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Volume 3, Issue 170:  Wednesday, February 28, 2001

  • "Power-Hungry Web 'Server Farms' Find Cooler Reception in California"
    Wall Street Journal (02/28/01) P. B1; Templin, Neal

    Web server farms house hundreds of tightly packed, high powered computers that serve up a large portion of the Internet's Web pages but also consume huge amounts of energy. Per square foot, server farms use 75 watts to 100 watts of energy compared to only 5 watts for a normal commercial office building, according to statistics from Silicon Valley Power. In energy-starved California, the ever increasing demand for data centers is causing worry among power companies and the Internet industry. Companies such as Exodus Communications and Digital Island are moving to construct over a dozen server farms in Santa Clara, Calif. The local power grid is already considerably strained and Web data centers could operate from virtually anywhere, but the technology firms hiring this service want the data to be stored near them. Silicon Valley Power, the local provider, requires newly constructed server farms to pay for the costs of upgrading the electricity infrastructure to make room for their power needs. Chris Hardin of Exodus says his company responds to the power crunch by always advising its customers to use the newest, most energy-efficient computers. However, critics say these servers are also slimmer, allowing data centers to cram even more hardware into the same amount of space. Exodus recently signed a contract with General Electric to construct its own power plant in the area to supply energy to several of its facilities.

  • "Intel to Keep Up Capital Spending"
    Financial Times (02/28/01) P. 20; Foremski, Tom

    Intel CEO Craig Barrett yesterday disputed claims that his company is considering cutbacks in its capital expenditure budget to compensate for falling demand for its communications chips. That budget has been set at a record-high $7.5 billion, and Barrett said the company would spend $12 billion to build new chipmaking facilities and in research and development. However, Barrett did say his company was facing a shortfall in demand, although he would not say how much his company was projecting that shortfall to be. "When a large customer of ours such as Cisco complains about business conditions it has to have an impact on our business," he told the Financial Times. Barrett said Intel would get "back to basics" this year, acknowledging that the company's efforts to compete in the markets for streaming media services and Web hosting had been mistakes. Barrett would not say whether he agreed with the predictions of some within the industry that the second half of this year would see an economic recovery. However, he said Intel has no plans to lay off employees.

  • "Internet Company Job Cuts Down Slightly in Feb."
    Bloomberg (02/28/01)

    Internet job cuts fell 9 percent from January to February, from 12,828 to 11,649, reports job placement firm Challenger, Gray & Christmas. The decline is the first in eight months in the index, which Challenger has maintained since December 1999. Challenger has now counted 65,992 Internet-related layoffs since the beginning of its index, 24,477 of which have occurred just in the past two months. Challenger CEO John Challenger says two areas that have seen job cuts rise in February have been online advertisers, with cuts up 57 percent, and "jumping-off points" such as Yahoo! and Excite, where job cuts have risen from 945 last month to 1,516 in February.

  • "eBay to Police Site for Sales of Pirated Items"
    Wall Street Journal (02/28/01) P. A3; Simpson, Glenn R.

    In a major change in policy, Internet auction site eBay has begun removing items that infringe on copyrights. The program was implemented in December after a series of court decisions involving eBay convinced company officials that they could interfere in some transactions on the site without incurring liability. EBay was also facing pressure from several organizations representing the software industry, which sees piracy as its top threat. The Business Software Association and the Software and Information Industry Association claim that 90 percent of the software available on auction sites such as eBay are pirated copies or violate software licenses. A study Microsoft conducted of Office 97 programs for sale on auction sites found 97 percent of the copies to be counterfeits. EBay does not agree with these figures, arguing that the number of piracy cases that the software industry refers to its attention on a daily basis, about 150, are a miniscule portion of the some 30,000 software items available on the site on any given day. Still, eBay is following similar decisions by Amazon.com and Yahoo!'s auction site to impose self-monitoring policies. EBay will filter out potential pirated items and then examine each listing to determine its status. The company will also stop the sale of any content recorded on a blank CD, beta software releases, and certain types of game equipment and DVD players that can use unauthorized copies of copyrighted material.

