and Electronic Privacy Information Center are among the groups that signed the brief. The government is expected to respond to the suit in March and oral arguments will take place in May, according to the EFF. The rules would allow law enforcement agencies to get Internet transmissions without a warrant by sending an order to the telephone company that carries packets rather than getting a full warrant against the ISP providing the packets, according to the brief.

  • "FTC Names Groups to Privacy Panel"
    TechWeb (01/21/00); Mosquera, Mary

    The FTC has filled out the roster of its Advisory Committee on Online Access and Security, which will hold its inaugural meeting on Feb. 4. The committee will attempt to resolve differences between online businesses and public interest groups over consumer privacy rules, including the issues of consumer notice and choice. Committee members include representatives from the Direct Marketing Association, AOL, Microsoft, Consumers Union, ExciteAtHome, DoubleClick, and the Electronic Privacy Information Center. "The committee will be working on some of the most difficult issues for achieving real privacy for individuals online," says Deirdre Mulligan of the Center for Democracy and Technology.

  • "Racing for Slice of a $350 Billion Pie, Online Auto-Sales Sites Retool"
    Wall Street Journal (01/24/00) P. B1; Warner, Fara

    Online auto sellers are starting to integrate the lead generation and direct sales models as competition in the industry heats up, reflecting the convergence of online sales and traditional retail. For example, Autobytel.com today will announce plans to let users buy cars directly from its site at a fixed price. In the past, Autobytel focused on lead generation, with buyers and dealers ultimately negotiating car prices. The new "click and buy" option is seen as a response to competition from direct sellers such as CarsDirect.com and CarOrder.com. The 200 dealers Autobytel already works with will list cars from their lots on the site at a fixed price. Microsoft says its CarPoint site will enable direct sales later this year. Direct sales offer immediate price quotes and allow consumers to avoid contact with dealers. Online car sellers stand to gain part of the huge U.S. car market, which totaled $350 billion last year. However, only 2.7 percent of new cars were sold online in 1999, and all of those sales went through a dealer. Companies such as CarsDirect purchase cars from dealers and deliver them to buyers. This year car sales over the Internet are expected to increase to 5 percent, but the industry will become more competitive as dealers move into the online business.

  • "Medtronic to Join Microsoft, IBM in Patient-Monitoring Venture"
    Wall Street Journal (01/24/00) P. B12; Burton, Thomas M.

    IBM is participating in a venture with Medtronic to allow cardiac patients to transmit, and eventually receive, heart monitoring information over the Internet. IBM will provide electrical circuitry and hardware for the project, while Microsoft has been tapped to supply software. "This has a major potential to change outpatient care," says Douglas P. Zipes, Medtronic consultant and chief of cardiology at the Indiana University Medical Center. The goal for the venture is to enable implanted devices to download patient information, which will be transmitted over the Internet to the patient's doctor. Eventually, the doctor may be able to alter the patient's treatment by sending instructions to implanted pacemakers or other devices over the Internet. All of this could take place without any action by the patient. The venture, to be called Medtronic.com, is expected to be operational in 18 months.

  • "RSA and VeriSign to Develop Secure Wireless E-Commerce"
    E-Commerce Times (01/19/00); Beale, Matthew W.

    RSA has teamed up with VeriSign to develop a secure wireless end-to-end e-commerce platform. The alliance intends to offer its services worldwide to enable application developers and carriers to offer services as secure as wired Internet transactions, says VeriSign CEO Stratton Sclavos. The two companies intend to integrate RSA's BSAFE software with VeriSign's WAP-based server digital certificates and applications. RSA President Art Coviello believes the joint venture will allow wireless business transaction become more commonplace, thereby making people lives easier.

