November/
 December 1998

FINANCIAL FIRMS' WEB STRATEGIES STILL IN A TANGLE
A survey conducted by consulting firm Ernst & Young LLP shows that despite considerable spending on Internet ventures, most financial companies don't have a clear idea of what they're doing or why they're doing it. Only 1% of the companies listed "selling more products and services" over the Internet as a top e-commerce goal. Thirty-three percent listed retaining existing customers and 23% cited reducing operational costs as driving forces behind their Web strategies. Meanwhile, 40% hadn't coordinated their Web offerings with their other distribution channels, and 70% had not come up with a pricing strategy for their e-commerce efforts. "A lot of people are just patching (the Internet) on as another stovepipe," says an E&P partner. "There's a lot of defensive posturing going on." Still, financial companies are budgeting twice as much money for e-commerce this year as last, and by 2001, they predict they'll spend about 14% of their technology budgets to Internet commerce.
(Wall Street Journal 9 Sep 98)

GEMSTAR POSITIONS ITSELF AS UNIVERSAL PORTAL
Forget the scrambling going on among Web sites to be the No. 1 Internet portal--Gemstar International Group Ltd. is aiming to be the exclusive licenser of an electronic program guide that can sift through everything--TV shows, video-on-demand and Internet access. "This technology gives you both a search engine and a delivery mechanism that can include broadcast, cable, satellite and the Internet," says Gary Arlen, president of Arlen Communications. The company has patented its Guide Plus technology, and anticipates reaping fat license fees from TV and set-top-box manufacturers, along with big advertising revenues. Gemstar president and CEO Henry Yuen is hoping to have Guide Plus installed in 2 million homes by the end of next year, and estimates that users will view about three pages of the guide four times an hour, or 168 million page views a day--"Bigger than Yahoo! and Netscape combined," says Yuen. "We're launching on a seven-hour-a-day habit, vs. the typical 20-minute Internet session, and we're the only program guide on the box."
(Business Week 14 Sep 98)

E-COMMERCE'S TAXING ISSUE
While the federal government is leaning toward a two-year moratorium on electronic commerce, and six states have already passed laws to that effect, a number of states are lining up on the other side of the issue. Nine states already tax Internet services, as do some local governments. The National Governors Association estimates that state governments now lose $3 billion to $4 billion a year on mail order sales, and states fear the Internet moratorium will exacerbate the problem. "We think the Internet has the ability to increase that dramatically," says an NGA policy analyst. Utah Gov. Michael Leavitt, head of the NGA task force on Internet development, says, "If the Internet is going to grow, it ought to be because of the advantages in the way it delivers goods, not in the way it is taxed." Jupiter Communications predicts that online shopping revenue, excluding cars and real estate, will exceed $37 billion in the U.S. by 2002, up from $5.8 billion this year.
(Reuters 7 Sep 98)

DOD FEARS DEPENDENCE ON FOREIGN TECHNOLOGY
The Department of Defense is once again concerned about over-dependence on foreign suppliers of technology used in its weapons systems. In response, DoD is forming a special advisory panel to look into the problem. The advisory panel on National Security and the Globalization of Business and Industry will focus on the special concerns surrounding growing reliance on foreign chip makers and software developers. Previous DoD efforts to reduce reliance on foreign suppliers by funding domestic flat-panel display and ceramic packaging industries have produced mixed results. (EE Times 7 Sep 98)

TRISTRATA SECURITY UNVEILS NEW SECURITY SOFTWARE
TriStrata Security Inc. has developed a new approach to encrypting computer files that it claims is hundreds of times faster than conventional cryptographic techniques, which rely on mathematical algorithms and their "keys." The TriStrata approach was inspired by a concept developed in 1917 by Gilbert Vernam, where each letter of a message is changed to a code by an addition process determined by randomly generated numbers. In the old days, spies kept code books containing pages of random numbers, but today's computers are powerful enough to generate a set of random numbers so large that the same set can be used in every server that manages encryption operations. In its demonstration, TriStrata was able to use its software to encrypt a standard word-processing file in one-hundredth of a second. Larger files containing video, for instance, can be scrambled the moment they're sent over the Web. In its endorsement of the new software, PricewaterhouseCoopers says it will use the TriStrata product for its internal communications, and the accounting firm is setting up a business to help other companies install and use it.
(Wall Street Journal 8 Sep 98)

NET DEPRESSION STUDY CRITICIZED
Various researchers, including Vanderbilt University's Donna L. Hoffman, are criticizing the recently released Carnegie Mellon University study that suggested that the Net may be a lonely place, causing depression in many people who used it extensively for e-mail, chat and similar purposes. Noting that the subjects of the study were not randomly selected (and not matched with a scientific "control" group of people who didn't use the Net but were otherwise like the people in the study), Hoffman says the CMU research is "not ready for prime time. This is not saying that the Internet does not cause depression. Maybe it does--but this research does not prove that." She adds that the CMU finding is hard to believe because it runs "counter to experience, anecdotal evidence, practice and scholarly research."
(Washington Post 7 Sep 98)

NET VIA TV AIRWAVES IS SLOW TO GET OFF THE GROUND
Video datacasting, which delivers Internet data over television airwaves, was expected to take off this summer thanks to a version of it called WaveTop, which is included in every Microsoft Windows 98 operating system.

