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Archive: October 2001 News Headlines
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Amazon Adopts Linux, Saves Millions

In what may be a pointer for many other companies heeding the Gartner Group's advice last month that Microsoft's web technologies are now simply "too unsafe" and "too costly" to continue using, online etailer announced today that it had saved US$17 million in the last quarter simply by swapping from Microsoft software to Linux, according to a filing with the US Securities and Exchange Commission. The firm said in the statement that it had spent US$54 million on technology and content expenses in the third quarter of this year compared with US$71 million in the corresponding quarter of 2000. The eye-opening 30% cost reduction was achieved primarily because of Amazon's "migration to a Linux-based technology platform that utilises a less-costly technology infrastructure, as well as general price reductions for data and telecommunication services due to market overcapacity," the statement said. Amazon were announcing their 3rd quarter results, posting a net loss of US$170 million. The company - which has yet to turn a profit - pledged that it will be profitable on at least a pro forma basis by the fourth quarter of this year.


Xmas Shopping On Upswing For Etailers

Despite the September 11th terrorist attacks, the war in Afghanistan and gloom on major stock markets, the world's online spending is tipped to increase by 39% to US$25.3 billion this coming holiday season according to Internet analysts GartnerG2. Releasing their latest forecast for the upcoming festive season today, Gartner said that troubled economic conditions had forced them to sharply reduce earlier estimates. Nonetheless, they expect that etailing should experience another strong rise all around the world this year. The US is expected to see an average 30% rise over last year's holiday spend figures, they predict, while Europe should see an average 39.6% rise and the Asia-Pacific a blistering 53.4% rise. Even so, Gartner note that online spending would make little difference to bricks-and-mortar retailers this year despite growing at rates generally higher than the traditional retail sector. The total volume of online sales - while rising rapidly - still represents only a tiny portion of all retail sales worldwide.


Windows Attacks Increasing

US security watchdog CERT has warned that attacks on Microsoft's web-based products appear to be escalating. In a recent report on denial-of-service (DOS) attacks on web servers, CERT authors Kevin Houle and George Weaver advise that "there's a perception that Windows users are generally less technically sophisticated, less security conscious and less prepared to respond to attacks than other Internet populations". As a result, they say, hackers are increasingly attracted to exploiting flaws in Microsoft's web products and a new generation of worms (such as Code Red and Nimda) are being designed specifically to attack IIS-based web servers. Worryingly, the authors warn that these "Windows worms" also have the capacity to cause increasing collateral damage to non-Microsoft servers by hogging bandwidth and pounding web log files. They also warn that hackers are seeking new avenues to launch DOS attacks, including IRC (Internet Relay Chat) technologies.


Gartner Predicts Slow XP Uptake

Microsoft's new Windows XP - released yesterday - will not dominate business PCs until 2003 and home PCs until 2004 according to new research by the Gartner Group. The firm found that despite the estimated US$1 billion being poured into promoting the new operating system by Microsoft and its allies, the lack of significant reasons for upgrading, a marked global slowdown in PC buying during 2001 and Microsoft's own poor track record for delivering reliable operating systems will all conspire to slow XP's adoption over the next 18 to 24 months. Gartner predict that unlike Windows95 (but certainly like Windows ME and Windows 2000), most users won't upgrade to XP until they purchase a new computer. Further, Gartner note that most businesses are only just beginning to migrate to Windows 2000 - so XP "isn't even on the radar" as far as most corporations are concerned. Gartner predict that less than 10% of new consumer PCs shipped this year will carry Windows XP, rising to 87% next year. In addition - because of its hardware requirements - only PCs built in 1999 or later will be capable of running the software in any event.


Telco, ISP Complaints Soar 85%

Complaints against telcos and ISPs soared by 85% over the last year according to the latest annual report from the Australian Telecommunications Industry Ombudsman (TIO). Releasing the report today, the TIO noted that billing complaints remained the biggest gripe amongst Australian consumers (39.4% of all cases) followed by poor access (32% of all Net-related complaints). This year, however, the steepest rise in grievances occurred in customer service areas with the number of complaints about poor ISP customer service rising from 282 cases in 1999-2000 to 1181 in 2000-2001, and for telcos from 3882 to 11,486. On a positive note, however, The TIO noted that the majority of the Australian ISP industry seems to be well-run. No complaints at all were recorded about 800 of the country's 900 ISPs.


