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Volume 2, Issue 33:  Wednesday, March 22, 2000

  • "Loss From Hack Attacks Doubles to $10 Billion"
    Los Angeles Times (03/22/00) P. C1; Piller, Charles

    The cost of cyberattacks to U.S. businesses doubled to $10 billion in 1999, according to estimates from the Computer Security Institute (CSI). The research group today is releasing the results of its survey of 643 large organizations, showing estimated losses of $266 million in 1999 from cybercrime, which is more than twice the amount lost in 1998. Using the figures obtained in the survey, CSI extrapolated that the total cost of cybercrime in the U.S. is more than $10 billion a year. Most of these financial losses are attributed to financial fraud and theft of corporate information. The rise in cybercrime is likely to continue as the Internet grows, experts say. The Internet spawned 59 percent of the computer attacks reported by the CSI survey respondents, while internal computers launched 38 percent. Hackers now have software programs that can automatically scan computers linked to a public network for weaknesses. Furthermore, always-on cable modem and phone-line Internet connections allow hackers access to any PC without a firewall whenever the system is turned on. E-commerce poses a security threat because Internet servers must often reside outside of firewalls to provide access to consumers. Meanwhile, many organizations are apathetic about security, says Gartner Group analyst John Pescatore.

  • "In E-Commerce Tax Talks, Status Quo Triumphs--For Now"
    TheStandard.com (03/20/00); Goldberg, Michelle; Asbrand, Deborah

    Recent reports in the media seem to suggest that the short-term outcome of the Internet tax debate is set, but uncertainty remains regarding the future of e-commerce. While the congressional commission studying e-commerce taxes concludes its meetings in Dallas this week, the New York Times' David Cay Johnston reports that it is almost certain that the panel will not reach a consensus, which would result in a default and the preservation of a tax-free Internet. He says the business bloc of the e-commerce group has backed the plan of Va. Governor and panel Chair James Gilmore to keep the Internet tax-free until 2006. The Wall Street Journal says, Gilmore, who already has the support of the commission's conservative bloc, elbowed his way into a conference call between representatives from Time Warner, Gateway, MCI WorldCom, AOL, Charles Schwab, and AT&T, and persuaded the business members of the group. With both the conservative and business blocs, Gilmore has the two-thirds majority needed for a vote against Internet taxes. Still, imposing Internet taxes is not a "political impossibility," as Johnston reports. There is plenty of support for taxing sales made over the Internet, as the Associated Press and other newspapers have reported. States such as Texas rely heavily on sales taxes. In fact, sales tax accounts for 59 percent of the state's revenue, according to the Dallas Morning News. Moreover, J.C. Penney, Tandy/Radio Shack, and Compaq are among the retailers that continue to tax all purchases, while Dell Computer collects taxes on online sales in Texas because the company has a physical presence in the state. Nevertheless, there is a loophole to a tax-free Internet in use taxes. Although the Internet Tax Freedom Act of 1998 bans new taxes, states can fall back on the use tax, an old tax dating back to the 1930s that some 40 states have on their books.

  • "IDC Forecasts Worldwide Appliance Server Market Explosion"
    ENT Magazine Online (03/20/00); Slepner, Isaac

    The worldwide appliance server market will be worth $11 billion in 2004, up from less than $1 billion in 1999, forecasts a new International Data (IDC) report. IDC believes network attached storage (NAS) will account for more than half of the estimated 2004 market value, but feels the Web server segment will be the fastest growing area of the appliance server industry. IDC's Mark Melenovsky attributes the anticipated industry explosion to the fact that service providers, dot-coms, and small businesses "are demanding reliable and scalable solutions to provide dedicated functions for their organizations." However, IDC cautions the enormous growth of the appliance server market will negatively impact the general-purpose server market and prompt general-purpose vendors to reshape their products to become similar to appliance servers.

  • "Microsoft Probes Leak of a New Windows Version"
    Wall Street Journal (03/22/00) P. B10

    Microsoft is investigating the possibility that the source code for Whistler, an early version of an update to Windows for consumers and businesses, was prematurely released Monday onto several Web sites. "We don't want a beta version of something out there and consumers thinking it's a final version," says Microsoft's Dave Fuhriman. Whistler, scheduled for official release in 2001, utilizes a code similar to that of Windows 2000 and Windows NT.

  • "Sunnyvale's Patent Library a Victim of Information Age"
    SiliconValley.com (03/21/00); Kwan, Joshua L.

