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Volume 2, Issue 138:  Wednesday, December 6, 2000

  • "Internet May Be Just a Fad, Says European Body"
    Newsbytes (12/04/00); Gold, Steve

    The Internet may be nothing but a short-lived fad in the United Kingdom and its popularity may already be on the wane, contends a report from the Economic and Social Research Council's Virtual Society project. The vastness of the Internet and the amount of time it requires to search the medium for information has discouraged some 2 million U.K. Internet users from going online as regularly as they once did, according to the report. The report stresses that the digital divide in Britain must be combated with the introduction of public access kiosks. Kiosks not only allow users to access the Web, they also offer users a way to interact with information services, the report says. Teenage Web usage levels are dropping and the report points to this trend to bolster its theory that the popularity of the Internet is but a passing fad.

  • "D.C. Council Votes Tech Tax Breaks"
    Washington Post (12/06/00) P. E5; Chan, Sewell

    The D.C. Council yesterday approved tax credits and other measures designed to attract high-tech companies to Washington, D.C. The New E-Conomy Transformation Act of 2000, supported by David Catania (R), would reduce the corporate franchise tax for tech firms that employ and train the city's workers from 9.975 percent to 6 percent. The bill would also exempt qualified tech companies from capital-gains, personal-property, and sales taxes. The city would also help tech companies find office space and would pay the security deposits for firms that provide tech training and job opportunities to D.C. public-school students and teachers. The bill has generated some controversy and must be approved by Congress and D.C. Mayor Anthony Williams (D).

  • "Battle Moving to Mobile Hardware Arena"
    Financial Times--IT Review (12/06/00) P. 8; Harvey, Fiona

    Analysts predict that the next great battlefield for operating systems will be mobile or handheld devices. Although Palm currently dominates this market, holding a 70 percent share with its Palm OS, Gartner expects that Microsoft will triple its current 10 percent share over the next three years as it continues to push both its PocketPC and Windows CE operating systems. Other players in the handheld OS market include Symbian, which currently has a 5 percent share, and perhaps even Linux, which has been attracting attention from firms such as IBM. Microsoft will continue to dominate the overall OS market, even though sales of Windows 2000 have yet to meet industry expectations. Analysts say consumers and businesses have not been very excited about the upgrade and thus are wary about implementing it. Microsoft is already preparing for the release of its next-generation OS, Whistler, which analysts say will replace Windows, not update it. This means Windows users will likely see fewer new applications that work on Windows and more expensive support for their existing Windows systems. Apple should also release its new Mac OS X next year, a year behind schedule. Although Apple's new OS will be powerful and have more functions, analysts say it will not change the company's small market share.

  • "Freedom to Criticize Belongs on the Web"
    San Francisco Chronicle (12/03/00) P. B5; Dyson, Esther

    Esther Dyson, the former head of ICANN and the current head of EDventure Holdings, argues that the TLD .sucks should have been approved as domain in which freedom of speech is permitted and companies, individuals, and officials can respond to criticisms. When ICANN chose its new TLDs, it was looking for guaranteed success in order to avoid any controversy. However, the .sucks TLD proposed by Name.Space was left out of consideration and, therefore, the freedom to criticize on the Internet was hindered, says Dyson. A .sucks TLD would not guarantee free speech, but it would have designated a place online where trademark laws could be applied differently, notes Dyson. Dot-sucks is a combination of principles and commerce, and commerce is an important counterbalance to the monopoly of government, says Dyson. Yahoo! is currently fighting for free speech in France. The French government does not allow the sale of Nazi memorabilia or anything else related to the Nazi regime within its borders. Yahoo! does not want those laws to limit its ability to sell such materials outside of France. The danger does not lie in the sale of Nazi materials, but in the attempts to control what people have access to and think, says Dyson. The appropriate response is to make the threat and its fallacies known, says Dyson. Internet users should not have to consider the laws of over 100 countries, it would be easier to have a .sucks TLD, says Dyson. Although ICANN was mistaken in not approving the .sucks TLD, at least Yahoo! has gotten the point.
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  • "State Department Disciplines Six in Laptop Case"
    New York Times (12/05/00) P. A16; Perlez, Jane

    The U.S. State Department has disciplined six employees in the bureau of intelligence and research because a laptop from that office disappeared last year. Two employees were fired outright, while the others, including bureau of intelligence and research deputy and China specialist Donald Keyser, received suspensions or reassignments. The State Department also lost its leading China expert, Ambassador J. Stapleton Roy, who retired early to show his support for Keyser. Although intelligence experts say the punishments will cost the State Department perhaps the government's best analysts of Asia, Secretary of State Madeleine K. Albright believes that the punishments are necessary to enforce the highest level of security in her department, saying "99 percent success [in security measures] is a failing grade."
    (Access to this site is free; however, first-time visitors must register.)

