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Volume 3, Issue 188:  Wednesday, April 11, 2001

  • "Mixed Tech Sector Reaction to Bush Budget"
    E-Commerce Times (04/10/01); Weisman, Robyn

    The tech industry found reasons to be pleased and disappointed in the fiscal 2002 budget released Monday by President Bush. The budget addresses some of the tech industry's most pressing concerns, including the state of math and science education, which would benefit from a $200 million allocation to the Math and Science Partnership of the National Science Foundation. The industry would also receive an extension of the research and development tax credit, an issue that had gained widespread, bipartisan support. However, Bush's budget would eliminate the Advanced Technology Program and also decrease research and development funding at the Department of Commerce. Also, the industry is not happy that the budget would further reduce funding at the Patent and Trademark Office (PTO), which is struggling to keep up with an ongoing, nearly exponential increase in patent applications. Industry officials argue that without greater funding, the PTO will not be able to process new patents in a timely manner, a prime concern in an industry where product cycles are brief and competition is keen. Forrester Research analyst John McCarthy says much of Bush's budget for tech-related issues is inexplicable but maintains that getting the economy out of its downward turn is the industry's top concern.

  • "Challenges, Possibilities Rise for Online Security Providers"
    Investor's Business Daily (04/11/01) P. A8; Levaux, Janet Purdy

    Computer security firms met this week at the RSA Conference 2001 to discuss the latest threats and opportunities in the industry. RSA CEO Arthur Coviello was pleased at tech firms' desire for a solution that fits their needs, rather than demand for the hottest technology. Still, new technologies such as public key infrastructure (PKI) and digital certificates are the key to the industry's further success. RSA reported significant growth in its recent earnings report, citing a 150 percent rise in sales of PKI products since last year. However, PKI and digital certificates are not expected to reach their full market potential until 2003, when Gartner Group predicts that they will be pervasive online. Two new areas for security vendors to consider are PDAs and Internet-enabled mobile phones. Many new security and privacy concerns have been raised by wireless Internet technology, especially in the banking industry. Matsushita and Ericsson have signed deals with RSA and VeriSign to strengthen security in these areas by jointly developing new digital certificates and encryption for mobile Internet transactions.

  • "Group of Tech Companies, 3 Labs to Unveil Chip-Making Machine"
    Wall Street Journal (04/11/01) P. B6; Goodin, Dan

    A consortium of leading tech manufacturers along with three federal laboratories are working to apply government laser technology in making smaller semiconductor chips. Some experts have predicted that Moore's law, the theory that computing power doubles every 18 months, will expire in five years as chips reach physical limits. However, that assumption is based on the traditional lithography techniques used to etch circuitry. A new laser-etching machine will use defense technology to make chips 20 percent to 7 percent the size of the smallest possible chips made by traditional lithography. Still, the use of government-developed technology would give away valuable national assets to foreign companies such as Nikon and Canon, argue some in the industry. Ultratech CEO Art Zafiropoulo says such foreign companies dominate the lithographic industry--estimated to be worth $10 billion by 2010. He contends that handing them U.S. technology would waste a chance to enhance the nation's trading power. The prototype machine still has to prove its viability, says Agere Systems CTO Mark Pinto. He notes that IBM, Motorola, and Intel--the corporate backers of the research--are the usual pioneers of such ground-breaking technology, but says, "If it was a no-brainer that it was going to be good for everybody, you'd find more people willing to stand up and invest in it."

  • "E Ink Demos First Active-Matrix Electronic Ink"
    IDG News Service (04/10/01); Evans, James

    E Ink has developed an active-matrix display that provides resolution equivalent in quality to a traditional laptop display, the company revealed this week. The display will be the first active-matrix display with high-resolution text and illustration capability, the company claims, and could be used in PDAs, cell-phone displays, and electronic reading devices. The prototype display, a screen 12.1 inches diagonal, uses enhanced electronic ink technology that has increased by tenfold the speed at which the electronic ink can change. The company will not say how it made such an increase possible. The display, which is being developed with the assistance of IBM, weighs less and consumes less power than traditional and organic LEDs, LCDs, and cathode ray tubes do, the company boasts. E Ink estimates that the new display should be ready by 2003.

