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Volume 2, Issue 34:  Friday, March 24, 2000

  • "PC Prices Catch a Wave"
    Washington Post (03/24/00) P. E1; Musgrove, Mike

    After a long period of falling, PC prices began rising in September and dropped again slightly in February, reflecting the fast and unpredictable changes that take place in the industry. The average sale price for a PC rose from $772.69 in September to a high of $864.34 in January, when vendors usually cut prices to encourage sales in the slow period after the holidays, according to PC Data. Hewlett-Packard's Tom Anderson attributes the winter prices to the high cost of memory chips following Taiwan's earthquake in September, which struck the island's chip manufacturing plants. Memory-chip prices have since stabilized. Another factor contributing to the recent price drop is that most computer makers in the consumer retail segment have stopped trying to compete with eMachines by offering cheap PCs. Last summer, Compaq, HP, IBM, Acer, and Packard Bell all offered systems priced around $600 in order to rival eMachines. Now IBM has stopped selling home computers in stores, Packard Bell has gone out of business, and eMachines' most recent models are priced between $800 and $900. Gateway chose to not offer a $600 or less PC last fall. Gateway's director of consumer product marketing Mike Ritter says, "A lot of smaller companies jumped into the game with business models that weren't sustainable." Currently, computer prices have leveled out and 75 percent of new computers cost less than $1,000. Offers of free PCs are disappearing, and only eMachines sells a system for $399.

  • "Study Shows 300 Mil Worldwide Web Users"
    Newsbytes (03/22/00); Stone, Martin

    The number of Internet users worldwide will shoot up from 300 million today to one billion by 2005, according to a $1 million study spanning 34 countries carried out by the Angus Reid Group, which operates out of Toronto. The study finds that U.S. and Canadian citizens lead the world in Internet usage, but European and Japanese users are the most likely to use Web-enabled wireless devices. As many as 150 million people are poised to connect to the Internet this year, the survey finds. However, worldwide growth patterns of Internet usage suggest that only a few countries will experience a real boom in Internet use. Ownership of home computers and interest in the Internet is lowest among Eastern and Southern Europeans, the study finds. "Wireless Web access on cell phones and palmtops and public access to the Web in cafes and kiosks must play a greater role" in bridging the digital divide, Angus Reid says. Per-minute phone charges are driving the use of wireless devices in Europe and Asia. Sweden, the Netherlands, Finland, and Australia approach the U.S. and Canada in terms of being Internet-savvy. A greater percentage of Northern Europeans than Southern Europeans use the Internet. About 59 percent of Americans have Internet access, followed by 56 percent of Canadians, and 53 percent of Swedes. Germany has 18 million Internet users--good for third place in Europe--followed by 14 million in the United Kingdom.

  • "Study Finds Gaps in Internet Content"
    New York Times (03/23/00) P. E5; Hafner, Katie

    Two recent reports from the Children's Partnership and the Conference Board suggest ways to help bridge the digital divide in the U.S. by making technology more accessible and relevant to low-income and immigrant groups. The nonprofit Children's Partnership last week released the results of a study showing a shortage of online content oriented toward low-income and immigrant groups. Specifically, the Internet lacks local information about jobs and housing that would be of interest to underserved groups. Based on the results of the study, the Children's Partnership recommends increased funding for community technology centers that can develop content aimed at low-income groups. In addition, the Children's Partnership suggests increased technical training for low-income Americans. The Conference Board, a business research group based in New York, released a report in January showing that first-time buyers account for only 40 percent of computer sales, with the remaining sales attributed to customers buying replacement or supplemental computers. In response to this finding, the Conference Board's Tom Cavanagh suggests that "business will have to reach out to lower-income communities if we're going to get anywhere near universal connectivity."

  • "Hope for Microsoft Settlement Renewed"
    Washington Post (03/23/00) P. E1; Grimaldi, James V.