  • "E-Commerce Step-by-Step VPNs for B2B?"
    Computer Currents Online (01/11/00); Blacharski, Dan

    Business-to-business (B2B) e-commerce is burgeoning in part because of virtual private networks (VPNs), which allow small and midsize businesses to enjoy the efficiency and cost reductions once accessible only to the Fortune 500. Big businesses are driving the use of B2B e-commerce, requiring the small companies they do business with to get online. VPNs, which encrypt and authenticate transmissions, afford businesses taking part in B2B e-commerce private and secure Internet links with one another. A conventional installation of VPN involves setting up personal gateway hardware, but VPN installation can also be outsourced through VPN software that can be merged with an existing server. These days, installation is not even necessary in order to make use of VPNs. Services such as Imperito Networks allow companies to sign up to use a VPN on a monthly basis. Although VPN installation can be expensive, once in operation, the service has relatively low upkeep costs and can go a long way in helping a company compete.

  • "Web Site Upgrades: Build or Buy?"
    Computerworld (01/17/00) Vol. 34, No. 3, P. 1; Sliwa, Carol

    As companies expand business Web sites, they must decide whether to build their own technology or to buy off-the shelf e-commerce suites. Although building the technology allows a company to customize the site to their exact needs, this approach can be time consuming and requires significant resources. Meanwhile, buying an e-commerce suite lets a company launch a site quickly, but can require customization or restrict opportunities over time. Off-the-shelf products from vendors such as BroadVision, IBM, Intershop Communications, and Open Market help companies with e-business needs such as establishing storefronts and processing transactions. Experts say commercial suites have significantly improved and many companies are reevaluating developing their own software because of high maintenance costs. However, Yankee Group analyst Paul Scarpa says experienced online vendors such as CDNow might favor building their own technology. CDNow has its own technical staff that maintains software code, allowing the company to change its site rapidly. "We found it costs just as much to integrate third-party technology as to build upon our own proprietary platform," says CDNow Chief Development Officer Michael Krupit. Although analysts note that some off-the-shelf solutions are in their early stages and need refinement, they say packaged products might be adequate for sites with limited needs and budgets.

  • "Construction and the Internet: New Wiring"
    Economist (01/15/00) Vol. 354, No. 8153, P. 68

    Internet business-to-business (B2B) companies are offering all levels of the construction industry a way to cut costs and save time. Of the $650 billion spent annually in the U.S. on construction, an estimated $200 billion is spent to correct mistakes and pay for delays. No wonder the construction industry is greeting Internet B2Bs with such enthusiasm. For each of their clients, these firms will develop an individual Web site that allows all involved in the project, from architects to carpenters, to communicate, as well as post or review project information via the site. In addition, all project communication and information is on permanent record. The service greatly reduces communication time and the possibility for errors to occur. B2B services cover residential as well as commercial construction. Instead of setting up sites for individual projects, builder and supplier clients, could establish Internet access with each other, allowing for the speedy and efficient delivery of materials while cutting down on paperwork and, again, human error.

  • "Internet Power Sparks Business"
    InformationWeek (01/17/00) No. 769, P. 65

    InformationWeek recently held a panel discussion with three top IT executives on the topic of how IT and the Internet will change their businesses this year. Participating in the discussion were Dave Bent, CIO of Visteon Automotive Systems, Ford's auto-parts business division; Rob Carter, CTO of Federal Express; and John Keast, CIO and CTO of Branders.com, a startup that will provide online ordering of company branded products. Asked how IT shapes core competencies, Bent says technology is becoming Visteon's product. "We transition from a core competency of manufacturing to that of technology development, selling and bringing technology to the customer," Bent says. Carter says FedEx differentiates itself from competitors by providing information that benefits the customer. Meanwhile, Keast emphasizes the role of IT in integrating the value chain. The same information that a company uses internally is also valuable to customers, says Keast. All three executives agree that information delivered to customers through the Internet is an important part of business, and sometimes selling information is more profitable than selling their main products. In terms of specific technologies that help determine core competencies, Carter notes the importance of XML in enabling business-to-business transactions. Bent says Visteon emphasizes voice recognition, which makes information easier for drivers to access. Keast notes the importance of minimizing the amount of data entry and simplifying navigation so consumers will not be frustrated. Finally, the executives note that as products become more linked to the Internet, the roles of IT and operations are increasingly overlapping.

