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Volume 2, Issue 13:  Wednesday, February 2, 2000

  • "Filing Offers a Way to Find Microsoft Violated the Law"
    New York Times (02/02/00) P. C8; Lohr, Steve

    Harvard legal scholar and Internet expert Lawrence Lessig yesterday submitted his friend-of-the-court brief to Judge Thomas Penfield Jackson, addressing how product tying laws relate to Microsoft's bundling of Windows and Internet Explorer. Lessig's brief was not written in support of either the Justice Department or Microsoft, and experts believe both sides will use the brief to back their arguments. In Microsoft's favor, Lessig says the company's product tying had "obvious benefits" to consumers as well as programmers. In 1998, a federal appeals court ruled that Microsoft could bundle the two products if consumers benefited as a result. If the 1998 ruling applies to the current suit, Microsoft's bundling was not illegal, Lessig writes. However, Lessig questions whether the previous ruling applies, since the court was ruling on a "consent decree" between the federal prosecutor and a potential defendant. Lessig says there is "no reason to read an opinion interpreting a consent decree as interpreting the contours of antitrust law." The application of tying law to software is "unsettled," and difficult to determine because the laws are written for more tangible products such as cars and tires, Lessig says. The issue of software bundling as an antitrust violation should center on whether a dominant firm practices "strategic bundling" for anticompetitive purposes, rather than on whether the products are linked through contract or software, Lessig suggests.

  • "Many Firms Fail to Meet China Deadline on Encryption"
    Wall Street Journal (02/01/00) P. A18; Forney, Matt

    Many foreign and domestic companies in China have failed to give the government information on the commercial encryption software they use. Some companies simply could not meet the Jan. 31 deadline, while others, such as Chubb Group of Insurance, have defiantly refused. Many companies have complained that the new regulations put proprietary information at risk, as they require that companies list which employees use the encryption software, what computer they use it from, and the employee's telephone number and email address. Although computer experts say that China probably would not be able to break encryption codes based on such information, the fact that the Ministry of State Security--the Chinese equivalent of the CIA-- is requesting it has made some companies uneasy. The government says that only about 1,000 companies have turned in the appropriate information so far, a figure that falls far short of the government's demand that every individual and company using even the most basic encryption devices be registered. High-tech analysts say that the new regulations, particularly the provision that prohibits the use of foreign-made encryption software in computer products, will cause China to lag behind the rest of the world in developing e-commerce.

  • "IBM Pushes XML Adoption With New Spec"
    CNet (01/31/00); Wong, Wylie

    IBM has developed a new, XML-based platform for developing e-business contracts. Trading Partner Agreement Markup Language provides companies with the components needed to assemble a basic electronic contract, allowing contract developers to choose characteristics such as whether the document will be a purchase order or invoice and whether it will be sent via email or a Web site. "It's a generic way to enable all the things you need in a contract," says IBM XML technology director Marie Wieck. The new specification will significantly ease e-business, says Giga Information Group analyst Phil Costa. "Most companies have worked out trading agreements manually and implemented them in [software] code. That increases implementation time and makes it difficult to change agreements," says Costa. "[This] will allow companies to add and modify agreements much more quickly, ultimately making the business more agile."

  • "Are You Ready for the E-Business Revolution?"
    San Jose-Silicon Valley Business Journal (01/31/00); Nucifora, Alf

    Large corporations are leading the charge to leverage the capabilities of e-business, yet small businesses stand the most to gain by incorporating e-business technologies and strategies into their business models. For the small business that takes advantage of technological opportunities, e-business is the great leveler. Never before has such total global reach been a possibility for the small business. The small business that hopes to survive, let alone prosper, must have a well-developed e-business strategy, a clear and representative Web site, strong security measures, strong site performance, and a focused attention to the needs of the customer. Goldman Sachs predicts that by 2004 the top five industries for business-to-business e-commerce will be chemicals, generating $349 billion annually; computer hardware and software, $221 billion; industrial equipment, $140 billion; energy and utilities, $133 billion; and agriculture, $124 billion.

  • "White House Cuts Computer Export Curbs"
    Financial Times (02/02/00) P. 5; Dunne, Nancy

    The Clinton administration yesterday announced plans to ease export limits on desktops and laptops. President Clinton says the move aims to minimize the rules restricting widely available computers, while maintaining limits on the most powerful systems. The new rules reduce the limits on computers that run below 12,300 MTOPS. In addition, high tech companies will be able to ship systems under 12,500 MTOPS to restricted countries without notifying the Commerce Department, while the previous limit was 6,500 MTOPS. Unless Congress rejects the proposed changes, the new limits will go into effect in six months. Critics say the new laws are still too strict, considering the rapid gains in computing power. By the end of the year U.S. companies plan to offer individual commercial chips that operate above 5,000 MTOPS, White House officials say.