IT&T Deficit Hits AU$15 Billion

Australia's annual trade deficit in information technology-related equipment and services now runs at more than AU$15 billion a year, according to new research by Victoria University's Centre for Strategic Economic Studies (CSE). The deficit accounted for 16% of Australia's total merchandise imports in 2000-2001. This was more than food, clothing, civil aircraft and textiles combined. Meanwhile, technology-related equipment accounted for just 2.3% of the country's total merchandise exports in 1999 (the latest figures available), well down on the OECD average of 11.1%. CSE also found that around 680,000 Australians now work directly or indirectly in the IT&T industries and noted that although the country currently exports far less technology than it imports, Australians are amongst the most intensive users of IT&T in the world. Australia now ranks as the 4th largest amongst all OECD countries in terms of expenditure on IT&T as a proportion of Gross Domestic Product.


New UK Data Protection Act Begins Tomorrow

In a positive demonstration that consumer rights can be genuinely protected by any government with the will to do so, the second phase of the UK's Data Protection Act (1998) will come into force in that country from tomorrow. From Wednesday onwards, any company in the UK will be required to provide a copy of whatever personal data they possess on an individual - whether electronically or on paper - for a fee of no more than £10 if they're requested to do so, and are obliged to provide the data within 40 days. Further - if they fail to do so - they can be fined up to £5,000 (around AUD$15,000) in a Magistrate's Court, or more if the matter is heard in a higher court. In addition UK consumers will have the right to demand that their data not be onsold or used for direct marketing purposes; and will be able to correct any errors in data stored about them. In Australia by contrast, new privacy laws which will come into force at the end of this year provide widespread exemptions for many different types of organisations and - most absurdly of all - no penalties whatsoever for anyone who chooses to flout them.


Broadband Market Small, But Growing...

According to a new study by Jupiter Media Metrix (JMM) the number of US homes with broadband will rise from 9% (in 2000) to 41% by 2006, using either cable modems, digital subscriber line, fixed wireless or satellite links. If JMM's prediction comes true, this will account for approximately 35 million US households. However, a parallel study by the Yankee Group has found that the drive towards broadband is being motivated more by the desire to free up the household telephone line and obtain faster Net access rather than the desire to access streaming media. Over 52% of people polled for the Technologically Advanced Family Survey said that freeing up the home telephone was the primary or secondary reason they would or do subscribe to a broadband service, while 51% chose faster Net access as the primary or secondary reason for getting broadband. Less than 2% of respondents said listening to music, watching videos or gaming online was either a primary or secondary reason for getting a broadband subscription.


NetRegistry Loses Aunic Contract

The Australian Domain Authority (auDa) announced today that it had terminated NetRegistry as hosts of the AUNIC database for a "breach of security and other matters of concern" - less than 3 months after assigning the contract to the company in July this year. The AUNIC database provides centralised information about domain name ownership in Australia and is supposedly protected against bulk searches to guard against abuse of the system and/or improper use by commercial interests. NetRegistry said that it had agreed to host the database for free, but in order to make the service commercially viable had used the data to create reports. According to NetRegistry director Giles Donovan, this had led to tension with the auDa. The AUNIC database is now being hosted by Optus and the NetRegistry logo has been removed from the AUNIC site.


Ecommerce Back To Normal

Online sales slumped dramatically around the world in the week after the September 11th terrorist attack on New York's World Trade Centre but have now rebounded back to normal, according to separate research reports by comScore (CS) and Nielsen//Netratings (NN). CS report that general online consumer spending fell away by 25% in the week immediately following the attacks, with online travel sites recording a particularly steep 40% decline. However, traffic to news sites soared by anywhere between 50% and 300% in the same period and many news sites are still reporting above-average visitation levels. Meanwhile, NN reported dips of 15% and 25% in the general consumer goods and travel respectively, but noted that in some sectors such as book sales, purchasing actually grew. NN also report that despite the September 11th attacks, consumers spent US$4.7 billion online in September 2001 - a 54% increase over last year. NN also estimate there were almost 39 million online buyers last month - a new record for ecommerce.


