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Volume 3, Issue 185:  Wednesday, April 4, 2001

  • "Job Cuts Loom Over Software Sector"
    Financial Times (04/03/01) P. 22; Foremski, Tom

    Although industry analysts had thought e-business and infrastructure software vendors would not be shaken by the tech sector's current downturn, as their products help companies reduce costs even further, three leading vendors on Monday announced revenue shortfalls and plans for layoffs. Ariba announced it would post a loss of 20 cents per share, four times worse than what investors had predicted. The company said it would lay off 700 workers, or one-third of its workforce, and would end its nearly completed merger agreement, valued at $2.55 billion, with Agile Software. Ariba's competitor I2 said its gains this quarter would be 2 cents per share, while its investors had expected gains of 5 cents per share. The company will let go 610 workers, about 10 percent of its workforce, in an attempt to reduce overall costs by 10 percent. Infrastructure software vendor Inktomi said its losses for the quarter would fall between 23 cents and 25 cents per share, much worse than investors' expectations of a loss of 5 cents per share. The company said it would reduce its workforce by 25 percent, 260 employees. The companies cited the weakening European market as well as companies hesitant to make any technology purchases as the causes of their declining fortunes.
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  • "In Silicon Valley, Vacancies Go Through Roof"
    Wall Street Journal (04/04/01) P. B1; Muto, Sheila

    Silicon Valley firms are reexamining their real estate portfolios as they issue profit warnings and face cost-cutting measures. Yahoo! announced a consolidation of its employees spread across the Valley back to its corporate headquarters in Sunnyvale. Palm has halted construction plans for a new San Jose headquarters in order to save money, and Cisco Systems has abandoned its search for new offices near Washington, D.C., and north of San Francisco. Ariba is looking to lease out 270,000 square feet from its new 715,000-square-foot headquarters in Mountain View after announcing the layoff of 700 workers. CPS Commercial Property Services reports that occupied space in Silicon Valley has taken a negative turn, meaning that more companies are not renewing their leases and are reconsidering plans to move to bigger offices. In the last three months, 3.5 million square feet of real estate has opened up in Silicon Valley.

  • "Tech R&D Spending Holds Firm--for Now"
    Interactive Investor Online (04/02/01); Kary, Tiffany

    Although the current economic downturn is prompting many tech firms to issue revenue warnings and lay off employees, few firms are willing to cut their research and development budgets. For example, both Sun Microsystems and Texas Instruments have recently announced plans to increase R&D spending for 2001. At Intel, the R&D budget has been reduced $100 million, but with the company still planning to spend $4.2 billion on R&D, company officials say that reduction is relatively insignificant. Economists say R&D spending is often the last thing to be reduced in lean economic times, as many companies believe breakthrough products are what can spring them, and perhaps their sector or even the entire economy, back into a boom. "Boom times are time to reap," says University of Chicago economics professor Boyan Jovanovic. "The incentives are to squeeze and milk the things you've got going on now. Recessions are a time to sow--when people really scratch their heads and think about drastic change." In addition, as Boston University economics assistant professor Samuel Kortum points out, the cost of restarting R&D spending after cutting it during a downturn is extremely high. In fact, a few analysts argue that it is a lack of innovative products that is to blame for the slowing tech economy. Fewer people are buying PCs, these analysts contend, simply because they are not excited about the PCs that they can currently buy.

  • "Taxes Top Tech Agenda"
    CNNfn (04/03/01); Richtmyer, Richard

    U.S. Rep. and Speaker of the House Dennis Hastert (R-Ill.) delivered the keynote presentation at the Comdex trade show in Chicago Monday and said lowering taxes will be a key part of the tech agenda in Washington this year. Addressing the $1.6 trillion tax-cut plan of President Bush, Hastert said it would help the economy and, as a result, help high-tech businesses. The centerpiece of the Bush tax cut proposal is a reduction in federal income taxes of $958 billion. The House passed the reduction package last month. Hastert also said the moratorium on Internet taxes, which expires in October, should be extended. The high-tech industry can expect Congressional leaders to take up several other tax-related issues, such as making permanent the temporary tax credits for research and development expenses and tax credits for employers who provide tech education and training to workers. Congressional leaders will also look to end the federal telephone excise tax as well as taxes on computers and Internet access that companies make available to workers. Aside from taxes, Congressional leaders have Internet privacy, open access to broadband Internet connections, improved technology education and training, and the digital divide on their agendas this session.