  • "Up-and-Coming Linux"
    International Herald Tribune--BizTech (02/26/01) P. 8; Martin, Mitchell

    Leading hardware, software, and services vendor IBM has been vocal in its support of Linux, the insurgent open source operating system that now holds 24 percent of the server computer market, second only to Microsoft's Windows and even more impressive considering it had no market share five years ago. "There is no doubt in our minds that Linux is certainly a disruptive technology that has the potential to change the game in information technology--forever," said IBM President Samuel Palmisano at the recent LinuxWorld expo in New York. Already firmly established in the education and government sectors, and with businesses for narrow-focus server applications, Linux will increasingly be used to support large-scale enterprise applications such as enterprise resource planning, customer relationship management, and human resources systems. And despite Linux's low cost, IBM sees an opportunity to sell plenty of hardware, software, and services products tied to the operating system. "Linux is the fastest growing operating system in the marketplace," explains IBM's Richard Sullivan. "It is very critical to us as a supplier not only of hardware but also of software and services."

  • "Site's Survey Finds Workers Lack Loyalty Toward Tech Companies"
    Saint-Paul Pioneer Press Online (02/27/01); McCartney, Jim

    The recent increase in layoffs in the IT sector have had a negative impact on how many workers view their employers, a new survey from Techies.com reveals. The survey, which questioned 1,600 IT workers, found that two-thirds of respondents have a different view of their employers now that layoffs are on the rise. Of the respondents, 28 percent said they now considered their jobs to be "temporary," regardless whether their employers had said it was a temporary position, and 19 percent said they would reconsider a job offer from a company that either had laid off workers in the past or that seemed likely to do so in the future. Also, the survey found that 10 percent had lost trust in their employers and would leave at the next opportunity, while 9 percent said they were considering self-employment as a way to avoid the layoff issue entirely. The layoff situation continues to overshadow the IT and dot-com industry, with nearly 35,000 Internet-related jobs lost in the last three months alone, a new report from outplacement firm Challenger, Gray & Christmas states. However, the firm notes that many of these laid-off workers will have little trouble finding a new job in the IT sector because their skills are still in high demand.

  • "Why Linux Is Giving Microsoft a Migraine"
    Business Week Online (02/22/01); Jaffe, Sam

    Microsoft CEO Steve Ballmer's January statement that "Linux is our enemy No. 1" is especially ominous for the software giant, which has largely been trying to ignore the open source threat since its bid for the corporate market began two years ago. Since Microsoft's launch of Windows 95, the company has sought to repeat its success as the paradigm of the technology shifts to the Internet. Although Windows 2000 has made inroads into the enterprise market, adoption has not come as quickly as company officials had expected. Analysts point to the relative coup that Linux has performed in this arena as the cause of Windows 2000's market hesitation. The consultancy firm NetCraft estimates that Linux has 30 percent of the Web server market. Several new enhancements to the open source code stand ready to give the software equal footing with Microsoft applications in the future. The new Linux 2.4 kernel is not only more stable than the previous operating system, but it is also customized to make the most of Intel's upcoming IA-64 chip, or Itanium, which experts say will be the driving force behind the next big PC upgrade cycle. However, Microsoft still has a death-grip on desktop applications, which analysts say may prove to be the bastion from which Microsoft can weather the Linux onslaught.

    Steve Ballmer is one of the many keynote speakers slated for ACM1: Beyond Cyberspace---a futuristic ACM conference where noted industry visionaries will comment on life in the new millennium. To register, visit http://www.acm.org/acm1.