  • "Copyright Laws Out of Balance"
    SiliconValley.com (04/07/01); Gillmor, Dan

    U.S. Rep. Rick Boucher (D-Va.) is gathering support from concerned interests to battle the entertainment industry, which he alleges is stifling fair-use laws for the digital medium. First on his agenda is to repeal the Digital Millennium Copyright Act, passed in 1998. That law, says Boucher, has given copyright owners far too much leverage against the consumer and may even lead to more serious infringements of users' fair-use rights. Boucher says he understands that copyright owners want to protect their content but argues that using legislation and the courts to shut down Napster and other providers of online content is missing an opportunity to turn the Internet into a widespread vehicle for content distribution. Boucher hopes to align Academics, libraries, digital-equipment makers, and a grassroots base of consumers as allies. While he has not yet introduced any legislation, his office is organizing a list of concerned citizens.
    For information regarding ACM's work in the area of intellectual property, visit http://www.acm.org/usacm/IP.

  • "Tech Consultants: Yes, You Can Go Home Again"
    Investor's Business Daily (04/11/01) P. A8; Bonasia, J.

    Tech consultants who left their firms for the dot-com gold rush are coming back to welcome arms now that the boom has gone bust. Nearly 75,000 dot-com workers have lost their jobs in the past 16 months, reports Challenger, Gray & Christmas. Consulting companies value the new experiences these people have, as well as the energy and attitude it takes to pioneer a dot-com, says Mike Connolly, president of global technology consulting for DiamondCluster International. "People who've experienced the ups and downs of a startup are also a bit wiser and humbler." He says his company has rehired employees who bailed only six months ago because DiamondCluster understands their desire to pursue new opportunities. Charles Schwab also has placed an emphasis on the value rehired employees have, offering a $7,500 bonus for returning workers in spite of recently announced layoffs. Challenger CEO John Challenger says the corporate attitude has shifted from 10 years ago, when employees who left were seen as not loyal. Accenture director for global recruiting Bill Ziegler says his company won back 108 employees after sending a recruitment letter last summer and that an additional 179 have returned since September 2000.

  • "H-1B Applications Unexpectedly Down"
    InformationWeek Online (04/09/01); Khirallah, Diane Rezendes

    H-1B visa applications in February fell by half compared to the same month last year, from 32,000 to 16,000, according to new statistics from the Immigration and Naturalization Service. The decline has surprised many in the tech industry, which last year successfully trumpeted the necessity for raising the number of H-1B visas issued each year in order to meet tech firms' demand for highly skilled workers. However, an INS spokesperson said the decline may have more to do with the rise in the H-1B application fee, which went from $500 to $1,000 in January. Applications were up considerably in December, the last month at the old fee, the spokesperson noted. Observers say the dot-com bust is also not a likely cause of the decrease in applications, as most of the firms that hire H-1B workers are tech stalwarts such as Oracle, Microsoft, and Intel, or consulting firms with a strong tech background.

  • "Forecast: More Pain for Tech Sector"
    NewsFactor Network (04/09/01); DeLon, Daniel F.

    Lehman Brothers analyst Dan Niles is pessimistic about the future of the semiconductor industry, predicting that 2001 will be the worst year the industry has ever seen. Niles expects revenues for chipmakers to plummet 18 percent to 20 percent this year and forecasts that companies such as Intel will continue to lose substantial revenue for the next two to three years. Other analysts say Internet infrastructure companies such as Cisco Systems and Oracle will also experience pricing problems. Analysts contend that the problem lies in incessant equipment manufacturing during the dot-com rush, which resulted in over-capacity. After the widespread death of many Internet firms, those left over are purchasing "out-of-the-box technology" for 30 cents on the dollar. This problem has been exacerbated by the slowing economy, which has prompted "old economy" companies to back off of their Web plans or abandon existing deals. As a result, many U.S. tech firms have begun investing in technology ventures overseas, particularly in Asia. Intel, for example, noting that just 15 percent of homes in the Middle East are connected to the Internet, has begun expanding there, despite that region's turmoil.

