Posts belonging to Category Business



Suit Over Faulty Computers Highlights Dell’s Decline

By ASHLEE VANCE
Published: June 28, 2010

After the math department at the University of Texas noticed some of its Dell computers failing, Dell examined the machines. The company came up with an unusual reason for the computers’ demise: the school had overtaxed the machines by making them perform difficult math calculations.

Michael S. Dell, Dell’s founder and chairman, presented the model of computer involved in the lawsuit in 2002.

Dell, however, had actually sent the university, in Austin, desktop PCs riddled with faulty electrical components that were leaking chemicals and causing the malfunctions. Dell sold millions of these computers from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic and small businesses.

“The funny thing was that every one of them went bad at the same time,” said Greg Barry, the president of PointSolve, a technology services company near Philadelphia that had bought dozens. “It’s unheard-of, but Dell didn’t seem to recognize this as a problem at the time.”

Documents recently unsealed in a three-year-old lawsuit against Dell show that the company’s employees were actually aware that the computers were likely to break. Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk. Even the firm defending Dell in the lawsuit was affected when Dell balked at fixing 1,000 suspect computers, according to e-mail messages revealed in the dispute.

The documents chronicling the failure of the PCs also help explain the decline of one of America’s most celebrated and admired companies. Perhaps more than any other company, Dell fought to lower the price of computers.

Its “Dell model” became synonymous with efficiency, outsourcing and tight inventories, and was taught at the Harvard Business School and other top-notch management schools as a paragon of business smarts and outthinking the competition.

Internal documents show Dell shipped at least 11.8 million computers from May 2003 to July 2005 that could fail.

“Dell, as a company, was the model everyone focused on 10 years ago,” said David B. Yoffie, a professor of international business administration at Harvard. “But when you combine missing a variety of shifts in the industry with management turmoil, it’s hard not to have the shine come off your reputation.”

For the last seven years, the company has been plagued by serious problems, including misreading the desires of its customers, poor customer service, suspect product quality and improper accounting.

Dell has tried to put those problems behind it. In 2005, it announced it was taking a $300 million charge related, in part, to fixing and replacing the troubled computers. Dell set aside $100 million this month to handle a potential settlement with the Securities and Exchange Commission over a five-year-old investigation into its books, which will most likely result in federal accusations of fraud and misconduct against the company’s founder, Michael S. Dell.

The problems affecting the Dell computers stemmed from an industrywide encounter with bad capacitors produced by Asian PC component suppliers. Capacitors are found on computer motherboards, playing a crucial role in the flow of current across the hardware. They are not meant to pop and leak fluid, but that is exactly what was happening earlier this decade, causing computers made by Dell, Hewlett-PackardAppleand others to break.

According to company memorandums and other documents recently unsealed in a civil case against Dell in Federal District Court in North Carolina, Dell appears to have suffered from the bad capacitors, made by a company called Nichicon, far more than its rivals. Internal documents show that Dell shipped at least 11.8 million computers from May 2003 to July 2005 that were at risk of failing because of the faulty components. These were Dell’s OptiPlex desktop computers — the company’s mainstream products sold to business and government customers.

A study by Dell found that OptiPlex computers affected by the bad capacitors were expected to cause problems up to 97 percent of the time over a three-year period, according to the lawsuit.

For the full article, visit the New York Times

HIPAA encryption: meeting today’s regulations

Sang Lee, senior security analyst, AlertBootJune 30, 2010

If you work with an organization that must adhere to the Health Insurance Portability and Accountability (HIPAA), you know by now that encryption is now a de facto primary aspect of HIPAA compliance after the passing of the HITECH Act.

There are a couple of reasons for this increased focus on encryption.

Sang Lee

First, the U.S. Department of the Health and Human Services (HHS) issued guidance wherein “unsecure protected health information (PHI)” is essentially any PHI that is not encrypted or destroyed. Under this definition, it doesn’t matter how many chains, walls, doors, biometric gizmos and guards with lethal weapons you have at your service. As long as PHI is not encrypted, it is considered unsecured.

A second and more compelling reason why encryption is now a requirement is the introduction of HITECH‘s breach notification initiative, which requires HIPAA-covered entities to send notification letters if there is a breach of unsecured PHI. However, as HHS pointed out, the use of encryption grants safe harbor in the event of a breach because encrypted PHI is not unsecured PHI.

Oddly enough, in the same breath, HHS also notes that “covered entities and business associates are not required to follow the guidance.” However, cleaning up the mess behind a breach notification can cost millions of dollars, so one would have to be supremely confident — or reckless — in not taking advantage of the encryption safe harbor. With such mixed signals, though, it is not hard to see why encryption is called ade facto requirement.