  • "Group Approves VeriSign's Control Over Web Addresses"
    Wall Street Journal (04/03/01) P. B4; Bridis, Ted

    In a 12-3 vote, ICANN's board approved its new deal with VeriSign, allowing the company to retain control of the .com domain without divesting portions of its business. By Dec. 2002, VeriSign will give up the .org domain, and the .net domain will be surrendered at a later date, although VeriSign will have a chance to bid for control of the .net domain. There were a few changes made to the agreement. The $10,000 fee that registrars pay to VeriSign was dropped and VeriSign now has to spend $200 million toward the research necessary to create a directory of all domain names. Further, VeriSign must keep the registrar and registry portions of its business separate or it will face fines. The U.S. Commerce Department still has to approve the deal, and four members of Congress have suggested that the Commerce Department "fully analyze" competitive concerns stemming from the new deal. These suggestions, which were made by Reps. W.J. "Billy" Tauzin (R-La.), John Dingell (D-Mich.), Fred Upton (R-Mich.), and Edward Markey (D-Mass.), were made to Commerce Department Secretary Donald Evans in a letter. The letter "certainly is something we take seriously," says VeriSign vice president Bob Korzeniewski. However, VeriSign hopes that changes made to the new agreement, at the suggestion of ICANN's board, will satisfy the lawmakers, says Korzeniewski. The Commerce Department has until May 10 to make a decision on the new deal.

  • "Wireless's New Keys to the Net"
    Washington Post (04/04/01) P. E5; ElBoghdady, Dina

    VeriSign is testing a service called WebNum that permits businesses and consumers to register numeric strings or phone numbers in order to connect to the mobile Internet. Web sites that want to join have to register on VeriSign's Web site. First, users have to visit the WebNum site on their mobile phone. Once at the WebNum site, users can enter the shorter, numeric addresses. The obstacle facing WebNum is attracting users when there are few available Web sites, and convincing Web sites to register when users are scarce. Although other companies have had a difficult time promoting the service, VeriSign might have the ability to make WebNum popular because it has an established market presence. WebNum services are available for free through May 1 for individuals or businesses that want to register their current phone numbers. Applicants requesting numeric addresses that are seven figures or less must be patient, as VeriSign has to make sure no trademark conflicts exist. The technology might become outdated quickly when it becomes possible to surf the Web using voice command, according to industry analysts. "I'm at least a bit skeptical about how much easier it makes a consumer's life when they have to think of the wireless Internet in a numeric way," says Jupiter Communications analyst Joe Laszlo. Voice technology will likely take a number of years to develop and could be integrated into the WebNum system, says VeriSign. Bango.net is another company offering numeric addresses for mobile Internet use, and has sold over 107,000 numeric addresses worldwide. Technology and pricing must improve before the mobile Web can start to grow in earnest, according to Aberdeen Group analyst Maged Fahmy. The mobile Web must achieve a critical mass before content providers can attract investors, say critics.

  • "Intel Makes First Chips Using New Technology"
    Reuters (04/02/01)

    New technology will allow Intel to produce more chips at a lower cost, the company announced Monday. The company is reducing the circuit lines on its cutting-edge chips from a width of .18 micron to .13 micron. At the same time, it is increasing the size of its wafers from a diameter of 200 millimeter to a diameter of 300 millimeters. The two changes will lead to 30 percent savings in the cost of production and will increase the number of chips produced per plant per day by fourfold. In addition, the .13 micron chips will replace aluminum wires with wires made from copper, allowing them to function at higher speeds and lower temperatures. Intel projects the new chips will be available later this year.

