The week in review: Nuclear labs shut down

In response to an unfavorable information security rating in a Department of Energy audit, Los Alamos National Laboratory, Lawrence Livermore National Laboratory, and Sandia National Laboratories halted operations last Friday on all computers that handle secret information. Suspending operations on this scale is a relatively rare event for the labs, which the federal government annually funds to the tune of about a billion dollars each.

Shutdown
The stand-down comes in the wake of widespread attention on a Los Alamos National Laboratory employee, Taiwan-born Wen Ho Lee, who was fired last month for violating the lab's security policies and for failing a lie detector test on questions about releasing U.S. nuclear weapons information to China. Also this week, Chinese Premier visited Zhu Rongji visited Washington, discussing China's hoped-for admittance to the World Trade Organization while denying China had made illegal contributions to President Clinton's 1996 reelection campaign.

During the stand-down, employees and managers will develop and implement plans to better guard information against inside and outside threats. The labs' classified computers are separated from other computers by an "air gap"--an actual physical separation--but there are other ways secret information can make its way from classified computers to open computers, including ordinary floppy disks.

Privacy
The data protection policies of the United States are beginning to trail those of the rest of the world, especially when it comes to guaranteeing people's access to private sector records which contain sensitive data and establishing an independent body to monitor privacy practices and address consumer complaints, according to government officials and participants at a leading international privacy conference.

In a brief supplementing a complaint filed earlier with the Federal Trade Commission, privacy groups argued that a Pentium III feature known as PSN, or processor serial number, will seriously erode privacy on the Web. The feature allows the chip to retain user information.

Rep. Edward Markey (D-Massachusetts) will soon introduce legislation to give Web surfers broad rights to limit collection and use of their personal data. Markey contends industry efforts to self-police data collection and proposed technological fixes--the stated policy of the Clinton administration--have fallen short of providing Internet users with adequate protection.

Amazon.com shut down an attempt to sell stock in a software company on its new auction site, an incident that could signal the need for an entirely new area of federal securities regulation.

NSI was expected to yield some ground over the controversial InterNIC Web site the company recently took over, a move that drew heavy criticism. During negotiations with the commerce Department, the government-appointed monopoly domain-name registrar said it wants to charge its rivals a $10,000 license fee and $16 per year for each domain name registered.

More Windows
Although Microsoft had said Windows 98 would be its last DOS-based operating system, president Steve Ballmer told a trade conference that the company will release another version of the Windows 9x OS for consumer computers in the year 2000. A year ago at the same conference chief executive Bill Gates announced Windows 98 would be its last DOS-based OS, with subsequent versions based on NT.

Apple will release a faster version of its popular iMac desktop in the near future, possibly soon after it reports quarterly earnings on April 19. The rollout should help stem a growing shortage of first-generation "fruit-flavored" systems at most retailers. The newest iteration is expected to include a 333-MHz PowerPC processor in place of the current 266-MHz chip.

Networking company Farallon Communications is working with Intel to build a home networking product for Apple Macintosh computers.

The networking chip has become the hottest growth item in the semiconductor market as consumers warm to a lifestyle of cell phones, handheld PCs, and high-speed Internet access. With revenue growth for PC chips slowing, communication chips are expected to climb from $28.3 billion in revenue in 1998 to $90.4 billion in 2005.

Chipmaking giant Intel revealed its near-future PC and server product plans, which include faster introduction of low-cost Celeron processors and a rapid transition from the Pentium II to the Pentium III.

In the black
Yahoo posted a profitable first quarter and beat Wall Street estimates by 3 cents a share, marking a third consecutive quarter in the black. The portal's earnings reports have become a leading indicator of the Internet sector's health.

Leading PC graphics chipmaker ATI reported solid earnings as it continued placing its processors inside the largest PC makers' computers, but took another charge for its purchase of Chromatic Research. The company also announced that it will develop graphics products for flat-panel LCDs based on Intel's digital interface technology.

Advanced Micro Devices issued its third earnings warning for 1999's first quarter, saying sales volume, total revenues, and averaging selling price would all fall short of expectations.