  • "Computer CODES; Data-Exchange Language XML to bring Faster, Smarter Communication"
    Fort Worth Star-Telegram (01/31/00) P. 21; Nicholson, Leslie J.

    Extensible markup language (XML) is expected to make the future of B2B e-commerce and Web browsing easier and more efficient. XML evolved from hypertext markup language (HTML), which tells a Web browser how to display data on a screen and how to format it for printing, in addition to managing Web links. XML performs these functions as well, but can also indicate what that data represents. "XML is to the Web of today much what the Web of today was to email," says IBM's John Patrick. "In other words, it's quite a jump. XML will bring structure to the Web." XML has the ability to work in any software platform, making B2B transactions between disparate systems and programs more feasible. "It becomes a self-describing piece of information," says Donald DePalma, vice president of corporate strategy at Web globalization firm Idiom. "If you have a tool that can understand XML at each end, it can deconstruct the tag, reconstruct the information, and do something with it." Since XML was introduced in 1996, groups have formed to create standards in the language that will allow people working together track information more easily. Today, many IT companies are scrambling to incorporate XML into their products.

  • "Video Conferencing Can Help Small Businesses to Export"
    Journal of Commerce (02/02/00) P. 11; Mahli, Paramjit

    Videoconferencing is helping small and midsize businesses move into international trade by cutting expenses and saving time. Although the number of small firms involved in exporting has risen in recent years, many companies turn away from new markets due to the initial costs of market research, labor, travel, and time involved. Using videoconferencing technologies small businesses can meet with market experts, buyers, and distributors in real time for significantly less than the cost of meeting face to face. For example, Mulay Plastics used videoconferencing to find potential acquisitions in Brazil. The technology is now becoming a key aspect of overseas business deals, says Mulay Plastics' Jack Shedd. However, Shedd adds that the technology should not completely replace in-person meetings. Companies that lack videoconferencing facilities can access the technology through the Commerce Department, which is working to make videoconferencing accessible at all of its domestic and overseas offices.

  • "NSA System Crash Raises Hill Worries"
    Washington Post (02/02/00) P. A19; Pincus, Walter

    The crash of the National Security Agency's (NSA) computer system for four days last week has prompted concern among legislators, who have contended for several years that the agency's systems are too old to be effective. Both the House and Senate intelligence committees said that although they have increased the NSA budget for three consecutive years to an alleged $6 billion this year, the agency still has not modernized or restructured its information technology networks. The computer crash was said to have cost the agency $1.5 million, although no essential intelligence information was deleted, according to the NSA. The intelligence committees have begun hearings on the NSA computer systems, accusing the agency of spending enormous sums on its global system of communication interception at the expense of its computer-processing capabilities.

  • "Online Banking Fraud Raises More Security Concerns"
    E-Commerce Times (02/01/00); Greenberg, Paul A.; Caswell, Stephen

    Critics of online banking cite the recent security breach at X.com, a California-based startup, as a perfect example of why banks should be cautious in moving operations to the Internet. X.com allowed its new customers to specify the account number from which funds would be transferred in order to set up a new account with the company. However, X.com failed to check whether the person creating the account was allowed to move the original funds. Therefore, anyone with knowledge of another person's account number and check routing numbers could theoretically take money out of that account, transfer it to the new X.com account, and then withdraw it. Fortunately, the company says it is aware of only one incident of theft, where a customer boasted on an Internet chat room of transferring $25,000 from an account and then withdrawing $4,500 from the new X.com account. However, online banking detractors say in the mad rush to move banking operations to the Web banks are pushing security concerns to the back burner, and that banks and customers would be better served if plans to move online were postponed until better security measures were in place. X.com says it has since implemented anti-fraud measures, such as requiring that customers only transfer money from accounts that are in the same name, and mandating that new customers send X.com a copy of a cancelled check before being allowed to transfer funds from an account. However, security experts say one of the biggest new consumer-related scams is to steal checks from mailboxes and then make fake checks, a practice that would completely circumvent X.com's security procedures.

  • "The Importance of Being Earliest"
    Industry Standard (01/31/00) Vol. 3, No. 3, P. 165; Heuer, Steffan

