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Volume 3, Issue 179:  Wednesday, March 21, 2001

  • "Love, Scorn, and Innovation Dominate ACM Conference"
    Deutsche Presse-Agentur (03/16/01); Goldberg, Andy

    While attendees at the Association for Computing Machinery's "ACM1: Beyond Cyberspace" conference were greatly impressed by new technology such as wearable communications technology, deep-sea power plants, and Internet-enabled cars, speakers at the conference took PC makers and others in the tech industry to task for their lack of innovation. Software developer and computer science professor at the University of Toronto William Buxton said stagnant PC design may be partly responsible for the new economy's recent downturn. "Much of what is happening economically is because we are pursuing a foolish thing--growing PCs exactly as we have been in the past. I believe design is the key to get us out of this slump," he said. Buxton's comments were echoed by Michael Dertouzos, director of the Laboratory for Computer Science at the Massachusetts Institute of Technology, who called for "human-centered computing" that would not make it difficult to perform what should be simple computing tasks. In general, those at the conference came away with a sense that, despite current economic issues, technology has much to offer the immediate and far future. "This conference is all about what we need to be doing now in order to make society better in the next 10 or 20 years," said ACM's Chris Morgan.

    For more new stories about the ACM1 conference, visit http://www.acm.org/acm1/media/index.html.

  • "Fewer Patents on Methods Get Clearance"
    Wall Street Journal (03/21/01) P. A3; Bulkeley, William M.

    The percentage of business-method patents approved by the U.S. Patent Office declined 20 percent in the quarter ending Dec. 31 of last year compared to the quarter ending last Mar. 31, from 56 percent to 36 percent. The patents, which have become a key tool in the development of e-business, provide copyright protection to new ways of doing business and are often granted for new computer-related methods. For example, Amazon.com has a business-method patent for its "one-click" shopping system, and Priceline.com has a patent for its "name-your-own price" system. A 1998 appeals court decision condoned the patents, causing a rush to trademark business ideas. In the 12 months prior to Sept. 30 of 2000, 7,800 business-method patent applications were filed with the Patent Office. In the 12 previous months, 2,821 such applications were filed. However, critics of business-method patents charge that they are being granted for "obvious" ideas that are "new" only because now they can be done online rather than with pencil and paper. Since March of last year, the Patent Office has taken extra steps to ensure that it is not approving the patents without critical scrutiny, ordering business-method applications to be reviewed by more than one official and taking tours of corporate applicants' offices to see whether the business methods in the applications are indeed new and worthy of trademark. However, supporters of business-method patents say the Patent Office may be overstepping its bounds in making it more difficult to receive the patents. Intellectual-property attorney Paul Gupta says, "They're taking one kind of patent and treating it much worse than other patents. The court said a business-method patent is as good as any other."

  • "High-Tech Visa Approvals Down From Last Year"
    Washington Post (03/21/01) P. E1; Johnson, Carrie

    The Immigration and Naturalization Service approved only 72,000 H-1B visa petitions between October of last year and early March, a nearly 30 percent drop from the same period in 1999-2000, the INS reported Tuesday. The high-tech industry last year made a major, and eventually successful, lobbying effort to raise the cap on how many H-1B visas, which allow highly skilled foreign workers to remain in the country for up to six years, could be granted each year from 115,000 to 195,000. However, since Congress approved the cap raise, the economy has cooled significantly, and many of the same tech companies that pushed for the limit's increase are now laying off workers. "From our perspective, there are a lot more people in the marketplace right now," says Ateesh Roye of the tech employment agency Mindbank Consulting group. However, Theresa Cardinal Brown of the American Immigration Lawyers Association contends that the decline in H-1B approvals may also be the result of a processing backlog at the INS and a new stipulation that excludes foreign workers employed by institutions of higher education from the cap. Still, Brown acknowledges that the pace of H-1B processing has slowed since the frenzy of last year, when the INS was reviewing applications at the rate of 15,000 per month. The INS yesterday said it had about 66,000 H-1B applications still pending.