  • "Net Technology Connects Data With Marketers"
    Advertising Age (01/17/00) Vol. 71, No. 3, P. 2; Mermigas, Diane

    DigitalConvergence.com's keystroke automation technology (KAT) can instantly connect TV sets to specific Internet sites, and Sears, Roebuck & Co. and Forbes are already making plans for the technology. KAT gives users direct access to online information when they click on an icon during TV programming or when they scan a printed code. Forbes intends to mail the required software and scanner to over 800,000 subscribers before its September "Best of the Web" supplement, and readers will be able to view Web content pertaining to the products, subjects, or services featured in print. Forbes eventually wants to make all its content interactive. Sears plans to refer consumers to specific sales and product information online by scanning a code printed in newspaper inserts. Advertising executives say the possibilities for KAT are limitless when it comes to strengthening consumer ties, launching new businesses, and increasing sales, and DigitalConvergence.com says it can provide advertisers with general demographic and preference data on its registered users, without names or email addresses. The company expects to have over 100 participating advertisers by KAT's midyear launch. Other big advertisers expressing interest in KAT include CitiBank, AT&T, Colgate-Palmolive, Toys 'R' Us, Warner Bros., and IBM. Warner Bros. intends to use it to provide access to streaming film trailers, contests, and local show data. Advertisers will be able to track consumers directly.

  • "Internet Virus Boom"
    InfoWorld (01/17/00) Vol. 22, No. 3, P. 36; Leon, Mark

    Although the New Year's weekend did not give rise to the army of viruses that many feared, businesses still need to be wary, as such viruses will only get more vicious and speedy in the future. The Internet and the interconnectivity of networks has helped hackers spread viruses quicker and more effectively than ever before. Computer security experts contend that when PCs are almost all Windows machines running the same applications, such as Word and Excel, they are extremely vulnerable to viruses, just like monocultures in nature. Unfortunately, this is basically the situation that computers are in, according to virus researchers. Experts also warn that hackers now can write viruses in macro languages, such as Word Macro and VBScript, that can facilitate the creation of new viruses. Although there has been a corresponding proliferation of antivirus software solutions, many specialists warn IT managers not to buy into the hype and go overboard; however, IT managers do need to take adequate precautions. Just as viruses are becoming smarter, so is antivirus software. Both NAI and Symantec are currently working on programs that use heuristic technology to alert computer users to suspicious code. NAI's program is called the AutoImmune system, and Symantec's product is the Digital Immune system. Although neither system is completely operational, the basic idea is that once suspicious code has been identified, the software automatically transfers a copy to the vendors' lab. Once the code has been analyzed and is thought to be a virus, specialists will design a signature file and a fix, which will then be transferred on the Internet as "automatic upgrades."

  • "AOL Shakes Up Open Access"
    Telephony (01/17/00) Vol. 238, No. 3, P. 8; Quinton, Brian

    AOL's recent announcement that it planned to merge with Time Warner changed the outlook for the company's future in broadband and also signaled a new strategy on open access. For years, AOL has been a chief supporter of the OpenNet Coalition, which favors federal laws permitting all ISPs to use cable owned by companies such as Time Warner and AT&T. In conjunction with their purchase of Time Warner--along with its massive cable network, 12 million cable television subscribers, and 5 million Road Runner ISP customers--AOL announced that it no longer backs any plan that would involve the government in establishing open access. Instead, says Time Warner Chairman Gerald Levin, who will become CEO of AOL Time Warner, the company now advocates a totally free market solution. Greg Smith, co-director of the OpenNet Coalition, stressed that AOL remains a member of the group and reiterated the coalition's dedication to open access. Others were less charitable to AOL. Consumers Union and the Media Access Project spoke out against AOL's turnaround, and Center for Media Education Executive Director Jeffrey Chester described AOL Chair Steve Case as a traitor to the cause.