  • "Data-Network-Equipment Manufacturers Are Hurt by Downturn in Tech Spending"
    Wall Street Journal (04/11/01) P. B6; Loftus, Peter

    A drop in technology-associated spending has hurt manufacturers of data networking equipment. Several equipment suppliers already cautioned that their earnings and revenues for the quarter would fall short of expectations. It is apparent that first-quarter sales in a range of market sectors will be lower than fourth-quarter sales, says market researcher Tam Dell'Oro. Companies have announced significant shortcoming for the current quarter. Extreme Networks predicted last week $110 million to $115 million in fiscal third-quarter revenue, falling short of analysts' expectations by 28 percent. Extreme also said it expected a loss of 6 cents to 8 cents per share for the quarter ended March 31. Prior to the warning, analysts expected 12 cents-per-share earnings, Thomson Financial/First Call reported. Other networking companies that expect quarterly results to fall below expectations include Redback Networks, Sycamore Networks, and Foundry Networks.

  • "Keeping Ahead of Infection"
    Financial Times--Corporate Security (04/10/01) P. 5; Heavens, Andrew

    Anti-virus firms agree that working quickly is the key to stopping a potentially devastating virus outbreak. A virus such as the damaging Melissa or "I Love You" strains can spread across the world, infiltrating entire corporate networks in seconds. Anti-virus firm McAfee.com allows its users to subscribe to an Internet-based service, letting them download patches for new viruses as soon as they become available. McAfee's parent company, Network Associates, is exploring the use of peer-to-peer file-sharing technology to make the spread of new patches even quicker and more efficient. At Symantec, vendor of the Norton AntiVirus software line, researchers are continuing work on the Digital Immune System, a technology that can remove suspicious files from systems and develop patches as it encounters new virus strains. Such technology could be vital in combating the most virulent of the new viruses, a worm known as Hybris. McAfee reports that this worm not only destroys files and replicates itself, but also changes it form to make it more difficult for patches to locate and neutralize. Some anti-virus firms say developments such as this show that current steps to stop the spread of viruses are rapidly becoming ineffective. Dave Kroll of FinJan Software advocates a preemptive anti-virus strategy, saying, "Traditional companies aim to get a patch up in six to eight hours. That approach is becoming obsolete. In six to eight hours, everyone is infected."

  • "Research Budgets Go Under the Knife"
    USA Today (04/10/01) P. 1B; Iwata, Edward

    As the economy continues its decline, tech companies are cutting into prized research and development budgets to reduce costs. Firms pressured by stockholder demands to keep profits up have already laid off thousands of workers, slashed expenditures on hardware, and put off big projects such as manufacturing plants and corporate offices. Morningstar analyst Jeremy Lopez says even though R&D is vital for the future of a company, nothing is immune when "growth has fallen off a cliff." Even industry pioneer Intel has cut its R&D budget from $4.3 billion to $4.2 billion, although the company vows not to reduce it further. Dell Computer, another tech leader, said it would scale back its $500 million R&D budget, though officials have yet to specify by how much. In previous recessions, R&D budgets have fallen--by 2 percent in 1992, for example. However, some companies are using the current situation to get a jump on competitors. Sun Microsystems has increased its R&D budget by 20 percent to $1.9 billion, while rival software firm Microsoft will raise R&D expenditures by 15 percent to $4.5 billion. Also, Texas Instruments reported that its R&D will increase 6 percent to $1.7 billion.

  • "The Name Game"
    Boston Globe (04/09/01) P. C1; Shadid, Anthony

    ICANN's selection process of new TLDs and its recent decision to extend VeriSign's .com registry contract to 2007 have created enough furor and controversy that Congress or the Department of Commerce may have to act to curtail ICANN. When President Clinton created ICANN, the organization was supposed to be an independent technical governing body that would give an international face to the U.S.-dominated Internet, all the while still working under the Commerce Department's approval or veto of ICANN decisions. While ICANN's selection process for new TLDs may have been insufficiently public as some charge, its approval of VeriSign's 2007 extension is raising catcalls of corruption. VeriSign had agreed in 1999 to a contract stipulating much harsher terms, but ICANN is apparently letting VeriSign out of the deal without an obvious rationale. Members of the House Commerce Committee have already written the Commerce Department, asking Commerce to scrutinize these two issues. Yet, experts are unsure what actions Commerce and Congress are willing to undertake. "It doesn't look very good for the U.S. government to be acting--appearing to act--in a unilateral way in regard to the Internet," commented ICANN's chief policy officer, Andrew McLaughlin. VeriSign says that its new deal is good for the Internet. "We are quite confident that this arrangement promotes competition," says VeriSign senior vice president Roger Cochetti. "We believe that any examination will demonstrate that." DomainRegistry.com President Larry Erlich says that ICANN lacks sufficient control and will not implement safeguards until a disaster strikes.
    For information regarding ACM's Internet governance work related to ICANN, visit http://www.acm.org/serving/IG.html.