  • "Cryptologists Discover Flaw in E-Mail Security Program"
    New York Times (03/21/01) P. A14; Glanz, James

    Computer researchers in the Czech Republic yesterday reported a flaw in the Pretty Good Privacy (PGP) email encoding software used widely to send secure email messages. ICZ, based in Prague, says its employees inadvertently found the bug, which would enable a hacker with remote access to either the sender's or receiver's computer to unscramble the key used in decoding the message. The alleged weakness would let someone steal the digital signature of one of the users and impersonate that party in future exchanges. Network Associates, which licenses the PGP software, says a team was working to investigate ICZ's claims, although vice president of PGP engineering Mark McArdle says the company should have contacted Network Associates earlier to work out patch software before releasing the news. ICZ says it sent several emails without receiving a response, but added that the company was willing to work with Network Associates on a solution before a description of the flaw is posted on the Internet.
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  • "Geography Yields to Cyberspace as Firms Seek Talent"
    Washington Times (03/19/01) P. D10; Dougherty, Carter

    The H-1B program, which gives working visas to nearly 200,000 highly skilled foreign workers each year, is still not enough to meet the high demand for IT workers, explains Software Outsourcing Research executive director Marty McCaffrey. He estimates a lack of between 500,000 and 1 million IT workers in the corporate world right now. Increasingly, firms seeking to fill these often crucial IT positions are outsourcing work to foreign workers. AOL Time Warner, for example, recently announced a $100 million investment in Bangalore, a tech-heavy city in India. There, highly skilled IT engineers work for numerous U.S. companies, doing critical work at salary rates far less than the companies would have to pay domestic workers. Lower overhead means a company such as Northern Virginia-based iCode can also open a facility in Bangalore, where 250 of its 320 workers are located. ICode executives say the reduced costs of overseas labor allow the company to offer its standard software package for only $15,000--much less than the $100,000 it would have to charge if it employed only U.S. workers. Even companies too small to afford opening an overseas facility can capitalize on the growing pool of foreign labor. Vienna, Va.-based CavaSoft contracts its work out to software engineers in the Ukraine. CavaSoft CEO Stephen Kurtz lauds the Ukrainian workers for doing good work quickly and at very revenue-friendly salary rates. McCaffrey says India is the number-one choice for overseas IT outsourcing, commanding as much as 90 percent of the market. Other locations favored by U.S. companies include former Soviet republics and the Philippines.

  • "A Thorn in Hollywood's Side"
    Wired News (03/20/01); McCullagh, Declan

    The Motion Picture Association of America has its hands full trying to stop what many computer programmers and users believe is a free-speech crusade. Carnegie Mellon University researcher Dave Touretzky uses his Web site, "Gallery of CSS Descramblers," to fight Hollywood's attempts to censor DeCSS, the program that lets users unscramble DVDs. "I don't object to content providers wanting to discourage piracy. But there's a limit to how far they can go....The movie industry is happy to destroy important parts of our technology to protect their interests," Touretzky says. He and other programmers fear that standards such as the Content Protection for Recordable Media will limit people's free use of their computers in the future. So far, however, government has sided with Hollywood in outlawing methods to circumvent copyright-protection technology, saying that software programmed with that intention is not protected under the First Amendment.

  • "The Broader Slowdown Isn't the Only Cause of Tech Industry's Ills"
    Wall Street Journal (03/21/01) P. A1; Thurm, Scott

    Some analysts fear that the slowdown for tech companies such as Microsoft, Oracle, Dell, Intel, and Cisco will only worsen in the next year. Many companies have already flushed out their IT infrastructure because of heavy spending in preparation for Y2K and competitive pressures from the dot-com boom. Now companies such as Mohawk Industries, the second largest national carpet manufacturer, say they can get by quite well spending much less than they did two years ago. Mohawk CIO Reid Batsel says he can now lease powerful IBM servers that outperform his old servers and cost half of the monthly price to lease compared to when the company was making payments. Many vendors have been left holding several months worth of inventory because they did not expect the sudden halt in technology spending. Semiconductor manufacturer Xilinx, for instance, says it has up to seven months of excess inventory to sell. This may enable the remaining buyers in the tech market to get steep discounts from vendors ready to unload excess stock or make a transaction. Unfortunately, the depression in tech spending may get worse because corporate tech spending often lags trends in the general economy by one year, Cassius Advisors senior partner Naomi Seligman explains. She says 2000 was a relatively good year, which is being reflected in the generally strong tech budgets this year. Next year's tech spending, however, will be less because of this year's slump.