For more information, read Sang Lee’s full post at SC Magazine

Microsoft shoots for the stars with Bing update

by Ina Fried – June 22, 2010 6:37 PM PDT

The event, hosted at Soho House on Sunset Boulevard, got off to a late start thanks to LA traffic.

WEST HOLLYWOOD, Calif.–Microsoft is hosting a celebrity-laden event here on Tuesday, announcing a variety of new entertainment features it hopes will give Bing a little more star power.

In truly LA fashion, the event started late as reporters battled the southland traffic to get to the Soho House on Sunset Boulevard. However, Microsoft’s blog post with the news posted promptly at the 6 p.m. starting time.

According to that, Microsoft is adding casual games, more TV content as well as Zune music and lyrics to the service. Each of several million songs can now be played once for free, with 30-second samples available thereafter. Songs can also be purchased from Amazon, iTunes or Zune.

The event, meanwhile, just kicked off at 6:30 p.m. PT, with Senior Vice President Yusuf Mehdi talking about Bing’s history and showing a clip from the promotion Bing recently did with Stephen Colbert.

In the clip, Colbert notes that Bing is for real, adding that he knows that because he “Googled it.” Mehdi said that despite a 47 percent gain in market share, Microsoft knows it still faces an uphill challenge.

“It isn’t like people wake up and say dang, if only I had another search engine,” he said. “We’re definitely humbled about a lot of work we have to do.”

Turning to entertainment, Mehdi said that there is a huge opportunity around entertainment and search, noting that there are some 1.5 billion entertainment-related queries per month.

For more, follow this link to Cnet.com

Battling the Information Security Paradox

Tuesday, June 22, 2010

Contributed By:

Anthony M. Freed

Anthony M Freed

Information security is still not garnering appropriate attention from the executive level at some of the largest companies in the world, many of whom are engaged in business activity considered critical to the nation’s infrastructure.

According to an article in InformationWeek, “more than half of Fortune 1000 companies lack a full-time chief information security officer, only 38% have a chief security officer, and just 20% have a chief privacy officer. As a result, a majority of companies are failing to adequately assess and manage the risks that information security and privacy issues pose to their business,” as quoted from Cylab’s Governance of Enterprise Security study for 2010.

With the seemingly exponential increase in threats that range from criminal enterprise to mischievous script-kiddies, combined with insider threats amplified by a struggling economy and an increase in regulatory compliance demands, one has to wonder why information security is not being given proper credence.

“According to the report’s author, Jody Westby, who’s CEO of Global Cyber Risk and a distinguished fellow at CyLab, “the survey results indicate that boards and senior executives need to be more actively involved in the governance of the privacy and security of their computer systems and data.”

Yes, but a willing detachment from the complex legal issues, highly technical and often jargon-laden nuts and bolts of data security initiatives is probably only one of many causes of boardroom malaise.

Some of the blame also rests with the Information Security Paradox, in which the performance of security efforts is often inversely proportional to the health of the budget for such endeavors.

That is to say, the better job one does preventing major information security events from occurring, the harder it is for one to justify a budget, let alone an increase to said budget.

It is not that the boardroom does not understand risk – they live and breathe risk on a daily basis. What the boardroom does not understand is mitigation of risk when it comes to information technology.

For the full article, visit InfosecIsland

How The World Spends Its Time Online [INFOGRAPHIC]

The web is diverse and users obviously log on for different reasons. From reading news, socializing on social networks, email and search, advertisers are always trying to understand where people usually spend their time on the web.

Using data provided by a recent Nielsen study, the infographic below provides exactly that.

So, which web services are used most actively? Email and search are the answers. More than 4 out of 10 users are using emails or/and search engines when connected. This data also explains the boom in search engine marketing over the past decade, whereby Google is the undisputed leader in this segment.

Getting news is also one of the main reasons why people log on to the web as users find it more convenient to consume news digitally.

Click here to display infograph and read more! (penn-olsen.com)

Does the Internet Need a ‘Kill Switch’?

A proposed bill could effectively give the president an Internet “kill switch.”

Senator Joseph Lieberman has proposed the Protecting Cyberspace as a National Asset Act (PCNAA), a bill that would give the president the power to control or even shut down the Internet in emergency situations. Citing the need for cybersecurity, Lieberman said in a press release that the U.S.’s “economic security, national security and public safety are now all at risk from new kinds of enemies — cyber-warriors, cyber-spies, cyber-terrorists and cyber-criminals.”

The bill requires that U.S.-based companies such as Google and Yahoo, as well as broadband providers and software firms, comply with any and all measures that the government sees fit in an emergency.