    Settlement talks between Microsoft and federal government lawyers were renewed recently, leading some to believe the antitrust case against the software giant may yet be resolved out of court. The discussions, mediated by Chief Appellate Judge of the Seventh Circuit Richard Posner, center around serious revisions to Microsoft's business practices rather than the federally-mandated breakup of the corporation sought by numerous government and technology industry officials. Although many are encouraged by the talks, some industry executives remain skeptical, claiming the activity is merely a pretense designed to help each side portray the other in a negative light when the efforts fail. Microsoft's newfound interest in a deal may stem as well from the fact that a decision against Microsoft in the current federal case could seriously damage the corporation's standing in the other 110 pending private lawsuits brought against it in 28 separate states. Regardless, Judge Thomas Penfield Jackson is expected within the next few weeks to rule on whether Microsoft's use of its Windows monopoly is in violation of antitrust laws.

  • "Getting Down to Business"
    San Jose Mercury News Online (03/20/00); Ackerman, Elise; Heim, Kristi

    America Online and Yahoo! are both attempting to enter the profitable B2B e-commerce market and achieve the same widespread brand name recognition among businesses as they have among consumers. AOL unveiled plans to partner with e-marketplace builder PurchasePro.com to create an online exchange that will originally target existing business patrons of AOL and PurchasePro.com but will eventually cater to the needs of organizations of every type and size. Yahoo! has created a directory of 48,000 online businesses and suppliers designed to aid corporate users in researching, pricing, and purchasing products online. Both AOL and Yahoo! face stiff competition in the B2B market from such established e-business companies as Ariba, Commerce One, and ShopNow.com. Prudential Volpe Technology Group analyst Tim Getz claims that the recent activity among consumer e-commerce companies stems from the fact that such sites "are realizing that the business-to-business market is 10 to 12 times larger than the business-to-consumer market." In fact, management consulting firm Boston Consulting Group predicts online B2B transactions will total between $2.8 trillion and $7.3 trillion by 2004.

  • "For U.S. Internet Portals, the Next Big Battleground Is Overseas"
    Wall Street Journal (03/23/00) P. B1; Auerbach, Jon G.; Wysocki, Bernard Jr.; Boudette, Neal E.

    Larger U.S. Internet companies such as AOL, Yahoo!, and Lycos are expanding their brands to Europe, Asia, and Latin America in hopes of establishing themselves before the local competition becomes entrenched. The European portal space is heating up. Lycos Europe just held its IPO in Germany this week, and other companies are expected to follow suit. Yahoo! and Lycos each have a roster of about two dozen foreign portals, AOL about half that many, and Excite nine. Internet growth is expected to be slower in the U.S. than the rest of the world over the coming years, due in part to slashed access rates in other countries, including free monthly access and low phone-fee services. International Data predicts the U.S. will have only 42 percent of the world's Internet users by 2002, down from 56 percent in 1997. Local competition is giving U.S. companies a run for their money in many markets, including Germany and France, where T-Online and Wanadoo, respectively, hold the lead. AOL Chairman Steve Case says the free Internet access model in the United Kingdom will prove unsustainable in the future as full-service providers begin to supplement Web access with other services, including TV and phone. AOL's German Web site has captured 29.5 percent of the country's Internet users, while AOL's U.K. site has captured 24.7 percent, and the AOL France site has seized 26.6 percent.

  • "EU 'Dot.com' Summit"
    BBC Online (03/23/00)

    E-commerce will be one of the foremost issues addressed during the special Euro summit in Portugal. U.K. Prime Minister Tony Blair, who arrived in Lisbon Wednesday, says European countries should move in the direction of making Internet access more widely available and more affordable. One in five people are online in the United Kingdom, compared to one in two in the U.S. Although it costs 50 pounds to surf the Internet 30 hours a month in the United Kingdom, in the U.S. it would cost 30 pounds. Blair will also address the issues that hinder e-commerce. Most ministers believe the summit could result in economic reform for Europe. They are hoping that the same frenzy of businesses started and jobs created in the U.S. will happen in Europe. To encourage this transformation, the ministers are targeting education, employment training, and support for new online businesses. A recent report from the European Commission found that EU countries have not been quick to promote innovation, cut red tape, or change their social security systems to encourage work. Ultimately, European leaders have a chance to agree on ways to improve productivity and complete the single market, and the summit represents a huge opportunity to catch up to international commercial standards.