  • "Employers Now Control Marketplace For Tech Workers"
    Chicago Tribune Online (04/02/01); Bennett, Julie

    As dot-coms continue to close shop and corporate layoffs push thousands of skilled tech workers back into the marketplace, employers and recruitment firms are facing a much different situation than only a few months ago. Rob Williams of ClickAction says he now considers no one but programmers with six to seven years of experience who are willing to work full-time. Previously, ClickAction had been forced to hire freelance computer experts at $75 to $125 per hour. Steve Colbourn, a recruiting director for Accenture, adds that prospective employees have received a reality check on what they can demand in pay. Fewer firms are offering perks such as $700 car allowances and generous stock options. At the same time, however, candidates are careful to make sure their compensation is not too heavily weighted in stock options, asking instead for cash up front. Recruitment firms are hard hit by the glut in tech workers even though their offices are inundated with calls from job seekers. Andrew Knott of White Rock Networks says his company's in-house recruitment promotion was a great success and saved $2 million in agency fees. The company offered a chance to win a BMW convertible for every engineer to whom employees recommended the company. As a result, White Rock received 438 referrals and made 82 hires. Others in the practice note that, despite the influx of mid-level programmers, demand is still taut for workers with rare skills like C++, Java 2 Enterprise Edition, and encryption experience. IT administrators in the Internet field, while still difficult to recruit, are opening up to the possibility of moving to more solid ground in traditional firms as well. Jim McSherry of recruiter Battalia Winston International says, "Executives who are still working in dot-coms realize their visions of grandeur may never come true and they're willing to talk to us."
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  • "P-to-P, B-to-B--R.I.P.?"
    Wall Street Journal (04/04/01) P. B1; Gomes, Lee

    A string of recent setbacks has halted the march of peer-to-peer (P2P) technology, once hailed as the future of online computing. "The whole P2P hoopla is emblematic of the mad rush to find the next big thing in technology," says Bill Burnham of Softbank Venture Capital. While the technology is still viable, the business wisdom leading companies such as InfraSearch and the now defunct Popular Power is being questioned. InfraSearch used P2P technology to help people conduct Yahoo-like searches over file-sharing networks. Recently, Sun Microsystems bought the company for only $10 million and discontinued the business, instead folding it into a research arm. Edward Jung, former Microsoft software architect and founder of the P2P firm OpenDesign, says businesses tried to capitalize on the enthusiasm surrounding Napster, which he says was more about sociology than technology. Even Jung's own company and others, such as Groove Networks, admit to passing their wares off as P2P mainly for public relations purposes. At most, their software could be described as P2P because the programs directly connect two computers for some applications. The pure P2P model is seen in the Gnutella networks looking to supplant Napster as the preeminent file-sharing network. These companies, including BearShare and Lime Wire, hope that the recording industry will not be able to close them down because their networks are run through millions of users' PCs instead of through centralized servers such as Napster uses. Another application of P2P is seen in the distributed-computing model popularized by causes such as advancing cancer research or searching for extraterrestrial life. So far, businesses are finding it hard to make money with this model. Popular Power closed last month and United Devices has only three customers.

  • "Special Report: The New Digital Politician"
    E-Commerce Times (04/02/01); Weisman, Robyn

    With over half of U.S. households now possessing Internet access, and advocates and opponents on issues such as online privacy and sales taxes for e-commerce becoming more vocal, the U.S. Congress will have to deal with Internet-related issues on an increasingly frequent basis, concludes a new report by the Net Policy and Regulation Group of Forrester Research. The report identifies a group of 36 members of Congress that will play a major role in shaping Internet and tech policy, calling the group, "a new breed of legislator." The members--20 Republicans and 16 Democrats--are not as bound by ideological ties as they are by their personal and political experience or by the districts that they represent. The group includes members from areas considered high-tech hubs and members who have served on committees with oversight on tech issues. Among the members are household names such as Orrin Hatch (R-Utah), the chair of the Senate Judiciary Committee, and Sen. John McCain (R-Ariz.), as well as lesser known but rising members such as Sen. Maria Cantwell (D-Wash.), a former tech executive, and Rep. Billy Tauzin (R-La.). Giga Information Group analyst Jim Grady notes that although this group of Senate and House members are unusually interested in tech issues, it does not mean that the overall Congress will rise above its usual partisan bickering. He notes that tech issues still seem to be coming down to party-line proposals and votes.

  • "Japan Outlines Five-Year 'E-Strategy'"
    Newsbytes (03/30/01); Stone, Martin

    The Japanese government has unveiled an extensive and detailed five-year strategy intended to make Japan the No. 1 IT nation in the world. The "E-Japan Priority Policy Program" contains 200 government actions listed year by year, with 2001 year-end goals that include creating a "Telecom Conflict Resolution Committee" arbitration panel, helping the FTC via new guidelines for the Antimonopoly Act, expanding the radio frequency spectrum for wireless Internet device use, and launching an extensive teacher and student Web and computer education program. Japan hopes to lay the legal groundwork for electronic contracts by 2002. During 2002, Japan will focus on digitalizing government, and during 2003 Japan intends to move the legislative process and delivery of legislative and regulatory documents online. The government also plans to help reduce the digital divide.