    The Internet threatens the survival of the Sunnyvale Center for Innovation, Invention & Ideas, a 37-year-old library in the San Jose, Ca., area housing a wealth of patent information. The library, nicknamed "SCI-cubed" by area residents, must figure out how to boost its revenue and profit against rivals such as IBM and the federal government, which each maintain an online database of U.S. patents issued since 1971. Viewers can access the IBM and U.S. Patent Office Web databases for free, as opposed to the $1 per minute fee charged by SCI-cubed, and print copies of patents for $3 each. Although the library currently charges only $2.90 per printout, it used to charge $6 per printout. "If they're counting on making money by providing basic patent information...those days are over," says IBM Almaden Research Center engineer Steve Boyer. Numerous others fail to see the library as a source of knowledge either unique or unattainable in another, more convenient manner. However, SCI-cubed librarians believe the Internet cannot replace the human expertise of the patent library's employees and feel Sunnyvale is and will remain important to individual inventors seeking information and guidance. The librarians also note the patent library contains copies of patents the IBM and government databases lack, including ones issued centuries ago during the early days of the patent system.

  • "U.S. Government Acknowledges IT's Importance to Productivity"
    InformationWeek Online (03/20/00); McGee, Marianne Kolbasuk

    The Federal Reserve Board will soon release a report detailing the results of a study showing that IT has a positive impact on employee productivity. The report says approximately $50 billion of the total $70 billion increase in labor productivity can be attributed to the corporate use of computers and related technology. The study also found that during the past five years labor productivity grew at an annual rate of more than 2.6 percent, a startling contrast to the average 1.5 percent annual growth rate seen for the period between the early 1970s and the mid 1990s.

  • "Report: Online Retailing Quadrupled in 1999"
    InternetNews.com (03/20/00); Cox, Beth

    A recent BizRate.com survey of more than 1.3 million online buyers revealed Internet retail sales increased from $4.5 billion in 1998 to $16.2 billion in 1999. BizRate.com's fourth-quarter 1999 Consumer Online Report also discovered the average household income of first-time Internet buyers was $67,100, as compared to an average household income of $81,200 for regular online buyers. Further, the study found that online buyers in 1999 placed more than 176 million retail orders, representing a nearly 300 percent increase from the previous year. BizRate.com estimates the retail e-commerce market will total $40 billion in transactions in 2000.

  • "Chipless Firm Stirs Commotion in Chip Market"
    Wall Street Journal (03/21/00) P. B1; Takahashi, Dean

    Rambus is making waves in the PC microprocessor chip market with Intel's endorsement of its advanced memory chip technology. Rambus is unique in that it does not manufacture its powerful high-speed memory chip itself, but instead licenses the technology to others, including those in the PC, video game, and communications markets, and charges royalties for its use. Toshiba began using Rambus technology in 1992 and Silicon Graphics, Nintendo, and Sony followed suit in 1994, 1995, and 2000, respectively. Although the Rambus chip can transfer as much as 1.6 GB of data per second between a memory chip and surrounding chips, versus the 800 MB typical for rival chips, the chip industry remains reluctant to embrace the technology. Manufacturers claim the 1 percent to 3 percent increase in performance seen when using a Rambus chip is not a significant enough improvement to justify the chip's high royalty price. Rambus sells its technology for 2 percent of a chip's purchase price, making it nearly 10 times more expensive than the industry-developed alternative DDR memory chip, which outperforms standard memory chips. Regardless, the adoption of the Rambus technology by Intel has many believing Rambus will eventually become a strong competitor in the chip market and perhaps, according to Morgan Stanley Dean Witter analyst Mark Edelstone, "the most powerful intellectual-property company on the planet."
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  • "High-Tech Matchmaking"
    Halifax Herald Online (03/21/00); Hoare, Eva

    IT players worldwide are preparing for Softworld 2000, a business forum considered to be the top deal-making event in the IT industry. Scheduled to be held in Halifax, Nova Scotia, in October, Softworld brings companies together to form international partnerships, joint ventures, or mergers. "It's kind of like computer dating for IT companies," explains John Hamm, premier of Nova Scotia. Although the actual conference will be held in October, companies worldwide have already begun to make business matches online, says IBM's Rick Andrews, chairman of Softworld. In a measure intended to encourage IT growth in Nova Scotia, the region has joined major sponsors in contributing $100,000 to the event. "Many of our traditional industries, our resource-based industries, while they're still very important, have very limited opportunity to grow," says Hamm. "Here we have an industry that will grow and this is where we have to focus our attention."