Technology trade association, TechAmerica, has already expressed worry at the level of control the bill would grant the president if passed — levels that could have “unintended consequences.” Other countries are also decrying the bill, fearing the impact on their own security if the U.S. were to shut down essential parts of the Internet. (via CNET)

Read more: http://newsfeed.time.com/2010/06/18/does-the-internet-need-a-kill-switch/#ixzz0rJhMCfOF

Report: FTC will investigate Apple

The Federal Trade Commission will open an investigation into whether Apple is illegally using its position in the mobile software market to harm competitors, according to several published reports.

On Friday afternoon, both Bloomberg News and The Wall Street Journal reported that the FTC had opened a formal probe.

At issue is Apple’s recent tweaking of its App Store rules. In May, Apple made changes that prohibit certain developer tools from being used to create applications for the iPhone and iPad, and on Monday effectively blocked Google’s AdMob and other non-independent mobile ad networks from accessing applications on the iPhone.

The probe will look at whether Apple is using its highly successful App Store to hurt competitors. When Apple changed the rules on which tools could be used to write apps sold in the App Store it raised eyebrows, as the shifts seemed to specifically target Adobe, with whom Apple recently had a public fallout.

The new rules blocked developers using other platforms that allow them to make one application that runs on multiple devices–for example, not just on Apple’s iPhone, but on competitors’ devices as well. Adobe’s Flash platform and Novell’s MonoTouch are both developer tools that fall into this category.

Then, earlier this week, Apple banned developers from using advertising in their iPhone applications that shares analytic data with “an advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple.”

Read Further(cnet.com)

Digg’s Looking For A New CEO

Posted by Zee Follow Zee on twitter on June 8th, 2010

On April 5th, Kevin Rose replacedJay Adelson as CEO of Digg.com.

There were a whole scope of rumours as to why the shake-up was happening, the most significant being disagreements between Rose and Adelson about the direction of the company. Theofficial statement came from Adelson who said it was a good time to do step down because of an”entrepreneurial calling” and now that Digg was well past “start-up” phase, it was time to move on.

Rose founded Digg in December 2004 and with Adelson stepping into the shoes of CEO in 2005, Kevin’s responsibilities gradually diminished as he focused more on angel investments and other projects. Today in an episodeof The Random Show with Tim Ferris, Rose elaborated some more on what exactly went down. Rose says he was frustrated with the lack of product innovation at Digg and that was the primary incentive behind his decision to become CEO.

Rose went on to give a pretty detailed overview of his experiences so far, the role seems to be taking its toll. Words like “nightmare” and “stressed” cropped up, but he does retract – if only slightly – with “it feels really good.” The most significant stress he says is “keeping 90 people on the same page as to what’s going on in the company.” Understandable considering the company had barely a tenth of the number of employees back in 2004.

Read further here…

Facebook, MySpace caught releasing user data

— Brett Michael Dykes is a national affairs writer for Yahoo! News.

Fri May 21, 5:47 pm ET

In a seemingly never-ending string of damaging disclosures about its users’ privacy concerns, Facebook has reportedly been releasing user data to ad companies that hadn’t even asked for the info.

Facebook isn’t alone this time: rival social-media site MySpace has also been called out in Friday’s Wall Street Journal report by Emily Steel and Jessica E. Vascellaro — together with the content-sharing sites Livejournal and Digg.

The report says that the companies have delivered user data to major online advertising companies such as Google’s DoubleClick and Yahoo!’s Right Media, despite explicit pledges to protect such information. The released material includes user names and ID numbers, together with data that could be used to accumulate a host of additional information on individual users, such as where they live, their names, occupations, incomes and places of employment.

Read more at Yahoo! News.

Judge Permanently Shuts Down ISP Catering to Spam, Porn

By Grant Gross, IDG News

A U.S. district court judge has ordered the permanent closure of an Internet service provider long accused of hosting and distributing spam, spyware, child pornography and other illegal content, at the request of the U.S. Federal Trade Commission.

Judge Ronald Whyte of the U.S. District Court for the Northern District of California in San Jose has ordered that the computer servers and other assets owned by Pricewert, doing business as 3FN.net, be sold by a court-appointed receiver. Whyte also ordered the company to turn over US$1.08 million in illegal profits to the FTC, according to court documents.

Whyte’s orders, dated April 8, were made public by the FTC Wednesday.

Several security experts supported the FTC’s case against 3FN, Whyte wrote in a disgorgement order. “These experts had analyzed data derived from internet searches which establish that defendant, an internet service provider, was engaged in widespread illegal activity,” he wrote. “There seems to be little doubt from the information provided that Pricewert functioned primarily as an internet service provider for illegal activity.”

There were a “relatively small number of apparently legitimate customers” of the company, Whyte wrote.

For more, visit PC World.com