  • "Microsoft Asks .Net Customers to Trust It With Personal Data"
    SiliconValley.com (03/19/01); Gillmor, Dan

    While columnist Dan Gillmor is generally positive about the potential of Microsoft's new HailStorm Web-services initiative, part of its .Net platform, he argues that the company has not earned the consumer trust necessary to allow its ultimate vision for the initiative to succeed. Gillmor applauds HailStorm's basic architecture, saying it should make it easy for users to develop programs across multiple platforms because it employs standards such as XML and SOAP. He does caution that developers must not be tempted to rely solely on Microsoft for their future Internet-related projects. Giving the company "critical mass," as chairman Bill Gates himself put it, will allow it to dominate the Internet's future as it has dominated the PC-software market, Gillmor warns. In a larger sense, Gillmor is wary about HailStorm and the .Net platform because it represents Microsoft's big push for consumers to transfer the information that governs their everyday life, from address books to documents to financial data, to online programs run by Microsoft. Gillmor argues that the company, for all of its new promises, does not have the track record to earn the level of trust necessary to make such a scenario feasible. Microsoft could easily turn back on promises not to mine or sell whatever consumer data it stores, and consumers would be powerless to stop it.

  • "Dot-Com Bust Taxes Workers' Integrity"
    Los Angeles Times (03/21/01) P. A1; Kaplan, Karen

    Many former dot-com employees are wondering if they should even bother to pay taxes this year. In many cases, the former employees' companies went out of business without filing tax forms with the IRS, meaning they never mailed W2s and other essential tax forms to employees. When this occurs, the IRS requires that employees reconstruct what they expect their taxes should be, even if that means using nothing more than memory and guesswork. Not filing taxes can lead to heavy fines, even prison, but some former dot-com employees seem willing to take the risk. Margee Fagelson, who lost three dot-com jobs last year, still lacks W2s from two of the expired companies. "I don't have enough money to pay my rent, and I certainly don't have enough money to pay my taxes," she says, estimating her earnings last year at under $40,000. Accountants say Fagelson and others like her are taking a big risk in not reporting taxes, even if their former employers simply boxed up their tax records and forgot about them. The IRS has three years to pursue such cases, accountants say, and can still enforce the law up to six years later if the unpaid taxes are significant enough. In some cases, former dot-com employees may even be outsmarting themselves. One such employee, who wishes to remain anonymous, says he had convinced himself not to pay taxes because he thought not paying would be less painful than guessing what he owed and overpaying. However, when guilt overcame him and he went to a tax professional, he discovered that instead of owing $40,000, as he had figured he would, the government owed him a $19,000 refund.

  • "Wallets Slam Shut in Silicon Valley"
    USA Today (03/20/01) P. 1B; Swartz, Jon; Hopkins, Jim

    Various data from the Silicon Valley area suggest that the dot-com downturn is having a definite effect on the overall economy. The vacancy rate for commercial property in San Francisco now stands at 8 percent, up from only 2 percent last year. "Softness in the dot-com market is creating a glut of office space," explains Amit Ghosh, the city's chief planner. For example, in the South of Market neighborhood, the city's former dot-com hotbed, the vacancy rate is now 18 percent. Residential real estate is also suffering, analysts say. In 2000, there were only 1,460 homes available for 5,000 buyers. Now, there are 2,470 homes available for 1,400 buyers. Also, the average price of a single-family home in the San Francisco Bay area has increased 21 percent from last year, which has dissuaded potential buyers. In the apartment-rental market, vacancies have increased 43 percent in the last three months, according to MetroRent.com.

  • "India's Tech Firms Braced for U.S. Fallout"
    TheStandard.com (03/14/01); Wray, Rick

    The drop in tech spending by U.S. corporations is resounding around the world and threatening to dampen the fiery Indian IT sector, which has seen 50 percent growth annually since 1991. Indian software companies are confident that they will be able to outlast the storm because their huge pool of skilled labor is a needed resource worldwide. However, some still fear a lull as U.S. executives hold off on new projects in order to assess the economy. This fiscal year, nearly 60 percent of the $6.24 billion in software exported from India is headed for the U.S. market, according to India's software industry association Nasscom. Next year, analysts see exports reaching $9.5 billion. Dewang Mehta, president of Nasscom, reports that, of the 72 Fortune 500 firms that outsourced IT to India last year with which Nasscom has spoken, 70 have said they plan to increase their outsourcing to India. Mehta is planning a trip to the United States to encourage new customers to enter the Indian labor market, which he says can offer significant cost savings to firms. SG Securities analyst Yeshwanth Kini says the big Indian software companies may not be affected much by the U.S. tech slowdown, but he worries about the second-tier companies that lack close relationships with U.S. clients.

  • "The Net's Letting U.S. Workers Do More From Home"
    Investor's Business Daily (03/20/01) P. A6; Prado, Antonio A.