Microsoft Blames Security Gurus For Bugs

In an unusual response to growing world-wide criticism of the security flaws in its online software, Microsoft today decided to assign blame to the security experts who discover the flaws in the first place. In an editorial on Microsoft's site, Scott Culp - head of the company's Security Response Center - said that the enormous damage caused by worms such as Code Red and Nimda can be blamed in part on computer security professionals who discover the software flaws, rather than on Microsoft itself. According to Culp, recent worms have relied on techniques and software instructions published by security firms in their advisories about bugs unearthed in the firm's products. He recommends that the security community work with vendors and not disclose vulnerability information to the public until a patch is available - and then only to disclose enough information so that administrators can decide whether to apply the fix or not. However, Culp's suggestion that it would be better to cover up what a mess the firm's products are in rather than force a complete rewrite has drawn little sympathy from critics. The Gartner Group's John Pescatore - who last month advised all the firm's clients to abandon Microsoft web technologies "immediately" - said that "the biggest problem system administrators have is not that people are giving out detailed blueprints on how to attack vulnerabilities; it is that many of the vulnerabilities that come out in IIS.... are so huge that minimally skilled hackers can exploit them on their own."


Sircam Virus Unlikely To Detonate

Anti-virus companies around the world agreed that the SirCam virus (which swept the Net in plague proportions earlier this year) is unlikely to unleash a hard-disk destroying payload on infected machines today - largely due to a programming error by the virus' still unknown author. Anti-virus experts first voiced concerns several weeks ago that the virus could reactivate on infected machines and erase their hard drives on October 16th this year. However, spokespeople for most companies concurred today that further, detailed examination of SirCam's complex code in the interval had found that a small programming error will probably prevent the destructive payload being activated.


Net Influencing More Sales

In a report that may have strong parallels in Australia, Europemedia reports that 17% of all retail sales in the US this year will either be made online or be influenced by online research carried out by consumers prior to purchase. The conclusion comes from research carried out by Internet market research group IDC. The research firm says that online sales and Internet-influenced sales constituted 10% of all US retail sales last year. Similar research from Jupiter Media Metrix seems to corroborate this view. Jupiter estimate that US consumers will spend US$199 billion online by 2005, while a further US$632 billion will be spent offline as a direct result of online research.


88% Of US Companies Hit By Worms, Viruses

According to a survey by Information Security Magazine (reported in Newsbytes today), 88% of US companies have had to deal Net-borne worm and/or virus infections in the last year, even though 90% have a security policy in place to deal with those threats. The magazine, which conducted an online poll that drew 2,500 responses, also found that 29% of the organisations surveyed had seen their IT security budgets frozen or reduced over the last year. Andy Briney, the magazine's editor-in-chief, said in a press statement that the results from this year's survey prove how serious virus and worm attacks like Code Red and Nimda actually are. In related news: Online gift certificate company was forced to announce today that its site had been successfully hacked on August 21st when it refused the hacker's demands for $45,000 in "hush money" and the hacker emailed customer account details he had taken from their web site to thousands of clients. Similarly, Saudi bank Arab National was hacked today and also had customer files pilfered. Both sites were running Microsoft IIS web servers - as do many Australian banks and Government sites.


