NewsScan Daily, 7 May 2003 ("Above The Fold")

NewsScan Daily, 7 May 2003 ("Above The Fold")
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"ABOVE THE FOLD"
       Palm in Motion
       House Committee Approves Restrictions on Internet Gambling
       What Goes Down Must Go Up (Eventually)
       Gates on Microsoft's New Security System: Use It or Don't Use It
       DoCoMo Ready to Face Saturation Challenge
       The Return of Atari

FEATURES
       Flash Card
       Honorary Subscriber: Nathaniel Bowditch
       Safe & Sound in the Cyber Age: A Privacy 2x4

PALM IN MOTION
PalmSource, the software subsidiary of PDA market leader Palm, has forged an
alliance with Research in Motion (RIM), maker of Blackberry devices, to make
wireless data connectivity and secure e-mail available to Palm OS licensees.
Palm has also cut a deal with RIM rival Good Technology, which will enable
Palm to make available Good's communications software and services on the
Palm OS. The market for handhelds was down 20% in 2002, but PalmSource CEO
David Nagel says a recent survey of 500 companies indicates that 90% of IT
managers plan to spend as much as 15% more on IT this year than last year.
(CNet News.com 6 May 2003)
http://news.com.com/2100-1041_3-1000076.html?tag=fd_top

HOUSE COMMITTEE APPROVES RESTRICTIONS ON INTERNET GAMBLING
The House Judiciary subcommittee approved legislation that would prohibit
the use of credit cards, checks and electronic fund transfers as means to
pay for online wagering. The bill, which is sponsored by Rep. Jim Leach
(R-Iowa), has already been approved by the House Financial Services
Committee.  The House approved a similar bill last year in Congress, but it
died in the Senate. Meanwhile, Rep. Jim Conyers (D-Mich.) and a small group
of bipartisan lawmakers are taking a different approach to the issue: they
have proposed creating a commission to explore legalizing Internet gambling
in states interested in licensing, overseeing and collecting taxes on
Internet gambling transactions. A report by the General Accounting Office
last year called Internet gambling "a fast-growing industry" with estimated
2003 revenues of more than $4 billion. (AP 6 May 2003)
http://apnews.excite.com/article/20030506/D7QS3KS80.html

WHAT GOES DOWN MUST GO UP (EVENTUALLY)
The information technology job market will remain sluggish throughout 2003,
according to two new surveys -- one conducted by the Information Technology
Association of America (ITAA) and the other by consulting firm Deloitte &
Touche. Corporate hiring managers who talked to ITTA said they planned to
fewer than 500,000 jobs this year (compared to more than twice that number
predicted last year), and almost half the respondents to the Deloitte Touche
survey indicated that they would add fewer than 25 new employees over the
course of the year. How long will the hiring slump drag on? ITAA president
Harris N. Miller says, "The good thing about the business cycle is that it's
so far down right now, it wouldn't take a lot to make it head back up pretty
quickly." (Washington Post 6 May 2003)
http://www.washingtonpost.com/wp-dyn/articles/A17864-2003May5.html

GATES ON MICROSOFT'S NEW SECURITY SYSTEM: USE IT OR DON'T IT
Microsoft's Bill Gates thinks people should have no fears about the
company's new hard-wired security technology -- but reminds them that they
don't have to use it unless they want to: "This is a mechanism that if
people want to use, for example, to protect medical records, they can use
it. It's a lot of work to do this stuff, and we think consumers will want
those privacy guarantees. If they don't want them, then fine, ask me about
our other work.'' Chipmakers Intel and AMD are working on the hardware
aspects of the technology, which will provide the creators or owners of
digital content a very high level of control over that content, allowing it
to be viewed only by trusted employees or paying customers, and locking out
snoops and vandals. Microsoft is calling its technology "Next Generation
Secure Computing Base." (AP/San Jose Mercury News 6 May 2003)
http://www.siliconvalley.com/mld/siliconvalley/5798718.htm