    More than two-thirds of U.S. workers say they would like to use the Internet to work from home occasionally, claims a new survey Modalis Research Technologies conducted for WorldCom. The survey of 510 business managers and workers from a wide range of fields found that 46 percent do work from home on the Internet at least one day per week. The survey revealed that 16 percent of workers would work at home if it meant reducing their salary. The survey also found increasing enthusiasm for using the Internet to host meetings and to work with colleagues at remote sites. Of the respondents, 91 percent said doing so resulted in time and money savings. Also, 61 percent of respondents said they used that saved time for other work-related projects. Internet-based meetings also received strong support because of their duration, which 55 percent said was shorter than traditional real-world meetings. The survey did find that only 19 percent of respondents actually used the Internet for conferencing. Email was the most popular work-related Internet application, with 94 percent saying they employ it, while 35 percent said they use Internet-based scheduling applications. A separate study from Gartner Group reveals that text messaging is also gaining popularity among workplace users. Gartner says some 12 billion text messages are exchanged each month by PCs, PDAs, and cell phones, with 3 billion additional messages sent each month by pager. Text messaging could impact business by allowing workers to multi-task, analysts say.

  • "The Dubious Digital Divide"
    Financial Times (03/20/01) P. 10; Jackson, Tim

    Columnist Tim Jackson questions the wisdom of a plan from the British government to provide 12,000 lower-income households with Internet connections, and he wonders whether too much fuss is being made about the digital divide in general. Jackson argues that the digital divide, if understood to be the gap in IT access between the rich and the poor, does not hurt the poor as much as some think. As an analogy, he says that there is a definite divide between the rich people who can afford to buy a BMW and the poor people who cannot. Even if the government were to give BMWs to poor people, Jackson contends that owning a BMW would not be likely to lift them out of poverty. In this case, Jackson argues that Internet access is only as beneficial as the content provided over it. He says the poor can use the Internet for two immediate benefits--gaining skills and communicating with others. However, he notes that 44 million U.S. citizens are illiterate, meaning that, even if they suffer from the digital divide, the Internet is not likely to help them communicate. Likewise, simply providing access to the poor so that they can gain IT skills and enter then new economy is impractical, as these skills quickly become outdated. Jackson says general education content offered online will have more tangible benefits but contends that strong, basic-education content--the kind those suffering from the digital divide likely need most--is still absent from the Internet.
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  • "From Russia With Code"
    InfoWorld.com (03/16/01); Vance, Ashlee

    A forum held earlier this month in San Francisco focused on Russia's potential to become an hotbed of IT talent and growth, joining such countries as Israel and India as places where U.S. firms want to do business and outsource important projects. Proponents of Russia's IT potential, such as Jason Horowitz of Sun Microsystems, say the country's strong tradition of education in math and science, as well as a scientific culture under Soviet rule that valued long-term innovation over short-term revenue, make it a natural source of creative workers who will be able to provide strong solutions. However, critics point out that the country is still struggling in its transformation from Communist state to a free-market economy, noting that the cash-starved government imposes a heavy tax burden on the private sector, especially any business that shows a glimmer of a profit. In addition, critics say rampant piracy of intellectual property makes Russia a difficult environment in which to conduct business. For example, Sun needed four years before its initial Russian ventures showed any results due to myriad complications. Critics also note that Russia does not have the same presence within U.S. firms as India and Israel does, a prime reason those two countries have established themselves as growing hubs of the new economy. The obstacles are daunting, proponents admit, but they say the Russian government is working to lessen the tax burden and clamp down on intellectual piracy. Also, a few Russian tech companies are beginning to prosper, including IT service firm Information Business Systems Group, which may even go public in the Europe or the United States next year. Also, Russia presents an enormous market for U.S. firms, proponents contend, as there are few servers or network infrastructure to connect its many PCs.