  • "Data Centers: Growing--and High-Priced--Niche"
    Washington Business Journal (01/20/00) Vol. 18, No. 37, P. 48; Martin, Maurice

    Data centers are becoming increasingly popular in areas that have high concentrations of technology companies. Data centers are basically big rooms full of big computers that service serve vast quantities of data to the Internet. From a commercial real estate viewpoint, data centers are an anomaly, as they mostly house non-human occupants. However, mechanical occupants can sometimes be more demanding than human ones. They are certainly more expensive to build for. Data-center machines run uninterrupted 24 hours a day, seven days a week. The physical requirements of a data center include on-site electrical generators, the capacity to hold significantly heavier floor loads, higher ceilings, fire suppression systems that do not use water, humidity control, and minimal windows. CB Richard Ellis' Cathy Delcoco says, "These days, data centers account for about 20 to 25 percent of the space that's newly built or leased in this area." Even if developers are not currently looking for data-center tenants, it is a good idea to adjust their thinking now for future office design.

  • "Brick-and-Mortars in 2000: Payback Time"
    Internet World (01/01/00) Vol. 6, No. 1, P. 31; Andrews, Whit

    Armed with decades of retail experience, brick-and-mortar companies are preparing to tackle e-business. Traditional retailers such as Barnes & Noble and Williams-Sonoma plan to battle Internet-only ventures by combining Web strategies with traditional sales strategies. For example, Barnes & Noble has begun accepting returns of books sold online at any brick-and-mortar branch, while Williams-Sonoma plans to develop a combination online and offline gift registry. Maidenform is considering offering Web coupons for use at both online retailers and brick-and-mortar sites. Unlike Internet-only firms, traditional retailers often view Internet sales as an additional opportunity for growth, alongside models such as catalogs and outlet stores. Maidenform's Cindy Davis predicts that the company's new Web site will mirror its outlet store strategy, which garners about 25 percent of the company's revenue. Even so, Davis maintains that Maidenform's Web strategy is important: "You need to be in this medium, and available to your customers." Offline retailers also have the advantage of distributing resources to other firms and sales models, whereas online ventures rely on keeping customers online throughout the shopping experience, from product selection to delivery. Maidenform is currently testing a partner's system that may enable it to outsource the commerce and fulfillment process. Meanwhile, online retailer C-Tribe has begun selling gift certificates for brick-and-mortar firms. "We're going to drive consumers back into stores," says C-Tribe president Tim Brennan.

  • "The Myth of Scalability"
    Industry Standard (01/10/00) Vol. 3, No. 1, P. 154; Carr, Nicholas G.

    Although the ability to grow rapidly is crucial among Internet businesses, it may not be useful in the long run, says Harvard Business Review senior editor Nicholas G. Carr. The ability to scale became important in the traditional economy because the bigger a company became, the more expensive, and consequently, more difficult, it became for a competitor to achieve the same assets. Yet Carr finds that most e-businesses differ in that they are built upon knowledge assets rather than tangible assets, which means that while getting started is not expensive for Internet companies, neither do their competitors need much money to get started. The question of scale becomes more important when one considers that many Internet businesses are rapidly acquiring others with the hope of building margins. This consolidation is expensive because many e-businesses have achieved extraordinary valuations. Yet Carr says that the expense may not even be necessary because it has not been proven that scale guards against new competitors. Carr finds that another problem with scale is that it creates bureaucracy, which can stifle the creativity and originality that most Internet businesses rely on to succeed. Carr maintains that scale can be an asset among some e-businesses, particularly those that rely upon physical properties. For instance, e-commerce delivery firms such as Webvan can prevent competitors from rising by accumulating a fleet of delivery trucks that would be expensive for new rivals to match. Yet Carr finds that among most e-businesses, continuously entering new markets is more important than trying to use scale to dominate a single sector.

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