  • "At 2000 Global Internet Summit Government Issues Are Topic No. 1"
    Potomac Tech Journal (03/21/00) Vol. 1, No. 8, P. 5; Robblee, Steve

    Internet industry executives, lawyers, and politicians met for the first Global Internet Summit last week at George Mason University to discuss topics including software encryption, telecommunications, government regulations, and national sovereignty. Improved bandwidth will help eliminate traditional long-distance phone companies as Internet service providers (ISPs) will be able to add voice services to their networks, says PSINet CEO William Schrader. In time, he said, telecom services will be integrated with Internet services. The price of telecommunications services needs to drop in some nations in order for Internet-based initiatives to really work, says Patricia Hewitt, Britain's minister for e-commerce and small business. She says that in Britain competition is driving prices down but the nation is still behind the U.S. in terms of e-business development. The restrictive U.S. policy toward the importation of encryption software designed outside of the United States must be relaxed, says Michael Nelson, IBM's director of Internet strategy. Nelson says foreign encryption software is superior to U.S. products. He also predicted that national governments will experience a loss of sovereignty as Internet technology empowers individual citizens. Governments will have less control over the distribution of information in the near future, Nelson said.

  • "Consulting Firms Struggle With New E-Business Models"
    InfoWorld (03/17/00) Vol. 22, No. 12, P. 1; Bowen, Ted Smalley; Scannell, Ed

    The Big Five consulting firms are struggling to find a role in the fast-paced world of e-business, as their traditional position is challenged by Internet startups and regulators. In an effort to stay competitive and attract IT talent, the Big Five are creating new business models. For example, Andersen Consulting recently announced that it has teamed with Microsoft to establish a services company called Avanade for Internet and corporate projects based on Windows 2000. Top consulting firms have been restructuring themselves due to pressure from regulators to split auditing and accounting operations from consulting businesses. KPMG and PricewaterhouseCoopers have already spun off their consulting practices, and Andersen Worldwide plans a similar move. Ernst & Young last month announced that it will sell its consulting branch to Cap Gemini, while Deloitte & Touche is experimenting with different structures. Beyond structural changes, consulting firms are trying to leverage e-business though a series of alliances and investments in e-commerce firms. Although Fortune 1000 companies look to top consulting firms for IT advice, experts say these same companies will turn to Web startups such as Scient or Razorfish for help with Internet projects. The Big Five are not sure of which businesses to pursue at this time, but to succeed in IT services consulting firms need to become faster, more educated, and better at marketing themselves, says Frank Petersmark, vice president of IT at insurance company Amerisure & Co.
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  • "Easi-Order"
    Computerworld (03/20/00) Vol. 34, No. 12, P. 1; Anthes, Gary H.

    Easi-Order, the wireless home-shopping service offered by British grocer Safeway U.K., illustrates the likely future of grocery shopping. Jointly developed by Safeway and IBM, Easi-Order uses advanced data-mining technologies and specially adapted Palm III personal digital assistants (PDAs) to offer to customers personalized online grocery shopping services. The service uses a customer's past purchases to suggest a possible shopping list, then enables the user to modify and send the list to the nearest Safeway store, which then assembles the order. Eventually, says Safeway CIO Mike Winch, Easi-Order will be become a full-service Internet portal, offering products and services far beyond Safeway's product portfolio. Easi-Order is currently available only in one store, but Safeway and IBM plan to scale to 200 locations within three years. Cost is an issue: Safeway pays $400 for every Palm III it gives away, for example, but the company expects that greater customer involvement will soon scale down the costs. Safeway leverages the enormous 3 TB customer information databases that it has been building over the last four years to offer personalized service to the Easi-Order customers, building improved customer relationships and loyalty. The service is already generating good reviews from its 500 trial customers. "I know them, they know me, and they know the boys," says Anita Morgan, who spends at least $300 a month through Easi-Order and has come to know the Safeway staff who handle her order. "It's nice, actually."