DOCOMO READY TO FACE SATURATION CHALLENGE
DoCoMo -- which means 'anywhere' in Japanese -- has now survived two
difficult years, and remains the dominant cell phone company in Japan. It
recently conducted a successful launch of a new line of mobile phone
handsets two months ago and completed its new mobile phone network (known as
FOMA). Still, a significant problem faced by both DoCoMo and its
competition: market saturation. More than 60% of all Japanese people already
owning cell phones, and so what the industry needs now is more people like
the young businessman who told a New York Times reporter:  "If everyone is
going to be using FOMA phones eventually, it's better to change now. I like
new things, and I like things that other people don't have." In other words,
DoCoMo would like cell phones 'anywhere' to mean cell phones 'everywhere.'
(New York Times 7 May 2003)
http://www.nytimes.com/2003/05/07/business/worldbusiness/07WIRE.html

THE RETURN OF ATARI
The name 'Atari' -- made famous by the game maker that 'Pong' thirty years
ago -- is being adopted by the Franco-American video publisher Infogrames,
which acquired the rights to the Atari brand in 2001. The chief executive of
Infogrames says:  "What we have decided to do, following a very precise
strategy, effectively is to adopt this brand Atari. Clearly we feel like it
is the symbol of the global company that we became during the last two
years." The company has recently completed work on the game 'Enter the
Matrix,' which will be marketed in conjunction with the forthcoming Warner
Bros. film 'The Matrix Reloaded'. (USA Today 7 May 2003)
http://www.usatoday.com/tech/news/2003-05-07-atari_x.htm

*****

FLASH CARD
     "We are generally the better persuaded by the reasons we discover
ourselves than by those given to us by others." (Blaise Pascal)

HONORARY SUBSCRIBER: NATHANIEL BOWDITCH
     Today's Honorary Subscriber is the American sea captain and self-made
mathematician-astronomer Nathaniel Bowditch (1773-1838), who was the author
of the best book on navigation in his time.
     Between 1795 and 1799 Bowditch made four lengthy sea voyages, and in
1802 he was put in command of a merchant vessel. Throughout that period he
pursued his interest in mathematics and astronomy. After investigating the
accuracy of J.H. Moore's standard text, 'The Practical Navigator', he
produced a revised edition in 1799, his additions to which became so
numerous that in 1802 he published 'The New American Practical Navigator',
which was adopted by the U.S. Navy and went through some 60 editions.
     Bowditch is also remembered for his annotated translation of Laplace's
monumental work on the gravitation of heavenly bodies, 'Traité de mécanique
celeste' (Celestial Mechanics) -- more than doubling its size with his own
commentaries. Bowditch also wrote many scientific papers, one of which, on
the motion of a pendulum swinging simultaneously about two axes at right
angles, described the so-called Bowditch curves, better known today as the
Lissajous figures, after Jules-Antoine Lissajous the French matematician who
later studied them in detail.
     Nathaniel Bowditch was born in Salem, Massachusettes, to a family of
seafarers. At age twelve he was apprenticed to a ship's chandler. After long
work hours, he would peruse the volumes in Salem's Philosophical Library
Society, and when only eighteen, he had copied all the mathematical papers
he found in the Transactions of the Royal Society of London. By the age of
twenty-one, he had learned Latin and French, and had even discovered an
error in Sir Isaac Newton's 'Principia'. In 1795, he went to sea, first as a
ship's clerk, and later as the captain and owner of the Putnam. Throughout
his career at sea, Bowditch shared his knowledge, teaching the principles of
maritime science to his sailors whenever possible.
     In 1804, Bowditch abandoned his life at sea to enter the world of
commerce as a life insurance actuary for the Massachusetts Hospital Life
Insurance Company of Boston. He was also president (1804-23) of the Essex
Fire and Marine Insurance Company of Salem, Massachusetts. Later in his
career as a businessman, he moved to Boston where he became a money manager
for the wealthy individuals who made their fortunes at sea. Before he died
in 1838 he succeeded in redirecting this wealth from maritime investment to
manufacturing investment, creating the mills that built the Lowell area.
     Although he was self-educated, Bowdich was offered professorships at
several universities (including the chair of mathematics and physics at
Harvard), none of which he accepted. Another measure of his academic
standing was the fact that from 1829 until his death he was president of the
American Academy of Arts and Sciences.

See http://www.amazon.com/exec/obidos/ASIN/0939837544/newsscancom/ref=nosim
for 'The American Practical Navigator' -- or look for it in your favorite
library. [We donate all revenues from our book recommendations to literacy
programs.]