  • "Bill Would Protect Firms That Share Hacking Info"
    Newsbytes (03/21/00); McGuire, David

    Reps. Tom Davis (R-Va.) and Jim Moran (D-Va.) this week will introduce a bill that aims to foster a greater amount of information sharing between companies, law enforcement agencies, and industry groups regarding hacker attacks. Many companies avoid sharing such data due to fears that the media will get hold of the information and spark a public relations disaster, a Davis staffer said. The new bill would ease these fears by granting companies limited immunity from the Freedom of Information Act--an immunity that will not exempt companies' business dealings, Marin said. The bill will focus on information regarding "how the attack was done and what was done to fix the attack," Marin said. The scope of the bill is limited to attacks on telecommunications and IT infrastructures.

  • "What Price High-Tech Workers?"
    E-Commerce Times (03/21/00); Dembeck, Chet

    The high-tech and e-commerce job markets are growing faster than any other sector, but few people are trained for these positions. Only 5.5 percent of the students who received bachelor's degrees last year in the U.S. received engineering degrees, while jobs for system analysts and computer engineers will rise 91 percent over the next 10 years, according to the Bureau of Labor Statistics. Some companies are trying to attract skilled workers by offering generous stock options and cash bonuses. For example, Andersen Consulting on Monday announced plans to invest $200 million in e-commerce firms and distribute the profits from these investments to its workers in benefits and bonuses. In the future, Andersen will add $100 million a year to the investments. The investments are meant to benefit "top-performing and long-term" employees to keep these workers from switching to other companies. However, columnist Chet Dembeck says Andersen's plan addresses the effects rather than the causes of the IT labor shortage. A more long-term solution to the shortage would be for companies such as Andersen to support training programs and scholarships for low-income workers, Dembeck says.

  • "Online Patents: Leave Them Pending"
    Wall Street Journal (03/23/00) P. A22; Lessig, Lawrence

    The number of Internet-related patents is growing, and Congress should consider imposing a moratorium on software and business-method patents until it completes a study based on the economics of the field, writes Lawrence Lessig, professor at Harvard Law School and legal expert on Internet issues. Until recently, the Internet was free of patents, leaving ideas open for everyone to use and generating "the most extraordinary innovation we have seen in a century," Lessig says. Now about 40,000 software patents have been granted, and a 1998 ruling from the U.S. Court of Appeals for the Federal Circuit allows companies to patent business methods. Internet patent advocates justify online patents by noting that patents exist in the offline world, Lessig says. However, the offline world has no experience with business-method patents to set a precedent for such patents in cyberspace, Lessig says. Furthermore, no "prior art" database exists for software patents to help determine whether an idea is actually an innovation. The rise in Internet patents stems not from legislators but from court decisions, and Congress needs to get involved in the issue, writes Lessig. Rather than enforcing old laws, the government has chosen a wait-and-see approach on all other areas of e-commerce regulation--online privacy, open-access to broadband cable, and Internet taxation. The issue of Internet patents should also undergo a regulation-free period of study, says Lessig. The current trend of issuing patents is "changing the environment for innovation in cyberspace," writes Lessig. "Before we allow that change to occur, we should have good reason to believe the change will do some good."

  • "E-Services Scramble"
    InformationWeek (03/20/00) No. 778, P. 22; Ricadela, Aaron; Mateyaschuk, Jennifer; Greenemeier, Larry

    The market for e-business consulting and services will double this year to $19.5 billion, leaving many IT companies and consulting firms scrambling to bring themselves up to speed with proven solution providers. To shore up its services, Microsoft is partnering with Anderson Consulting to create an IT services company called Avanade. With this, the company joins the ranks of Cap Gemini, Deloitte & Touche, Ernst & Young, GE Information Services, and USWeb/CKS, Whittman-Hart, all of which are reorganizing or forming partnerships to catch up to IT service industry leaders such as IBM, and facing serious problems. "When you start stitching consultancies together, the culture can get lost," says Yankee Group analyst Chris Selland, "and oftentimes you lose the best people you acquired." In addition to old companies trying to play the new game are upstarts such as iXL, Proxicom, Scient, Sapient, and Viant, which focus solely on e-business, but don't always have the breadth of experience or resources to handle back-end integration work. Such deficiencies were not acceptable to American Floral, which faces serious competition from FTD, Hallmark, and Martha Stewart online floral sales. The company says it is glad IBM developers got Eflorist.com up and running just 10 weeks after development began.