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But computer manufacturers have resisted including the critical add-on circuit board necessary to use the technology, because it adds $100 or more to the price of a PC in an extremely price-sensitive market. The result is lackluster demand for the service, despite its ability to reduce some of the frustration associated with the limited bandwidth of conventional modems. "From a consumer perspective, this technology is pretty damn impressive right now with really limited bandwidth," says the chief operating officer of National Datacast Inc., the PBS spin-off that's signed up to transmit the WaveTop service. "And the price is right: it's free. Our stations have gotten a number of calls from viewers inquiring about the technology, although I will admit for those not fully familiar with the concept of a TV tuner card" interest has been slow to develop.
(Los Angeles Times 7 Sep 98)

BIOMETRIC TECHNOLOGY SET TO TAKE OFF
"Biometrics will be pervasive within two years," predicts Barry Wendt, CEO of SAC Technologies. The advent of low-cost, high-power PCs is making it possible to implement biometric security systems without spending a lot of extra cash. Compaq is now offering a $99 fingerprint reader as a peripheral for its Deskpro PC line, and voice recognition and facial verification technologies are also becoming more affordable. "A little software, some hardware, 8-bit digitization, a $1.50 microphone, and you have some pretty discriminating (voice-recognition) technology," says Wendt. "Facial-verification technology can be implemented for less than $50."
(TechWeb 3 Sep 98)

ANALYSTS FORESEE "PORTAL MELEE"
With companies scrambling to take on Yahoo! as the top "portal"--the site that Web users use as a "home base" for their Internet activities--analysts are predicting a major shakeout in the portal industry. "This is the first time since Yahoo started that it will be vulnerable," says rival CNET CEO Halsey Minor. "In the next nine months, things will be vastly different." Most experts are placing their bets on America Online, whose 12.5 million subscribers comprise 36% of the Web traffic that comes from households, but Microsoft's new msn.com site launched late last month is also expected to garner a healthy share of Web surfers. The stakes are big--by 2003, portals are expected to grab 20% of all Web traffic and $3.2 billion in Web advertising dollars.
(Business Week 7 Sep 98)

THE INTELLIGENT ESSAY ASSESSOR
A psychology professor at the University of Colorado at Boulder is spearheading the creation of an Intelligent Essay Assessor, a computerized tool to assist professors in grading students' written essays. Thomas Landauer says that to use the program, a professor must first teach it to recognize both good and bad essay writing by feeding it examples of both, which have been manually graded. The program can also be trained using what he calls a "gold standard"--passages from textbooks or other materials written by experts on the same subject as the essay to be graded. While earlier digital essay graders work by analyzing essays mechanically--looking at sentence structures and counting commas, periods and word lengths--Landauer says his program can actually "understand" the student's writing using sophisticated artificial intelligence technology called "latent semantic analysis." It does so by comparing the patterns of word usage in student essays with the usage patterns it has learned from the initial samples, enabling the computer "to a good approximation, to understand the meanings of words and passages of text." If an essay appears to convey the same knowledge as those used in the examples, the computer gives it a high score. The Intelligent Essay Assessor is not meant to be used to grade essays in English-composition or creative-writing assignments, where a student is being graded more on writing skill than subject knowledge.
(Chronicle of Higher Education 4 Sep 98)

BERNERS-LEE THINKS WEB HAS A LONG WAY TO GO
Tim Berners-Lee, who invented the World Wide Web in 1989 when he was a researcher at the European Laboratory for Particle Physics (CERN) in Geneva, Switzerland, thinks the Web is still too complicated and inefficient: "Users desperately need it to be simple. You need to walk up to any screen and treat it the same way as any other screen." It's also not private enough, and not yet able to give people sufficient privacy guarantees that give them confidence in collaborating with others: "I initially thought the Web would be used for collaborative purposes. It isn't." (AP 3 Sep 98)

MICROSOFT OFFERS CAMPUSES NEW PRICING PLAN
Responding to criticism from higher education administrators, Microsoft has announced a new pricing plan for colleges and universities. The Microsoft Campus Agreement offers a single annual fee, calculated at $54 for each administrative and faculty user at an institution (for colleges with fewer than 3,000) and $48 each for larger institutions. The license covers a variety of products, including operating system updates, word-processing, spreadsheet and Web page software, as well as others. For an additional $13 to $19 per student, a school can also purchase copies of the programs for students. Greg Jackson, associate provost for information technology at the University of Chicago, says the new plan "does something that some people have been asking for a long time--offer a real site-wide license." But some schools say they were better off under the old plan. "This does not make me excited," says Laurence Alvarez, associate provost at the University of the South.
(Chronicle of Higher Education 4 Sep 98)

COLLEGE STUDENTS PHONE HOME VIA INTERNET
Prepaid phone cards that enable students to make long-distance calls via the Internet are being promoted heavily on college campuses this fall: "They tend to be early adopters, are technically savvy and price-sensitive and tend to be social," says the senior market manager for VocalTec Communications, a pioneer in Internet telephony. The service does save a bit on domestic calls, but is particularly appealing for making overseas calls. Rates for international calls using PC-to-phone service run 50% to 80% below conventional long-distance rates.
(Los Angeles Times 31 Aug 98)