New Security Flaw In Excel, Powerpoint

In what will probably come as no surprise to anyone familiar with the quality of the company's products, a dangerous new security flaw was found in Microsoft's Excel and Powerpoint software today. The newly-discovered hole allows a specially crafted macro to avoid detection and run malicious code on a victim's machine, allowing a hacker to execute any instructions that a user could normally execute at a keyboard include reading, deleting or modifying data; modifying security settings; sending e-mail; or posting data on Web sites. The flaw was discovered by the Computer Emergency Response Team at Carnegie-Mellon University. Microsoft have posted a security bulletin about the matter on their web site, but have so far made no other comment. In related news: It emerged today that Microsoft moved swiftly to close a security gap in the company's customer service web site earlier this week which let anyone with a browser view customer sales records and other confidential information. They did so after a computer security expert found that the site's database was unsecured and he was able to access hundreds of confidential records - something he notified the company about.


Cards Best For Online Shopping

The US-based National Consumers League (NCL) has recommended that consumers use their credit cards for purchasing over the Net even though they note that 43% of online consumers in the US still say that having their credit card number stolen remains their biggest ecommerce related concern, and a surprising 59% said they thought it was safer to buy with a cheque or money order than a credit card. Releasing a new study of online purchasing today, the NCL reported that US consumers spent almost $26 billion online last year and that 55% of respondents had placed at least one order online in previous 12 months, against 44% in a similar 1999 survey. The NCL says credit cards are the safest way for consumers to buy online because users can dispute charges for goods or services that were either never ordered, never received, or misrepresented. Furthermore, many US consumers now have the option of using substitute or single-use numbers which disguise their true card number and prevent its abuse by either hackers or dishonest employees of the seller (a facility not yet available in Australia).


More Car Buyers Going Online

In a trend that may be mirrored in Australia, the Gartner Group report that car buyers in the USA and Europe are increasingly turning to the Net as a prime source of buying information. The study found that 38% of 8,000 consumers polled said the Net was now an important information source when they looking for a new car (up from 27% last year) and online consumers in the market for a new car were most likely to visit a car manufacturer’s site, followed by franchised dealer sites, and then independent dealer sites and specialist car brokerages. The study found that 3% of all new car sales in the USA last year were made online (up from 1.6% the year before), and online new car sales increased from 0.7% of all sales to 1.6% in Germany, and from 0.1% to 1.1% percent in the UK during the same period. 45% of online consumers polled said they'd like to be able to configure their new car online while 35% said they'd like a detailed online order tracking service. Not surprisingly, 79% of car manufacturers involved in the poll saw the Net as an opportunity, while 63% of car dealers saw it as a threat.


66% Of US Small Businesses Now Online

More than 80% of small businesses in the USA now have at least one computer on their premises used for business purposes according to Dun & Bradstreet's (DB) 20th Annual Small Business Survey. DB also report that two-thirds of all US small businesses (and approximately 85% of small business computer owners) now have Net access, and more than half of those now have a web site site as well. Furthermore - amongst companies that currently access the Net - 60% say that they expect to increase their use of the Net in the coming year. However, DB also report that while PC and Net uptake may be strong in the sector, most US small businesses still have a strong resistance to actually conducting transactions online. Only 27% of those with a web site are currently selling anything on the Internet and most that do are averaging less than three web based orders per month. Furthermore, less than 25% say they plan to invest in a web site or Internet marketing during 2001 - indicating the most are still using the Net to publish brochure sites and/or to research purchases online that they conclude in the real world via traditional means: phone, fax, mail or in person.


Interest In mCommerce Drying Up

According to new research by management consultants A. T. Kearney (ATK), interest in mCommerce - buying via a web-enabled mobile phone - is rapidly drying up and Internet firms who spent large amounts of money enabling this technology on their sites may have simply wasted their time. ATK polled mobile phone users in Finland, France, Germany, Japan, the UK, and the USA and found that the average intent to buy goods or services using a mobile phone was now only 4%. This is down from 12% six months ago and 32% in June 2000. Even in Japan, where web-enabled phones are most common, the intent to buy using a phone is now down to 7% (from 17% in January 2001 and 42% in June 2000). Furthermore, only a slim 2% of those polled had actually purchased something using their phone, though this was up from 1% six months ago. ATK's research backs up critiques by web interface guru Jakob Nielsen who predicted as early as 1999 that mcommerce would fall flat because the poor usability and poor quality of mobile phone screens would deter consumers from using the medium for anything but the most simple purchases.