  • "The Black Arts of 'White Hat' Hackers"
    Financial Times--Corporate Security (04/10/01) P. 5; Larsen, Peter Thal

    "White hat" hackers, such as the team of security experts employed by Ernest & Young, attempt to break into or otherwise subvert corporate systems in order to find weaknesses that malevolent, or "black hat," hackers could exploit. Often, companies fail to realize how vulnerable their systems are and rely upon firewalls and internal protection systems to block and identify hackers, says Ernst & Young consultant Scott Laliberte. However, hackers can circumvent even these measures in a number of ways, such as a method that Ernst & Young's Thomas Klevinsky calls social engineering. Simply by calling a company's IT department and pretending to be an employee with a lost password, hackers can sometimes reset a user password and gain network access. The Ernst & Young hacker team is complemented by a group of forensic analysts who search for incriminating evidence left by hackers on compromised systems. Even though Klevinsky and Laliberte use the same techniques, they maintain they have never used their skills illegally. Former "black hats" are not welcome in the Ernst & Young camp as every applicant is investigated for a criminal background, says Klevinsky.

  • "Study: Layoffs Not Needed to Save E-Businesses"
    E-Commerce Times (04/05/01); Mahoney, Michael

    There are other ways for e-businesses to cut costs besides cutting jobs, according to a Gartner report called "Nine Ways to Cut Costs and Save E-Business Initiatives." The study reviews steps for increasing e-tailer cash flow by focusing on technology upgrades. Gartner's vice president Kenneth McGee recommends that businesses find their cash savings by implementing upgraded IT programs. In fact, eliminating personnel is just a quick and temporary solution that may end up backfiring on the company. According to McGee, managing human capital is central to maximizing staff on major projects during a down period. Gartner recommends consolidating voice, data, and mobile network contracts to a single network service provider, for example. NSP's usually gives higher discount rates to multiple users. The physical maintenance of office facilities is next to labor in the high cost of doing business and to this end, Gartner recommends transitioning the physical work environment into a virtual one. Other efficiency activities include measuring business costs by examining business activity, e-metrics, and total cost of ownership (TCO). TCO includes the diversity of desktop computer systems and office suites, service levels, physical relocations of personnel, number of physical workstation relocations and the frequency of major software changes. Savings for an e-business currently doing $1 billion to $6 billion in revenue can reduce IT support by an average of $5 million.

  • "Programming Gets Extreme"
    Computerworld (04/09/01) Vol. 35, No. 15, P. 1; Gladwin, Lee Copeland

    Several U.K. businesses have begun employing eXtreme Programming, a form of application development that requires two programmers to work together to develop code. Tom Ayerst of investment bank Dresdner Klienwort Wasserstein says, "It's like having a pilot to focus on flying, while the navigator makes strategic decisions about where to go next. In the end, you make fewer coding mistakes and stupid choices." Royal & Sun Insurance Group used the technique to develop an application for the U.K. government's motor vehicle registry body. As a result, company officials say, the programmers were more efficient, the code turned out better, and the entire project cost 15 percent less than what the budget had anticipated. Advocates say having two programmers working side-by-side forces both to concentrate on the task at hand. Tim MacKinnon of Web browser software vendor Connextra says, "It's easy to get distracted when you're coding by yourself. You're not as disciplined." However, eXtreme Programming has not caught on among users in the United States. U.S. businesses are wary of the cost of doubling the number of programmers needed to develop one piece of code. Also, as many U.S. firms now distribute their application development to teams in separate locations, eXtreme Programming would be especially difficult to implement.
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  • "Going Straight"
    Economist (04/07/01) Vol. 359, No. 8216, P. 69