  • "Cyber Hackers Targeted"
    Washington Techway (03/13/00) P. 38; Terry, Rob

    Maryland Gov. Parris Glendening is proposing increased penalties for hacking and other cybercrimes as part of new technology legislation designed to attract high-tech industries to the state. The proposed law would upgrade any computer intrusion that results in more than $5,000 in damages from a misdemeanor to a felony. Glendening also will sign an executive order that stiffens penalties for software piracy, a crime that the Business Software Alliance says resulted in $11 billion in losses for the industry in 1998. Glendening says the harsher punishments will bring Maryland in line with nearby states such as Virginia, Delaware, and New Jersey. Supporters of the bill also say changing certain offenses from misdemeanors to felonies will make it easier to extradite criminals who attack Maryland's computers from other states. However, the fate of Glendening's proposals in the state legislature is less certain. Although many high-tech executives have traveled recently to Annapolis to testify in favor of the bill at hearings, the two committees that will decide its future--the Senate Judicial Proceedings Committee and the House Judiciary Committee--are notoriously volatile and unpredictable. Del. Joseph Vallario, the Democrat who heads the Judiciary Committee, has already raised a philosophical objection to making a crime that is not committed against a person a felony. However, Sen. Walter Baker, the chair of the Judicial Proceedings Committee, has made public statements indicating that he would support the bill.

  • "Is IT Ready to Support Ubiquitous E-Commerce?"
    Computerworld (03/20/00) Vol. 34, No. 12, P. 42; King, Julia

    The age of ubiquitous computing is fast approaching, but IT has several issues to address before the Web can be integrated seamlessly into everyday life. In the future, household appliances will communicate with one another and with manufacturers. This would allow consumers, for example, to scan a frozen dinner into a Web-enabled refrigerator, that would then turn the oven to the right temperature to cook the meal and order another dinner from the local grocery store. Over the next five years computing will move to information appliances such as Web terminals, gaming consoles, and screen phones, providing Internet access from any location. To prepare for pervasive computing, IT will need to provide reliable, high-capacity networks that can support the constant communications of millions of different devices. In addition, IT needs to create new formats to make Web page content, which is typically viewed on PC screens, accessible to tiny devices. In preparation for the pervasive movement, IBM last month announced a partnership with Fidelity Investments, in which IBM Internet appliances will provide Fidelity customers with easy access to financial services. The devices will be tailored to meet customer needs, so if a person uses the appliance only for trading, the device could have special keys for trading functions, says Fidelity's Tracey Curvey. Unlikely partnerships will be formed as companies work together to enable ubiquitous computing. For example, appliance makers, food makers, and grocers will need to share information about usage and cooking time. Another large IT challenge will be to create standards to make this information sharing possible. Although ubiquitous computing is rapidly becoming a reality, most companies are not ready to leverage the benefits of the pervasive world, says Joe Devlin of IT services provider ICL.

  • "The B2B Tool That Really Is Changing the World"
    Fortune (03/20/00) Vol. 41, No. 6, P. 132; Tully, Shawn

    Glen Meakem became a General Electric employee in 1994 and on only his second day thought of a brilliant idea: electronic purchasing auctions. Since the Internet at that time was still primitive and unreliable, most GE executives were wary of the project and declined to invest the enormous amount of resources required for its development. Although Meakem was allowed to experiment with online auctions, he left GE two months later when the company denied his request to expand his efforts into a separate business. Meakem subsequently enlisted the help of former colleague Sam Kinney and founded FreeMarkets, a Pittsburgh-based online auction company that now handles billions of dollars in transactions annually. FreeMarkets brings together buyers and suppliers of industrial components in what is essentially a bidding war. A supplier submits a bid on the price of a part and the FreeMarkets site immediately displays it as a black diamond on a graph. The manufacturer needing the part and other suppliers of the part can simultaneously see in real-time who is offering what price, enabling all participants to make informed decisions about how to proceed. United Technologies saved 43 percent in a FreeMarkets auction, paying only $42 million for circuit boards when it had been prepared to spend $74 million. The state of Pennsylvania last year saved 10 percent when it purchased aluminum for license plates through FreeMarkets. The genius of Meakem's creation lies in its transformation of the request for quotation (RFQ) process into a non-secretive, standardized operation. FreeMarkets ensures suppliers compete solely on costs because all other items involved in the RFQ process, such as the delivery date of a product, have been predetermined and are universal across competitors. FreeMarkets also walks first-time clients through the auctioning process and will even research suppliers for manufacturers lacking the time or information to perform the task themselves. A handful of FreeMarkets customers, such as GM, which recently partnered with DaimlerChrysler and Ford to form an online automobile exchange, have branched out to create their own online industrial components auctions. Regardless, FreeMarkets is likely to remain the Internet industrial auction market leader for some time to come. Few existing companies possess the money, patience, or know-how to successfully follow in Glen Meakem's footsteps.