  • "Companies Strive for Simpler Security"
    InformationWeek (03/20/00) No. 778, P. 94; Kahaner, Larry

    Companies looking to improve computer security want simple products that can integrate easily with existing systems. Tivoli Systems created its SecureWay line after finding that only 5 percent of its clients were engaging in e-commerce, primarily because users did not want to change systems and procedures for security purposes. The SecureWay series is flexible, providing security and network policy integration through a single administrative view. Emerging hardware-authentication devices are reducing the need for passwords, which 98 percent of large companies still use as their primary way of verifying user identities, according to a recent Forrester Research survey. Passwords are the reason for 20 percent to 40 percent of help-desk calls, experts say. Compaq and other companies now offer biometric products and smart cards that offer to replace passwords, saving companies time and money. Smart cards authenticate a user's identity when swiped through a reader attached to the PC, and users can enter multiple PCs with the same card. However, some smart cards require the use of a PIN, which users might forget, and the devices can be lost or stolen. Alternatively, companies could implement biometric devices, which confirm a user's identity by reading unique parts of the body such as a fingerprint or iris. Fingerprint-identification devices, sold by Compaq and NEC Technologies, provide access to one unauthorized user for every 500,000 tries--an authorized user is denied access once in every 2,000 tries. Iris-identification devices, available from IriScan, are considered the most secure type of biometric security, allowing only one unauthorized user in 1.2 million tries.

  • "IT Demands Directory Choices"
    InternetWeek (03/20/00) No. 805, P. 1; Wagner, Mitch; Zimmerman, Christine

    Customers are now demanding that vendors support multiple directories, and vendors are responding with directory synchronization efforts. Cisco last week acknowledged that its exclusive support for Microsoft's Active Directory angered many customers, and is now retreating from the approach. Cisco has postponed plans to develop a version of Active Directory for Unix and says it will integrate a range of directory services into its products, although the company has not announced support for any specific non-Microsoft directories. Many companies are struggling to maintain NDS along with Windows NT domains and other directories for specific applications. The situation will worsen as companies implement Active Directory during the migration to Windows 2000, and adopt e-business directories from IBM and the iPlanet group. To help ease the directory problems, IBM, Microsoft, Novell, Oracle, and Sun-Netscape have joined with e-commerce firm Bowstreet to create the Directory Services Markup Language (DSML). DSML is an XML-based standard that allows users to share information among various directories and applications. Last week NetVision released software that will synchronize Active Directory with NDS and other directories, while Novell this summer will ship a product called DirXML for managing multiple directories. Meanwhile, Microsoft will release its Metadirectory Services this spring. Support for multiple directories is becoming increasingly necessary as companies need to make corporate networks accessible to business partners for e-business, experts say.

  • "Solving the ERP Paradox"
    Intelligent Enterprise (03/20/00) Vol. 3, No. 5, P. 52; Riggle, Mark

    The need to source a data warehouse, which makes data consistent and accessible, from an ERP system, which provides mission-critical operational workflow, is clear in light of ERP's lack of decision-support systems, and is a task made easier with the emergence of a new set of tools. Data consistency is usually achieved by addressing data noise, which stems from incorrect or repeated data; multiple-source data, which may differ in value and be incompatible, multidata encoding, which can inadvertently hide code; and data structuring. Additional problems include hard-to-understand legacy systems, a lack of people familiar with those systems, and political problems arising when legacy systems span enterprise units. All told, ensuring data consistency can consume 60 percent to 90 percent of project time and budget. ERP systems can solve all a company's data consistency issues with its ability to use a consistent enterprise data model to span an enterprise, though political problems may still be a risk. ERP must be supported at the highest level and its data format made the enterprise standard because a single department's non-compliance puts the whole system at risk. Finally, data accessibility--the practice of keeping data understandable and navigable to the user--demands understanding of user requirements, available data types and structures, and business processes. The problem that arises after data consistency is achieved is in the dimensional modeling design task phase, in which the data models must be highly abstract.

  • "Who Owns the Airwaves?"
    Network Magazine (03/00) Vol. 15, No. 3, P. 28; Dornan, Andy

    The European Union (EU) may soon take steps to decrease prices for wireless Internet access and unbundle wireless networks. GSM wireless service providers controlling 20 percent or more of the market will be required to give rivals access to their networks. Such new players are expected to be ISPs that would provide Internet access at reduced rates. However, mobile service providers fear that such a move would hinder the progress of high-speed data services. The GSM Association says that deregulation of the networks will remove motivation for existing service providers to enhance their equipment, especially to GPRS technology. Also, wireless service providers argue that those carriers with the largest customer bases would suffer since deregulation means that regulators tend to grant equal amounts of spectrum to all operators, thereby possibly reducing capacity for the largest operators. However, the United Kingdom is now forcing all vendors to open their networks to competitors by year's end despite their market share. Otherwise, the vendors could lose their licenses. ISPs believe that owning the infrastructure provides more control over the network. Ownership of the base station sites and network gear is compelling Freeserve, an ISP, to bid for its own 3G license. Orange also supports deregulating networks since it could build out across the EU without bidding for licenses in each market. Orange wants to provide services in 50 countries by 2003.

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