Software developer Spyglass signed a 3-year, $20-million deal with Microsoft to help develop and integrate Internet-ready applications for Windows CE device manufacturers. In addition, Microsoft licensed unnamed Spyglass technology, apparently having smoothed over Spyglass's past complaints about unpaid royalties on a previous licensing agreement. Separately, Spyglass intends to acquire Navitel, a developer of Windows CE software, for $11.3 million.

Battle renewed
IBM, Computer Sciences, and Electronic Data Services are once again vying for a huge contract, a ten-year San Diego agreement worth an estimated $700 million to $1 billion. Bids are due at the end of the month. Unlike other governments that are outsourcing piecemeal, San Diego County is farming out all telecommunications and IT services--worth about $98 million a year--to the private sector. A winner should be announced by September.

Struggling business software maker PeopleSoft is preparing to buy a midsized front-office player to boost its offerings. The short list includes Campbell, California-based Saratoga Systems, Austin-based Trilogy, British Columbia-based Pivotal, or Bellevue, Washington-based Onyx, analysts say. CEO Dave Duffield recently promise that the company would make a key front-office strategy announcement within the next month.

After muddling through the past several months with seemingly dueling messages, database giant Oracle will attempt to clarify its application server strategy next week when it announces updates. Oracle has confused customers with a pair of similar products--its two-year-old Oracle Application Server and its new Oracle 8i Database, which has built-in application server features.

A growing number of companies are marketing supply chain management software for IT consultants. Opus 360, Evolve, and Niku are among those with products that help analyze business cases; manage staff, projects, and resources; track and resolve problems; and complete progress and expense reports.

Dell Computer said it will increase sales and earnings by offering more computer services, which the company believes will be key to sustaining its company's remarkable growth, which has topped 50 percent a quarter for most of the last two years. That plan includes selling more third-party software.

Reorganization
MSN Hotmail substantially revised its email service to combat spam, tighten security, and circulate its giant base of 40 million members to other parts of the Microsoft Network. The company recently reorganized its Internet division to form a Consumer and Commerce Group, but so far MSN has yet to really catch hold, its path marred by the departure of key executives and its audience dwarfed by America Online and Yahoo, among others.

BMG Entertainment and Universal announced a new Internet alliance to create Web communities for music fans, promote artists, and sell CDs online through a venture to be known as GetMusic, which will consist of music channels and an e-commerce site, getmusic.com. Due to launch later this year, the channels will build on the foundation of BMG's existing genre-based music Web sites, introduced in February 1996.

@Home, the leading cable modem service, formed a joint venture with Japan's largest cable operator to bring @Home Japan to as many as 5.1 million homes, or nearly one-third of the Japanese cable television market. Back home, however, AT&T's TCI has lagged behind competitors in upgrading its network for cable Net services, and hasn't lived up to expectations in recruiting subscribers. Should it fail to do pick up its numbers, AT&T will cede some of its ownership to junior partners.

Separately, Falcon Communications, a small cable operator with television systems in secondary markets and rural areas, will become the first partner in @Home Network's new Internet service aimed at small to mid-sized cable companies.

Also of note
AMD released a 475-MHz version of its K6-2 processor for desktop systems ... Creative Labs will announces a new MP3 player at next week's Spring Internet World trade show ... Makers of liquid crystal displays continue to raise prices, a move that is expected to hike prices on personal computers and other devices ... Liberty Media Group will acquire an 8 percent stake in News Corporation in two transactions valued at about $2.1 billion, thus becoming News Corp.'s second-largest shareholder ... The stolen 1961 Kentucky Derby trophy was reclaimed 21 years later, after Internet auction house eBay offered the item attracting 41 bids, a final price of $4,200, and the police ... Palm Computing's new advertising campaign, featuring a naked woman, has drawn protests, a racy parody, and now letters from Palm's legal department ... The man accused of creating and disseminating the Melissa virus heard the charges he faces in a New Jersey court ... The Federal Reserve will provide U.S. banks with an additional $200 billion in cash to cover any surge of year-end withdrawals by customers worried about the year 2000 computer problem, Chicago Fed President Michael Moskow said ... Presidential hopeful Al Gore breathlessly declared that his AlGore2000.com Web site is "open source," marking another high-tech faux pas for the vice president, who previously solicited children's emails and last month stated he helped invent the Internet.