    The music industry has adopted the strategy of restricting access to songs online so that they can protect their intellectual property and make more money. On the surface, the strategy appears to be a good move. The trend toward copy-protection schemes means more opportunities for software makers. Just last week, the software maker RealNetworks announced that it is working with Warner Music, Bertelsmann Music Group, and EMI in a joint venture that will result in a paid music-subscription service. Microsoft has plans to have its technology become the standard for secure online music as this week it unveiled its MSN Music Web site. In addition, IBM and Intel have assisted the efforts of the music industry by contributing to Content Protection for Recordable Media (CPRM), technology designed to allow only the rightful owner of music files to play music on devices. The high-tech industry also plans to deliver digital locks for memory cards, minidisks, and other storage media. However, the high-tech industry should expect more pressure from the music industry to produce devices with copy-protection schemes. The music industry already has powerful legislation behind it with the Digital Millennium Copyright Act, a law that critics say restricts free speech and inhibits further advancement in protection technologies. Counterpane's Bruce Schneier says copy protection disrupts the natural law of the Internet, which supports the easy copy of bits. Other critics of the music industry point out that its strategy would end the existing right of making copies for personal use.

  • "Down in the Valley"
    Industry Standard (04/09/01) Vol. 4, No. 14, P. 40; Rivlin, Gary

    Although the economy of Silicon Valley looks bleak these days, those who work in the high-tech hub are not ready to declare the market dead. Many executives and workers hope the Valley can bounce back from the decline of the Internet economy as it did with previous declines in defense contracting, semiconductors, and personal computers. They point to the rise in spending on research and development at the leading tech companies. Mark Hudson, a marketing manager at Hewlett-Packard, believes that it could lead to the discovery of the next wave of hot technologies. Executives and workers in the Valley also note that the job market remains healthy, despite all of the layoffs. The unemployment rate in Santa Clara County, Calif., at 1.7 percent, is down from 2.4 percent a year ago. Also, the number of new jobs created is up 4.4 percent. Nevertheless, venture capitalists are wary of the Valley at this time, and high-tech companies have taken a beating on the stock market. Some market observers now see the Valley as just another business hub like Hollywood, Motor City, or Wall Street. Others view wireless and health-biotech and genomics as the next big thing that could bypass the Valley, as it is not a center for such industries. Nevertheless, Jeff Bonforte, the 26-year-old chairman of online data-storage company I-drive.com, says, "There's still this notion out there, 'Can't the Nasdaq just bounce back and we promise it'll be a higher quality version of what it was before?'"

  • "Saving It For the Future"
    Federal Computer Week (04/09/01) Vol. 15, No. 9, P. 50; Peniston, Bradley; Langlois, Greg

    Federal regulations requiring departments and agencies to archive digital materials--emails, Web sites, records, etc.--are so demanding that government information workers are calling for new legislation to help store these documents. The Federal Library and Information Center Committee's 2001 Forum will focus on this topic, especially the National Digital Information Infrastructure and Preservation Program proposed by the Library of Congress. This program asks Congress for $100 million to create a policy infrastructure for storing government information digitally. Officials of the National Archives and Records Administration spoke to librarians, archivists, and IT personnel about the complexities of the task they face. They said as the number of digital government documents reaches into the billions, even narrow keyword searches are relatively meaningless. Instead, IT experts need to come up with a standard protocol for attaching metatags to documents. Sen. Ted Stevens (R-Alaska), a sponsor of the Library of Congress legislative effort, said the effort to build an effective digital-archive infrastructure must be careful and deliberate despite mounting pressure to store the information.

  • "Girls Are From Venus; High-Tech Is From Mars"
    Darwin (04/01) Vol. 1, No. 7, P. 18; Bass, Alison

    A recent Arthur Andersen survey of teens aged 15 to 18 reveals major differences in how the sexes view the corporate world and high-tech careers. The boys surveyed were twice as likely to want to be the CEO of a high-tech firm and five times more likely to be computer-science majors. The girls appeared more interested in working for small businesses, or in public service, and focused more on careers that help others, such as health or education. The survey shows that high-tech companies and corporations in general definitely need to reach out more to females, particularly while they are still young, in order to interest them in applying for positions at their companies. Aurthur Andersen, for example, has a program that uses high-ranking women in technology as role models to encourage young women to enter the high-tech field.
    To learn more about ACM's Committee on Women in Computing, visit http://www.acm.org/women.

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