  • "Internet Firms Act to Ease Sharing of Personal Data"
    Washington Post (12/05/00) P. E1; O'Harrow, Robert Jr.

    IBM, MircoStrategy, First Union, and several dozen other e-commerce players have developed the Customer Profile Exchange standard, with the aim of improving their ability to share consumer data with one another. The XML-based standard is being viewed as a means of improving the development of personalized products and customer service. Skeptics are viewing the standard as a threat to privacy. "There are no standards for what they can and cannot do," says Lauren Gelman, director of public policy at the Electronic Frontier Foundation. The standard does include a privacy protection mechanism, but privacy advocate Jason Catlett likens this feature to "a machine gun with a safety catch that no one will use." Richard Smith of the Privacy Foundation says that the standard will give marketers greater access to consumer data but questions whether that will benefit consumers.

  • "Net Privacy Law Could Pass, Despite Congressional Rancor"
    Newsbytes (12/05/00); McGuire, David

    Despite the chaos of the presidential election, congressional observers are still predicting that the next Congress will pass some form of Internet privacy legislation. Andrew Shen, policy analyst at the Electronic Privacy Information Center (EPIC), says that online privacy is an issue that cuts across party lines, unlike other matters that Congress may be confronted with next session. A divided Congress could resolve to concentrate on those measures, including online privacy, that have bipartisan support. An aide for Sen. Patrick Leahy (D-Vt.) says that online privacy legislation will face little resistance in the upcoming session, even though it is a prickly subject. The aide allowed that the financial services and insurance industries could have enough muscle to defeat a broad privacy bill in Congress. EPIC supports a broad approach to online privacy but will take what it can get, says Shen. "We would not oppose a [focused] Internet privacy bill," Shen says. "We have to do what we can."
    For information regarding ACM's activities on behalf of privacy matters, visit http://www.acm.org/usacm/privacy.

  • "Can the Web Stand Up to the Strain?"
    NewsFactor Network (12/04/00); Ben-David, Philip; Gebler, Dan

    The Web's ability to handle huge traffic spikes was tested twice last week, first for the Madonna concert last Tuesday and again for the Webcast of oral arguments in the Supreme Court over the presidential election on Friday. Microsoft's MSN hosted the Madonna concert, promoting the event as the largest online production in history and promising "DVD-quality." Although Microsoft estimates that 9 million Web users successfully logged on to the event, The Net magazine estimates that 90 percent of the people who attempted to log on were unable to do so. Furthermore, viewers without broadband connections found the images blurry and shaky. Meanwhile, the Supreme Court's Webcast also shut out thousands of would-be viewers. Although the Supreme Court Web site was enhanced for the occasion, most users could not log on until after 5 p.m. EST. The technology to bring streaming media to millions of users at the same time already exists, but only users with broadband Internet connections can access audio and video of decent quality. Most users are not equipped to handle streaming media, as a 1999 study suggests that broadband is in less than 1 percent of households worldwide. Major Web events also require significant server capacity. News sites can foresee that large traffic spikes will occur from time to time, and can therefore prepare to add more servers or move content from one server to another when traffic surges. However, one-time events such as the Supreme Court's Webcast are hard to predict, and sites do not want to maintain excessive server capacity that they might never use. Larger broadband pipes will eventually improve the Web's ability to handle major online events.

  • "What Detonated Dot-Bombs?"
    USA Today (12/04/00) P. 1B; Krantz, Matt

    The large number of Internet companies that have failed in recent months need only look to their business plans for the reason for their failure, according to Boston Consulting analyst George Stalk. Many of these substandard business plans were predicated on four false assumptions about the New Economy: that it is permissible to sell products for less than they cost; that economic cycles do not affect Internet companies; that massive advertising spending will lead to site visitors, sales, and profits; and that Internet companies' lack of inventory will lead to infinite profits. "Did any of these business models make sense?" asks University of North Carolina at Chapel Hill accounting department chairman John Hand. Pets.com lost 19 cents on every dollar of product it sold before it even subtracted its overhead costs. When interest rates began rising this year, Mortgage.com was left without a way to attract new borrowers, as its success depended on low rates attracting borrowers seeking to refinance their mortgages. Online retailer Boo.com spent $223 million on advertising that apparently led to relatively few new paying customers. And many online sites learned to their detriment that having no inventory means one has very little control over prices, making profits elusive. Despite a general consensus among analysts that faulty e-business models are to blame for this year's dot-com demises, many of the failed dot-com's principals continue to assert that they are no longer in business because investors would not make up the difference between their revenues and costs.