  • "Napster-Proof CDs"
    Salon.com (03/27/01); Mann, Charles C.

    New technology to prevent CD downloads will make its U.S. debut this month in a new release from Music City Records. The technology seeks to prevent the downloading of CDs into MP3 format for storage or trading, and the recording industry will be watching as the marketplace tests its effectiveness. Israeli firms such as TTR and Midbar, as well as the major U.S. recording companies, are trying to develop anti-download technology, but whether it will be hacker-proof and will not disrupt CD playback remains to be seen. The technology hones in on the differences between how CD players read a CD's "RedBook" (or CD-DA) code and how CD-ROM players read CD-ROM "YellowBook" and "OrangeBook" code. CDs sprinkle 10 or 11 tracks across the spirals of a CD, which the CD player locates through a "table of contents." The RedBook code also contains self-healing information that allow CD players to skip over any damaged information. CD-ROMs hold more information, all of which must be read. Traditional anti-download technology consists of encoding disruptive data in CDs that the CD player skips but that the CD-ROM cannot. One major obstacle is that high-end car radio and stereo equipment use fine-combing CD-ROM reading technology for its CD players, which would be disrupted by anti-download CDs. Some industry experts see anti-download technology as the recording industry's last gasp before the industry either enhances CD-buying with special-access clubs and such similar services or moves to another medium altogether. "You're going to need a new generation of secure devices," says mathematician and entrepreneur Dan Lieman. "Ultimately it's going to be done in hardware, because hardware is a lot harder to hack than software."

  • "Spotlight Shifts to Music And Film Industries"
    Financial Times--IT (04/04/01) P. 5; Talacko, Paul

    Digital rights management (DRM) software is looming on the horizon of the recording industry. Users will soon have to pay for each specific use of music content, and companies will have an amazing amount of control over their music content. Companies such as InterTrust, Microsoft, Softlock, and Adobe are developing ubiquitous methods for blocking content from being illegally used on all digital devices, including MP3 players, CD-ROMs, and digital television. Additionally, with InterTrust technology, content providers would be able to gather specific information and build profiles according to how each consumer uses the content. Currently, corporate interests are piqued over the new revenue streams this technology will entail, and many are positioning new product lines for DRM. Microsoft, for example, has its Windows Media package integrated with its new XP desktop system, and Nokia bought a 5 percent stake in InterTrust in anticipation of earning money from content distributed via mobile phones. Bertelsmann's Digital World Services is working on a DRM solution for its besieged partner, Napster. InterTrust executive vice-chairman David Chance says users will not be able to mix their favorite music on a CD anymore unless they purchase the rights to the individual songs from different media companies. DRM software will work by connecting the user online to a digital rights clearinghouse, such as Digital World Services or U.S.-based Reciprocal, which would then collect the fee and distribute it amongst the various content owners.

  • "Idea Auction Sites Put Brainwaves on Block"
    Globe and Mail (03/30/01) P. E1; Marron, Ken

    Several Web sites have emerged in recent months to capitalize on the growing market for knowledge commerce, or, in the language of the Internet, k-commerce. K-commerce sites such as Knexa allow users to submit their intellectual property, from academic treatises to custom-built software solutions to plain, old-fashioned advice, and sell that property to the highest bidder in an eBay-style auction format or to anyone who wants it. Knexa CEO David Brett says the Internet is the best medium for exchanging the world's continually growing store of information, which will double every 11 hours by 2010, forecasts McMaster University professor Nick Bontis. Indeed, a recent study sponsored by another site, Keen.com, found that the average U.S. resident spend 18 days per year searching for answers to their questions. Keen.com allows users to submit their queries and then connect with experts who can advise them. The actual advising occurs over the telephone, a system that allows for both the worldwide reach of the Internet and the intimacy of conversation, explains Keen.com CEO Karl Jacob. Keen.com now has 2.5 million users, and tech research firm Datamonitor predicts that the market for online data exchanges will reach $6 billion by 2005. Knexa's Brett acknowledges that his firm has yet to turn a profit, nor do other participants believe that anyone who sells their information or advice online will become rich overnight. "It doesn't allow the authors the ability to retire," says deputy fire chief Pat Downey, who has sold operational guidelines for fire departments online, "but it does allow them to take their wives out to dinner and it gives them an incentive to compile the information that they have inside their own head so that other departments can use it."
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  • "Recycled PCs Bridge the Digital Divide"
    Associated Press (04/03/01) P. A12; Smith, Tony