  • "Exorcising the Ghost in the Internet Machine"
    Financial Times (02/28/01) P. 10; Kirchgaessner, Stephanie; Despeignes, Peronet

    The ongoing Internet privacy debate appears headed toward its final denouement as industry and federal legislators alike are attempting to stem a potential onslaught of privacy legislation at the state level. The Internet industry is still attempting to push self-regulation as a privacy solution, but with some 300 privacy bills awaiting the call in state legislatures, a handful of industry groups are supporting the idea of a federal privacy law. Congress has already introduced upward of a dozen privacy bills, including one that would cast the FTC in the role of privacy enforcer. Industry analysts and insiders, including David Zimmerman of privacy software maker YouPowered, continue to warn that Congress is preparing to take action on privacy if the industry remains inactive. Yet Chamber of Commerce official Rick Lane says that the complexity of the privacy issue has kept Congress from reaching a consensus. "If you look at the bills, they come at it from different perspectives," Lane says. House Commerce and Energy Committee spokesman Peter Sheffield believes that Congress will pass privacy legislation by November. And congressman Cliff Stearns (R-Fla.) has called for a "thorough review of the effectiveness in cyberspace of our existing consumer protection laws." DoubleClick, Toysmart, and most recently, Network Solutions, have all been involved in high-profile privacy breaches this year.

  • "New Survey Shows E-Government a Challenge, Priority"
    Internet.com (02/22/01)

    A new study shows that the overwhelming majority of federal CIOs want to move forward on e-government initiatives but face numerous obstacles. Over 37 CIOs from across the federal agency spectrum were surveyed by the Information Technology Association of America (ITTA) for the study, which was presented at ITTA's recent 11th annual convention. The CIOs said they need increased authority within their bureaucratic structures to pursue e-government more fully. In addition, a working IT foundation as well as recruiting employees with in-demand IT skills are pieces of the e-government puzzle yet to be completed. The CIOs also noted the need for security for all e-government initiatives. The study points out that federal CIOs, regardless of their enthusiasm, are dependent on Congress for e-government funding.

  • "EC Says E-Europe Initiative Is a Success"
    Newsbytes (02/23/01); Dennis, Sylvia

    The European Union's E-Europe Initiative has been successful in promoting the Internet throughout EU countries, reports Erkki Liikanen, a member of the European Commission (EC) responsible for the project. The E-Europe Initiative was created in 1999, and has been successful in its founding goals of promoting Internet startups, encouraging research and development, and increasing Internet businesses' access to markets. E-Europe also helped standardize Internet policy among various EU governments, as well as bring the Internet to the attention of governments throughout the EU. The EC is now working on an E-Europe Action Plan to identify key regulations on e-commerce that need staffed and working before 2003.

  • "Lots of Shake Left in the Dot-Com Shakeout"
    E-Commerce Times (02/26/01); Mahoney, Michael

    Analysts warn that the dot-com shakeout may not have reached bottom yet. EMarketer analyst Steve Butler notes that venture-capital funding in the third and fourth quarter of last year fell. "This leaves dot-coms with very little cash to last on a month-to-month basis," he says. "The majority will go bankrupt or consolidate by the middle or end of this year." ECnow.com President Mitchell Levy says the New Economy is only is at its beginning stages, with many players from both the dot-com and bricks-and-mortar sectors still trying to find their positions, but warns that the threat of recession striking the economy may cast further shadows on firms' chances for success. Levy does see some prospect for hope for the end of this year, when he thinks dot-coms that truly have been successful will begin to gain respect from investors. However, James Vogtle of the Boston Consulting Group contends that recent trends in e-commerce will put dot-coms at a disadvantage. He points out that traditional retailers' online channels gained more attention from consumers this past holiday season, meaning there might be less market space available for pure-play competitors, especially if the pace of consolidation in the e-commerce sector begins to accelerate.

  • "Carnivore Use for Telcos Debated in Germany"
    InternetNews.com (02/26/01)

    The German government wants its TKV regulation to perfect the monitoring of telecommunications and make even email subject to universal surveillance. If the German cabinet approves the regulation, ISPs will soon have to install bugging devices, store connection data and content for six months, and transmit that data and content to the state on command. The ISPs must purchase the bugging devices themselves, and only company network operators will be exempt from the regulation. The equipment is to be inspected by the Regulatory Authority for Telecommunications and Posts, and there is to be a fine for failure to comply with the law. Germany, which already leads the world in wiretapping its own citizens, is discussing a German "Carnivore" regulation. German e-commerce forum Eco says that German ISPs want to combat the expensive bugging procedures; Michael Rotert, the lobby group's head, notes that data packets frequently go through four to five carriers, which would mean that providers would have to acquire as many bugging devices--which would, in turn, bankrupt small ISPs. The Netherlands is requiring ISPs to acquire spying equipment by this spring, and its industry association believes that a third of the nation's providers will go bankrupt.