  • "Facing Red Ink, Dotcoms Temper Their Idealism"
    Christian Science Monitor (12/04/00) P. 3; Slambrouck, Paul Van

    The downturn of the e-economy this year has signaled a change in the dot-com mindset. The optimism once seen online has been reigned in, as the industry suddenly realized its growth had far outpaced the market. Kirk Walden, of PricewaterhouseCoopers, monitors venture capital investments and predicts that sales this holiday season will be a litmus test for investors ready to pull support from unsteady e-tailers. In this threatened situation, many e-companies are seeing the workplace environment change. Businesses and employees alike are becoming more cautious, seeking security rather than high-risk opportunity. Founder of Employeeservice.com Jay Whitehead notes that job seekers want cash rather than stock options, and consider a company's viability carefully before signing on. He adds that, because the IT job market remains tight, the laid-off dotcom employee still can be picky. While the psyche of the dot-com industry has been rattled, it is not disillusioned. Richard Florida, professor of public policy at Carnegie Mellon in Pittsburgh, says, "This shakeout now is separating the fad and fashionable from the deep and enduring." Park Greg, who recently founded his own startup after being laid off by a dot-com, explains his generation's mentality, "We've just seen that there is an old-fashioned way of doing business that might not be so old-fashioned."

  • "The Net's .Us Domain Is Laden with Baggage"
    SiliconValley.com (12/02/00); Plotnikoff, David

    The high demand for new domain names led ICANN to approve seven new TLDs, however few people know that every country has its own country code. The United States' .us country code TLD has been running since 1985 and is the third largest country code in the world (behind only Japan's .jp and the United Kingdom's .uk), and the sixth largest TLD. Still, there are only an estimated 10,000 names registered under the .us ccTLD, although there is nothing barring companies or individuals from using it. However, if someone does want to register a .us domain name, it is first necessary to claim the desired name at the local level in the geographical hierarchy. Therefore, Wally's Widget store in Woodside, California, would register www.wallyswidgets.woodside.ca.us as opposed to www.wallyswidgets.us, the former being far too long for those that want an easy to remember name. The Information Sciences Institute at the University of Southern California recently turned over control of the .us TLD to VeriSign Global Registry Services. VeriSign will act as caretaker of the TLD until the U.D. Department of Commerce decides what to do with the system. The federal government should leave the .us ccTLD alone, writes David Plotnikoff.

  • "Cyberattack Report: Some Progress Made"
    Computerworld (12/04/00) Vol. 34, No. 49, P. 1; Verton, Dan; Hamblen, Matt

    A new report from the National Partnership for Critical Infrastructure Security (NPCIS) indicates that over the past year many companies have made major progress in protecting their infrastructures from attack, but that others are still struggling. The report will be the basis for the next version of the Clinton administration's cybersecurity plan. Officials say the banking and energy sectors are ahead in security preparedness, while other industries are challenged by such factors as deregulation and market fluctuations. One progress indicator is the soon-to-be-announced Information Sharing and Analysis Center (ISAC) for the IT community, much like the ISAC that now exists for the financial sector. The new ISAC includes a secure database, analytic tools, and other software that officials can use to submit reports about information security threats, incidents, vulnerabilities, and solutions. NPCIS working group member Tim Atkins says the IT sector has been moving aggressively and any perceived slowness is due to the industry's desire to protect sensitive and proprietary information.
    For information regarding ACM's activities related to security, visit

  • "The Great Patent Giveaway"
    Industry Standard (12/11/00) Vol. 3, No. 50, P. 75; Pressman, Aaron

    The U.S. Patent and Trademark Office is likely to curtail the number of Internet business-method patents it grants in response to mounting criticism. Business-method patents such as Amazon.com's patent for one-click ordering are being challenged in court as critics argue that some of the patented processes are commonly used online techniques. The number of business-method patents surged in 1998 after a federal appellate court upheld inventors' right to patent new and non-obvious ways of doing business. That ruling contributed to the number of online business-method patent applications jumping from 700 in 1996 to 7,500 by the end of fiscal 2000. Meanwhile, the patent office in fiscal 2000 approved 1,000 high-tech business method patents, seven times as many as in 1996. The patent office investigates business methods by looking in academic journals and prior patent lists, and critics say these research methods often do not uncover the widespread use of a particular method. Last March the patent office said it would expand its review process and that senior examiners would look at all Internet-related patents. As a result, the number of business-method patent applications that were granted dropped from 57 percent last year to 50 percent this year. Next year Congress will consider a law that would require applicants rather than examiners to prove that a business method is original. In the meantime, a Web site called BountyQuest.com is offering monetary rewards to anyone who can provide information that could nullify an e-commerce patent.