    Former consultant Rodrigo Baggio has founded the Committee for the Democratization of Information, a nonprofit organization to battle Brazil's digital divide. Baggio estimates that, of his country's 170 million residents, only 4 percent use the Internet, most of them professionals in the upper- and middle-classes. Baggio's organization takes in outdated PCs, cleans them up, and then installs them in one of over 200 Computing and Citizenship Schools across the country. The schools are located in Brazil's favelas--communities inhabited by the country's poorest citizens. Baggio says the schools enroll some 20,000 students of all ages, who pay between $2.50 and $7.50 per month to learn how to use computers and the Internet. Those who cannot afford that payment can pay through volunteer work. "We give technological trash a social use and give these communities hope and perspectives for the future," says Baggio, who takes issue with those who say Brazil's poor need food, not technology. Technology, he says, offers an opportunity to rise above a way of life that all to often leads to drugs, violence, and even greater poverty. The organization's sponsors include Microsoft, Xerox, and Brazil's National Bank of Development.

  • "State and Local Market to Outpace Federal Spending, Research Says"
    Washington Technology (04/02/01) Vol. 16, No. 1, P. 1; Emery, Gail Repsher

    State and local government IT funding will outpace federal funding over the next five years as all levels of government pursue robust growth in online services, reports market research firm Federal Sources. State and local is predicted to grow at a 5.3 percent annually compared to 4.2 percent on the federal level as governments continue to prioritize IT funding even in the face of slowing revenue rates resulting from the recent economic downturn. The worst case five-year scenario for state and local government IT funding growth is 4.2 percent, says Federal Sources. The federal Department of Education budgeted $63.1 million for IT funding this year, but has in addition spend over $1 billion on 53 grants that include IT components. The State of Maryland is pursuing an ambitious online timetable, codified under Maryland law, to offer 80 percent of state agency services online by 2004. By 2004, combined state and local IT spending will reach $45,3 billion, $44 billion for the federal government, predicts Federal Sources.

  • "Whodunnit?"
    Economist (03/31/01) Vol. 358, No. 8215, P. 73

    Computer forensics--the tools and techniques used to find, keep, and analyze the digital evidence from cybercrimes--is a field that is becoming more commercially viable by the day. Computer forensics experts must search through data that is often encrypted or put in graphics files in order to establish an "audit trail." Such experts are needed to combat the growing popularity of programs on the Internet that enable a hacker to gain control of a computer's operating system. With more and more computers attached to large networks, and with few users taking anything more than minimal security precautions--if even that--hackers relying on these programs could easily have a field day employing ordinary users' systems to mount sophisticated hacking attacks. However, there are now automated investigation tools that can counter the hacking programs, such as Coroners Toolkit, which speeds up and standardizes the digital-forensic examination process. A group of anti-hacking experts have even set up a network of "honeypots," vulnerable but unimportant computers designed to lure hackers so that the experts can study their habits and techniques.

  • "Federal Redrafting of the UCITA Law Could Benefit Everyone--Including Bush"
    InfoWorld (03/26/01) Vol. 23, No. 13,; Foster, Ed

    It is time to redraft the Uniform Computer Information Transaction Act (UCITA) to create a fairer e-commerce and software marketplace, writes Ed Foster. Although UCITA provides some good guidelines, limits need to be placed on what shrink-wrap/click-wrap licensing agreements can demand. In addition, while products do not have to come with warranties, UCITA should be rewritten so that warranty disclaimers are not legal excuses to avoid replacing bug-infested or otherwise ladefective products sold as working software. UCITA should stop the practice of selling software over the Internet without displaying the full terms of a licensing or buy agreement before purchase, and it should force companies to do more when changing their privacy policies than posting changes on a Web page that no one may ever visit. When UCITA was first written 10 years ago, only the large software and hardware manufacturers were at the table, Foster points out, and their input has led to a marketplace tilted favorably toward them.

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