    Internet entrepreneurs are divided over whether it is best to launch a Web site quickly, before it is fully developed, or to wait until it is complete. While speed is imperative among Internet businesses, a badly executed site launch can plague companies just as they are starting out. HandSpring, for example, found that after a major marketing campaign, its site could not adequately handle online orders. As a result, some customers received notification of late delivery, while others received wrong orders. Now, observes Mobile Insights director David Hayden, "they have a growing contingent of dissatisfied customers." Other online ventures maintain that an early site launch is key to a good business. Guru.com, for example, launched its site after just six weeks of development and relied on customer suggestions to continuously upgrade the site. "It's a site, not surgery," says Guru.com CEO Jon Slavet. "Get the product out, let people test it and put a lot of trust in your customers. It builds brand loyalty and a sense of ownership." Although some have clear preferences on when to launch a site, most agree that striking a balance is the safest route. To launch a good site quickly, Internet ventures should take a few weeks to design a well-planned, well-tested architecture, then add features over time, based on customer response. Some also recommend that Internet firms delay a big marketing push until the site has been put to use. Dell Computer, for example, waited 10 days to launch a marketing campaign after implementing a new system. "Sure, you've done a lot of testing," says Dell's John Zoglin, "but you never know." No matter when a company chooses to launch its site, it should first ensure that it will be well received by the public. ActivMedia's Harry Wohlhandler says, "The bottom line is, it ought not to embarrass you when it's ready for prime time."

  • "E-Commerce: Security Tends to Be Last on the List"
    Network World (01/21/00); Gittlen, Sandra

    Businesses should not spend too much money on the security of their e-commerce infrastructure, says Ian Poynter, president of security consultancy Jerboa. "But not spending enough is even more stupid," he adds. Poynter recommends businesses follow three steps when building their e-commerce security infrastructure. One, determine the value of any information to be exposed online. Getting approval to acquire adequate security is easier if the at-risk information is shown to be of real value to the enterprise. Two, be sure the technical people understand from the business people the value of any exposed information, and prioritize security efforts accordingly. Third, do not allow communication problems or unhappy staff to block the development of effective security measures. Building an effective security infrastructure tends to be low on the e-business priority list because it does not generate revenue. Businesses must remember that a security breech will be much more expensive, due to lost revenue and the high cost of adding a security infrastructure to an system not designed with it in mind originally.

  • "Spending Surge"
    Network World (01/24/00) Vol. 17, No. 4, P. 65; Ellerin, Susan

    Network budgets rose by 10 percent last year, according to the 1999 Network World Spending Survey, which aimed to show how much companies spent on different technologies. Budgets rose last year at 78 percent of the companies surveyed, with the biggest IT spenders receiving the largest percentage increases in budget. Respondents devoted 48 percent of their budgets to capital equipment, 37 percent to internal labor, and 15 percent to outsourcing, the survey shows. On average, respondents spent 16 percent more on labor last year, with almost half increasing regular IT staff, and 25 percent boosting contract and temp workers. Capital equipment spending grew an average of 26 percent, making it the area with the greatest spending increase. About two-thirds of respondents deployed major network projects in 1999. Common investments included LAN, WAN, and Internet/intranet upgrades. Meanwhile, only 13 percent started creating a converged voice and data network, and several companies said they plan to hold off on convergence. Many respondents bought hubs, routers, network operating systems, network management tools, Web servers, and firewalls last year, while Layer 2, Layer 3, and gigabit Ethernet switches were less popular but still common. Meanwhile, ATM and token-ring switches were among the least popular investments. Despite last year's budget gains, more than half of respondents said their funding was insufficient, possibly because of the need to support growing numbers of sites and end users.

  • "Financial Services Industry Missing E-Commerce Boat"
    E-Commerce Times (01/31/00); Spiegel, Rob

    Most traditional financial services companies have not made aggressive moves to offer services via the Internet because they are concerned about security and the cost of wrong strategic decisions, and they lack sufficient human resources to support Internet initiatives, according to a new Arthur Andersen report. But such caution is the wrong approach, Forrester Research warns. "Firms that dip their toes into the Internet waters are doomed, because the Net crowns winners more quickly than the offline world," said Forrester analyst Jaime Punishill. The person-to-person financial services provided by traditional firms do not generally appeal to younger consumers, who are not wary of technology and prefer to take a more hands-on approach to their investing. The slower traditional financial services companies move, the greater the opportunity for startup Internet companies to capture large portions of the market, the experts say. The Andersen report, entitled "Thriving in the New Economy: Perception vs. Reality," states that fewer than 25 percent of senior management executives in the financial services industry rate e-commerce a high priority.

  • "Known Quantity"
    Executive Edge (01/00) Vol. 2, No. 1, P. 38; Rothfeder, Jeffrey

    Of all the resources that companies have at their command--capital, real estate, labor, and knowledge--knowledge is the most difficult to work with, says Larry Prusak, executive director of the IBM Institute for Knowledge Management in Cambridge, Mass. However, as knowledge management success stories have shown, it is worth the effort to figure out how to exploit enterprise-wide knowledge. The single largest obstacle to effective knowledge management is business culture. Though sharing does not come naturally to many in the corporate world, an effective knowledge management strategy requires that teams, networks, and communities take precedence over individuals and proprietary knowledge. A GartnerGroup survey of 800 North American and European companies found that 90 percent were pursuing a knowledge management strategy. "It won't be enough in the future to collect information," according to one CEO. "It will become vital to add value to what is collected and utilize this newfound knowledge for managing the business."

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