  • "Crossed Wires"
    Smart Money (12/00) Vol. 9, No. 12, P. 95; Hunt, Albert R.; Murray, Alan

    Although high-tech issues were almost completely ignored in the recent elections, many analysts expect technology to take center stage during the next session of Congress. Political commentators say technology makes for odd alliances across party lines, with liberal Democrats and far-right libertarian Republicans both advocating online privacy, and with traditionally anti-tax Republican governors leading the push for collecting Internet sales taxes. The high-tech industry supported Democrats with slightly more money in the recent election, but it seems that its allegiance is still up for grabs. An Internet privacy bill will almost certainly pass next session, while some sort of action on Internet taxation will also transpire, as the current moratorium on online levies expires next fall. Copyright and patent laws are also expected to be updated for the digital age, although the issue is highly contentious, with many powerful interests such as drug companies and Hollywood studios expected to spend millions of dollars to ensure that their wishes are met. Broadband cable regulation will at least be debated, and possibly enacted, because some legislators are worried that cable companies, which have a monopoly on service in many areas, may limit access to DSL service if they become the chief providers of them.

  • "Out of the Frying Pan and Into...The Frying Pan"
    Business Week (12/11/00) No. 3711, P. 50; Burrows, Peter

    Many PC makers are relying on growth in the server market to compensate for a slowdown in the PC sector, but servers could follow the same path as PCs unless manufacturers change their strategies, analysts say. Compaq, Dell, and IBM note that profit margins for servers can exceed 20 percent, compared with 10 percent or less for PCs. Furthermore, Compaq and IBM, which offer servers linked to the Internet, have both seen their server divisions grow 40 percent over the past six months. However, most PC makers are focusing on low-end and midrange servers and will face strong competition from server appliances. Server appliances are less expensive and more reliable than a PC server at performing a specific Internet-based task, and customers like the new devices for their ease of use. Server appliance sales will grow to $12.4 billion in 2002, up from $1.2 billion last year, says International Data (IDC). Meanwhile, PC server sales will reach $13 billion in two years, compared with $8.1 billion in 1998, IDC says. The growth of server appliances could force PC makers into a price war in the server sector, according to experts, who note that price wars killed the profitability in the PC market. Already, low-end servers are selling for roughly half as much as they did a year ago. Dell's server growth already seems to be slowing, as the company focuses on low-end servers and tries to replicate its PC strategy.

  • "Michael Dertouzos: Predicting How Technology Will Connect the Globe"
    Interactive Week (11/27/00) Vol. 7, No. 48, P. 58; Stellin, Susan

    Michael Dertouzos, director of the Massachusetts Institute of Technology's Laboratory for Computer Science, says 25 percent of the global population will have access to the Internet within 30 years. However, the one-to-one personal exchanges between people in different countries, a scenario Dertouzos described in his new book, "The Unfinished Revolution: Human Centered Computers and What They Can Do for Us," has not caught on because only 5 percent or less of the population is presently connected to the Internet. Dertouzos says when he speaks in the book of nations becoming distributed, he maintains that it is to be taken in "a lofty, idealistic sense." Internet connections to Greece, for example, would be the next best thing for someone who has an affinity for the country's culture. Information technology will not change the concept of nations, he says, although he adds that countries that want to take advantage of the economic miracle of democratic nations could use the technology to transform their nations. Among other things, Dertouzos says he would like to see the United Nation become more involved in technology issues.

  • "Help Wanted (And How)"
    CFO (11/00) Vol. 16, No. 13, P. 117; Leibs, Scott

    IT companies need to employ a range of tactics to cope with the ongoing labor shortage. Three-fourths of the IT companies responding to a recent Meta Group survey said they did not have enough workers, and most respondents said they would increase their IT departments by 25 percent if the workers were available. Although the recent increase in the H-1B visa cap eases the labor shortage temporarily, observers agree that other approaches are also necessary. "There is no silver bullet for this problem," says Harris Miller, president of the Information Technology Association of America. Companies need to concentrate on developing their own skilled workers rather than waiting for colleges to churn out IT workers, Miller says. IBM, for example, has increased its internships and is now focusing on turning interns into full-time workers. In addition, companies are focusing on retaining workers by offering mentoring programs that help employees feel as if they are on a career path. Some companies also rotate IT workers into different positions to help them learn new skills and avoid boredom. Companies that want to retain IT workers need to offer professional development opportunities, make new workers feel like part of the company, reward workers' contributions, and offer a stable compensation and benefits program, according to a best-practices study from the American Productivity and Quality Center. Meanwhile, companies can also find the IT talent they lack by turning to Web-based services such as Vivant and SkillsVillage. Hiring contract workers allows companies to locate specialized talent and provides flexibility in staffing, observers say.

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