  • "Questions on Firing and Severance at Computer Associates"
    New York Times (03/20/01) P. C1; Berenson, Alex

    Computer Associates employees laid off within the last few months are raising serious questions about their recent terminations. Lawyers for some of those laid off allege that their clients are victims of a corporate cost-cutting scheme. They argue that Computer Associates not only covered up the real reason for the layoffs, but also that the firm charged some former employees with poor performance so that they would not have to pay severance. Mary Welch, a former salesperson for the company, says she received a glowing review during the same month in which she was fired for poor performance. Former employees claim that hundreds of workers in Computer Associates' worldwide offices are victims of an undercover mass layoff. Although the employees could have been terminated at any time for any reason because they are nonunion, the former employees' lawyers say a lack of documentation could prove a vulnerability for Computer Associates in a lawsuit. Also, one lawyer suggests that the Securities Exchange Commission may step in if a mass layoff scheme is revealed to have occurred because of economic reasons unreported to investors. Officials at Computer Associates say the firings were not a mass layoff but rather a typical year-end housecleaning of unsatisfactory employees.
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  • "Rethinking the Internet"
    Business Week (03/26/01) No. 3725, P. 117; Mandel, Michael J.; Hof, Robert D.

    Although the Internet appears to have lost its status as "The Next Big Thing" destined to revolutionize every aspect of human existence, many observers and analysts say the Internet industry is doing much better than most people are aware and will succeed over time. Those who believed that the Internet would be an overnight success set their expectations too high and were destined to have their hopes shattered. Observers say the Internet is bringing change to nearly every industry, but each industry is changing at a different speed, depending on how the Internet--more than anything else, a tool for speeding the exchange of information--fits that industry. For example, financial services have embraced the Internet wholeheartedly because they trade in facts and figures rather than any physical object. Of financial companies, 63 percent sold their products or services online, far outpacing any other industry, according to a Goldman Sachs survey. In contrast, the entertainment industry has yet to catch fire, as few consumers have the high-speed connections that would make watching programs or listening to music online worthwhile. Likewise, the manufacturing industries have already benefited tremendously from the Internet--reducing inventories and making supply chains more efficient--but the Internet will not change the fact that manufacturers must still make physical items, a process that is still time- and labor-intensive. The retail industry has also learned that the Internet will not destroy bricks-and-mortar business models. Companies that rushed to make hundreds of thousands of goods available for purchase online but that spent little on warehousing or distribution gained a lot of early press but, for the most part, failed spectacularly. Those that invested in infrastructure rather than flashy Web sites have made progress, even if they have yet to make a profit. Observers stress that society must give the Internet time to grow, as people become comfortable with it as a very powerful, but not the only, tool for doing business.

  • "To Protect and Self-Serve"
    Scientific American (03/01) Vol. 284, No. 3, P. 31; Grossman, Wendy M.

    Large tech companies, including IBM, Intel, and Toshiba, are working to place what is known as content protection for recordable media (CPRM) technology in the next generation standard for storage technology. Confronted by the media, the companies admitted that they were planning to use the CPRM scheme, but only for removable media, not fixed hard disks. Regardless, columnist Wendy Grossman maintains that because the companies that hatched CPRM also created the regional encoding that stops a DVD produced for use in one part of the world from playing in another, there is reason to worry. Currently, CPRM is being mulled over by the technical committee that decides the hard-disk standard. CPRM would assign every hard disk an identification number, which would be verified before compliant files are run, moved, or copied. Many analysts fear that CPRM would bar people from making backup copies of their own data or of commercial software without the permission of a third party. Others insist that CPRM is a plot to "kill off" open source software by splitting it into one group that supports the copyright protection and one that opposes it. Grossman contends that while content owners have a right to make a living off of their work, this right needs to be balanced with the public's right to consume such content, something that copyright laws have traditionally accomplished. However, Grossman argues that CPRM, which would cause consumers to lose control over even basic computer hardware, would "upend the balance." Even more ominous, she says, is the fact that CPRM exploits technology to protect the interests of powerful corporations with no public discourse on the matter.

  • "Three-Strikes Law"
    Internet World (03/15/01) Vol. 7, No. 6, P. 28; Isenberg, Doug

    Columnist Doug Isenberg contends that the 107th Congress has already become the most activist group of lawmakers in terms of Internet legislation in U.S. history. However, he warns that the current crop of legislators should take a look at the failed history of attempts to regulate the Internet and craft legislation that will be practical and stand up to judicial scrutiny. Already, three laws--the Communications Decency Act, the Child Online Protection Act, and the Children's Online Privacy Protection Act, which limits the type of data allowed to be collected from youth under age 13--have all been deemed too vague and broad to be enforceable by the courts or regulators or have been struck down for violating First Amendment free-speech protections. Isenberg contends that the most recent piece of Internet-related legislation, the Children's Internet Protection Act, which cuts federal funding for Internet access in public schools that do not possess "adequate technology protection measures" to filter out certain types of content, will meet a similar fate, as will any other law that is written without careful consideration of its ramifications.

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