SAFE & SOUND IN THE CYBER AGE: A PRIVACY 2X4
     [Our security experts Chey and Stephen Cobb write this week about "A
Privacy 2x4 For Clue Deprived Corporate Giants."]
                         ***
     Calling all Chief Executive Officers! Get a clue about privacy, now,
before your assets are put at risk. Privacy has regularly topped the list of
consumer concerns for the last 4 years, but 2 consumer product companies
recently showed they did not have a clue about privacy. In March, Benetton
and Philips (officially Benetton Group S.p.A. and Koninklijke Philips
Electronics N.V.) called a press conference and proceeded to start a bonfire
with large denomination bank notes.
     Well, not exactly, but what they did amounted to the same thing: they
announced that Philips was going to help Benetton embed computer chips in
the clothes it sells, enabling individual garments to be tracked,
potentially beyond the point of sale. To put this announcement in context,
consider half a dozen things that were happening around the time of this
announcement:
     * The US government confirmed that it was going ahead with plans to
mine commercial databases for clues about terrorists.
     * The Tom Cruise sci-fi movie ³Minority Report² came out on video
(featuring two memorable scenes: the gruesome eye transplant that Tom
undergoes to fool ubiquitous biometric surveillance, and talking billboards
that track you wherever you go).
     * The US government threatened to block flights to America by European
airlines if the airlines refused to give the US government access to their
passenger data records.
     * A phone survey of 1,010 adults conducted by Harris in February 2003
found: 54% did not think most businesses handle the personal information
they collect about consumers in a proper and confidential way. And 73% said
it is extremely important to not have someone watching or listening to them
without permission.
     Even so, Benetton and Philips proudly and publicly announced that:
³Clothes produced under Benetton's core brand Sisley have been fitted with
RFID-enabled labels based on Philips' I.CODE semiconductor technology.²
     As you probably know, RFID chips function as tiny radio transmitters,
allowing objects to be identified and tracked at a distance. The press
release described the embedding of chips into garments during manufacture,
noting that the chips are ³imperceptible to the wearer and remain in
individual items of clothing throughout their lifetime.²
     Within two days a consumer privacy group was calling for an immediate,
worldwide boycott of Benetton. In announcing the boycott, Katherine
Albrecht, founder and director of CASPIAN (Consumers Against Supermarket
Privacy Invasion and Numbering) warned that Benetton's chips could be used
for more than unwanted advertising. "Benetton could easily link your name
and credit card information to the serial number in your sweater, in essence
'registering' that sweater to you. Then any time you go near an RFID reader
device, the sweater could beam out your identity to anyone with access to
the database‹all without your knowledge or permission."
     While some people may have welcomed the news that they might be able to
locate their missing garments wirelessly‹errant socks spring to mind‹many
more were alarmed. A web site quickly appeared at www.boycottbenetton.org,
featuring a Benetton-style poster proclaiming: ³I¹d rather go naked.² Less
than three weeks later, Benetton wisely released a statement saying it was
reconsidering, and no chips were currently present in the garments produced
and sold under its brand names. Meanwhile, all trace of the original press
release disappeared from Philips¹ web sites.
     As economists like to point out, even when a company recovers from a
mistake such as this, it has lost money. Dealing with a problem always
incurs an opportunity cost (which could have been avoided, in this case, if
the companies had any clue as to the current level of consumer privacy
fears). The same money and effort could have gone into something positive,
rather than recovering from a negative.
     And then there is the effect on brand and share value. When you look at
annual revenue, the numbers are huge (Philips and Benetton bring in about
$33 billion and $2 billion each year, respectively). But the stock market is
more interested in smaller numbers, like quarter-on-quarter growth rate,
earnings per share, and the degree to which these meet expectations. It
doesn¹t take many of the wrong kind of unexpected dips in revenue to
negatively impact those numbers, and thus the stock price.
     How justified are consumer fears about RFID chips? We will examine that
question in a future column. What we can say for sure today is that failure
to get a clue about privacy is a threat to consumer product companies, one
that should frighten the people who work for them.
     [Chey Cobb, CISSP, the author of ³Network Security for Dummies,² is an
independent consultant (www.cheycobb.com) and a former senior technical
security advisor to the NRO. She can be reached at [email protected]. Stephen
Cobb, CISSP, is the author of ³Privacy for Business: Web Sites and Email²
(www.privacyforbusiness.com).  He can be reached at [email protected].]

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We call our news section "Above The Fold" to honor the tradition of the
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