Most Won't Pay To Download Music

In news that may come as a blow to the music recording industry's hopes to monopolise the distribution of music on the Net, new research by IDC (reported in eMarketer) suggests that most Net users aren't interested in paying for online music downloads. IDC found that only 23% of people who've downloaded music from the Net would currently be interested in paying to do so. IDC also found that while this rose to 29% amongst broadband users - supporting earlier research by McKinsey and Company that faster connections encourage more downloading - the low numbers still suggest that plans by the recording industry to launch "pay for play" sites in the foreseeable future may face an uphill battle in the short term. Earlier this year the recording industry launched an all-out campaign to close down Napster and similar music swapping services, alleging that the sites were violating copyright and depriving artists and recording companies of income. Their claims were upheld by US courts.


Nimda Cost = AU$1.2 Billion

The Nimda worm which appeared on the Net on September 18th Australian time has so far cost the world at least AU$1.2 billion - and could have cost 6 times as much if it had carried a lethal payload, according to US security firm Computer Economics (CE). The firm estimated that worm had infected 8.3 million networks world-wide in a matter of days. The Nimda worm - like Code Red before it in August - attacked Microsoft IIS web servers and networks, probing for 16 known major security holes to spread itself from one server to the next. Last month CE estimated that viruses which attack defects in Microsoft's web products had cost the world AU$20.5 billion in the year to September - roughly the cost of the World Trade Centre disaster. In related news: Microsoft has reportedly been stung by the Gartner Group's assessment last week that their web products are now too defective to be safely used online and that users of IIS should immediately switch to Apache, the Net's dominant web server. Today Microsoft announced that it would try to improve its system of alerts and patch updates for its 1,000 largest customers - and also stop charging all customers for telephone support on virus-related matters.


Online Brokers Losing Customers

According to a report in Cyberatlas, online brokerages are steadily losing their customers. In a study of 8,626 online investors by JD Power and Associates (JDP), online brokerages have lost 18% of their established customers in the last six months while the number of new investors rose by only 8%. JDP also found that only 24% of online investors are now using more than one online brokerage. This compares to 42% six months ago. While some of the reasons for the decline may be due to economic conditions, JDP found that online investors' preferences are changing. Where they formerly valued customer service and low trading fees, they now value information resources provided by brokerages above all else, followed by customer service, core values, web site capability, cost, and trade execution. As a result, many online brokerages are changing their focus and are now offering aggregation services which allow investors to keep all their online account information on one web site. However, Cyberatlas warn that research by Forrester suggests that very few US consumers (7%) either feel they need aggregation or are prepared to hand over their data to a third party.


Australian Net Bounces Back

After recording a decline of slightly more than 9% last month, the Australian Internet bounced back with an average growth of between 9.5% and 13% this month according to the search engines we poll to construct our monthly Australian Internet Growth Index (which has been attempting to measure the number of live Australian web sites - as opposed to the number of registered domains - since January 1996). The bounceback, we suspect, can be attributed to the engines purging dead or abandoned sites from their databases and updating their indexes with new ones. If so, true average growth over the last few months has actually been a more constant 2% to 3% nationwide, except in Sydney - the centre of the former boom - which appears to have suffered a genuine decline. The October 1st figures (with September 1st figures in brackets) are as follows:

  Australian Internet Growth Index September 2001
  (Figures Show Estimated Live Sites)
  • Brisbane - 9,928 (8,716)
  • Sydney - 44,785 (42,099)
  • Melbourne - 38,139 (34,050)
  • Adelaide - 6,929 (6,275)
  • Perth - 7,791 (7,096)
  • Hobart - 3,161 (2,890)
  • Canberra - 7,334 (6,658)
  • Darwin* - 9,045 (7,971)
NB: The Darwin figure includes rural Australian sites

During September 2001 Australian Cybermalls hosted 62,297 visitors, a slight rise on August's 61,992. Our visitors viewed 279,582 page displays from our servers, which in turn consumed 12.97 Gb of bandwidth.

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