  • "E-Learning Branches Out"
    InformationWeek (02/26/01) No. 826, P. 42; Swanson, Sandra; Khirallah, Diane Rezendes; McGee, Marianne Kolbasuk

    Investing in online training may help reduce training costs, but many companies are in it for the long haul because of its potential for revenue as well as improved systems integration, customer service, and employee retention. Some companies have learned--to their regret--that e-learning is a slow, complex process that does not guarantee a quick return on investment (ROI). In addition, they face technical challenges such as a lack of interoperability standards and an overwhelming assortment of e-learning products, and should expect a steep learning curve from users unfamiliar or resistant to the programs. A successful e-learning project must follow a long-term strategy, as exemplified by Air Canada's and Ford's efforts. The primary goal of Air Canada's initiative is to improve ramp worker safety, and the airline's manager of e-learning and knowledge management, Brian Corbett, does not expect an ROI for three to five years. "If organizations are trying to measure value on that basis, they're not going to get anywhere," Corbett explains. "You have to impact what's important to the business." Ford's global core engineering organization runs an e-learning program that combines courses on the Internet, CD-ROM, and in the classroom; Ford's 3,000 suppliers can take the online courses for a fee, but Ford's technical education strategy manager, Bob Kiger, insists revenue gains are not the purpose of the program. "Our suppliers are our partners," he says. "We all have to be at the same skill level." IDC estimates that the allure of e-learning's potential benefits will drive technology sales to $11.4 billion by 2003. Furthermore, 46 percent of 250 business and IT professionals recently surveyed by InformationWeek Research claim their companies are already receiving returns on their E-learning investments.

  • "A Gray Area in the New Economy"
    Washington Business Journal (03/01/01) Vol. 19, No. 43, P. 49; Katz-Stone, Adam

    Recent studies suggest that older tech workers may find it difficult to find employment in today's youth-driven job market. University of California at David computer science professor Norman Matloff recently shared his findings with the U.S. House Judiciary Committee. He said the percentage of graduates in computer science with programming jobs falls with age, from 60 percent of those only five years out of college to 34 percent of those 15 years out and only 19 percent of those 20 years out. A separate survey of tech workers by the career portal Techies.com found that women may be particularly susceptible to age-based discrimination. The survey of 106,000 workers revealed that women and men with equal experience earn roughly the same amount when beginning careers but that, as they grow older, women earn less. Charlie Norton, a 53-year-old managing editor for news portal Backwire.com, says his age definitely made him wonder if he had a place in the tech sector. "I thought I would be perceived as not being agile enough, flexible enough, energetic enough," he relates. Charles Chen, president of the IT consulting firm Systems Applications, says many managers in the tech sector, even if they do not realize it, view younger workers as a better investment because they have the latest training and often can pick up new skills and technologies much more quickly. However, Burton L. Bank, the 76-year-old president of the software firm Chesapeake Interlink, contends that older tech workers do have a place in the industry. "Along with the age and the gray hair comes the wisdom and the experience," he says. He argues that younger workers do not necessarily have the management experience necessary to run a business, as the recent failure of many dot-coms proves.

  • "Software Shakeout"
    Business Week (03/05/01) No. 3722, P. 72; Kerstetter, Jim; Greene, Jay