  • "More Than Fun and Games"
    CIO (03/15/00) Vol. 13, No. 11, P. 168; Wailgum, Tom

    Sports fans can go online at any time to check up-to-the-minute scores and pictures from major tournaments, thanks to IBM's e-Business Services group. The group, a mobile band of computer experts and sports enthusiasts, travels to events such as the U.S. Open, the Olympics, the PGA Championship, and the Ryder Cup to broadcast numbers, pictures, and related merchandise on each event's Web site. The team consists of 10 people who provide services such as graphic design, systems administration, scoring programming, publishing system design and programming, and overall project management. The group travels from event to event, each time bringing its own equipment. The equipment is set up in any space provided by the event staff--from a van at the PGA Championship to an office at the U.S. Open. The process of creating content on the fly relies on e-Publisher, a homegrown content design template based on Lotus Notes and Lotus Domino, and two RS/6000 servers, which send the Web content designed on-site to server farms located across the United States. Scores are recorded by volunteer data entry teams using notebook computers and handheld devices, and transmitted wirelessly from the site of the event itself to the location of the e-Business Services team. Communications sector executive John Ramminger, who oversees the e-Business Services team, says the success of the site relies on the staff, who are chosen using four guidelines: preparation, experience, commitment, and flexibility. "We're careful to pick people who have a strong affinity for this job because good ideas come from people who like this stuff," says Ramminger.

  • "When to Outsource"
    Business 2.0 (03/00) Vol. 5, No. 3, P. 16; Barker, Rick; Sippey, Michael

    Consulting firms are lined up to offer Web design and technology outsourcing services to Internet companies that want to free up their teams to focus on mission critical duties and get the expertise and personnel for the Web project that they could not afford on their own. Once a consultant is hired, business need to follow their process and make concessions over development of strategy, brand, and systems. Outsourcing firms should be chosen based on their understanding of Internet startups, years of experience, and record for quality. A good firm can offer assets beyond IT capabilities; it will help the startup define strategy, processes, operating and revenue models, and assist in the formation of key relationships. Web consultants are in such high demand that the top ones actually choose their clients. Startups stand a better chance of getting their consulting firm of choice by having completed their first round of funding and developed realistic expectations of cost, scope, and timeframe. There are five guidelines to keep in mind to find and create a successful partnership with the right outsourcing firm: be prepared to spend money or provide equity, formalize the deliverables, expect to collaborate, plan for independence, and end the partnership gracefully.

  • "Love It, or Lease It"
    Small Business Computing (03/00) Vol. 5, No. 3, P. 39; Marrinan, Michele

    The decision of whether to lease or buy office technology is somewhat simplified by an understanding of what sort of person typically leases or buys, according to a Pitney Bowes study. Three types of customers tend to buy technology outright: sustainers, who balance life and work; optimizers, who like to control their environment; and hard workers, who follow a steady path to growth and success. Meanwhile, idealists, who prefer to attend to their core interests and talents, and jugglers, who like to do everything independently, tend to lease office computing equipment. "Leasing will provide the obvious benefit of monthly payments instead of a big cash outflow," says IBM's Paul Crescenzo. "That frees up cash for other purposes, such as expanding the employee base." Small businesses should understand however, that leasing may cost more in the long run.

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