    Application service providers (ASPs), once the darling of venture capitalists and tech analysts, have dramatically underperformed expectations. The market for ASPs, which analysts projected could be worth $6 billion by the end of this year, will likely generate only $600 million in revenues in 2001, International Data predicts. Of the ASPs currently offering services, Gartner Group predicts that 60 percent will go out of business in the next year. Analysts say causes for ASPs' disappointing performances are numerous. A Business Week survey of executives found many unwilling to try a new business method. Others worried that using an ASP to host sensitive company applications would pose an undue security risk. Still others did the math and said ASP claims that outsourcing software operations saved money were not true. ASPs say these cost analyses are inaccurate because many businesses do not understand the cost of building and maintaining new computer systems. Despite these grim facts and projections, the venture-capital market has not dried up for all ASPs. In the fourth quarter of last year, after the failings of many ASPs became apparent, venture capitalists still invested $1 billion in existing and startup providers. Analysts say the new crop of ASPs may bear watching. Unlike the first generation of ASPs, which licensed software from third-party developers, these companies develop their own software, reducing costs for themselves and for their customers. Many of these companies are also targeting their offerings at small and mid-sized businesses, a key market as many large companies may be wary to give a small start-up a try. Several established software firms, including Oracle and Intuit, are also giving the ASP market a try. Intuit already receives 20 percent of its revenue from online services. Analysts say the ASP model can work and point to VeriSign, a software firm specializing in encryption technology, as an example. VeriSign's revenue last year grew 460 percent to $474.8 million. It now enjoys 75 percent market share. Analysts say VeriSign succeeded by being the first to identify and fulfill a particular need in the market.

  • "Educating the Workforce"
    CIO (02/15/01) Vol. 14, No. 9, P. 36; Viscasillas, Stephanie

    U.S. Rep. Jerrold Nadler (D-N.Y.) has proposed a $100 million grant program to provide technology training to minorities and other groups who cannot afford access to a computer or the Internet. The grant money itself would go to training centers and schools, which would then provide courses and access to hardware to those who might otherwise not have an opportunity to enter the new economy. However, political observers say Congress is more likely to favor a plan to provide tax credits for high-tech training rather than grants. The Republican majority is unlikely to support Nadler's plan because it would focus on a specific segment of the population, observer say. Those in the IT industry say they do not mind which plan gains approval. Either way, better training will mean more workers to fill empty positions.

  • "E-Business and Changing IT Development Standards"
    Application Development Trends (02/01) Vol. 8, No. 2, P. 19; Trepper, Charles H.

    IT development teams who once devised e-business solutions for a homogenous group of users or clients must now focus on providing solutions that satisfy a wide variety of tastes, cultures, personalities, and physical parameters, writes consultant Charles H. Trepper. Application development teams probably consider security their highest priority, he contends, and must build secure systems that are easily recoverable from hackers. Furthermore, Trepper notes that management, business partners, and customers must approve of such security systems before production is initiated. Application development teams need to design systems that prevent inappropriate use or sale of data while also adhering to local privacy laws and abiding by cultural content standards, Trepper writes. The turbulent nature of business-to-business (B2B) and business-to-consumer (B2C) transactions requires a heavy focus on usability testing and "bulletproofing," and Trepper outlines efficient, user-friendly design specification for each function. B2B sites need site maps for experienced users and "getting started" sections for novices while B2C sites should be intuitive and require little training. He recommends incorporating reusable components and rigid standards in order to ensure maintainability and universal data formats to optimize supply-chain interactions. Quality control must be improved constantly in order to reduce the incidence of programming errors and IT groups must ensure that the systems will maintain secure supply-chain links while simultaneously operating in a timely, accurate manner.

  • "Suspicious Server Probes Multiply"
    Computerworld (02/19/01) Vol. 35, No. 8, P. 1; Verton, Dan

    A survey by California network security company Pilot Network Services of over 70,000 corporate clients found that the incidence of hacker scans looking for vulnerable domain name servers (DNS) rose 280 percent from December to January. Most security experts agree the increase results from the recent discovery and publication of new vulnerabilities in BIND, the program language that allows a DNS to send a person typing a Web address to the DNS with the appropriate Web site. "Our remote sites and VPN users connecting over both dialup and broadband technologies are also reporting major increases in scans for DNS servers," says security specialist Keith Morgan, a member of West Virginia's Terradon Communications Group. Hackers are targeting companies' IP addresses, looking for BIND programs that have not been updated, and experts worry that virus writers will incorporate such scanning, as well as BIND attack strategies, into viruses.

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