KGB Report

April Week 4, 1999

A Curmudgeonly Look at Business and Technology

Published by Kevin G. Barkes | 1512 Annette Avenue | Library, PA 15129-9735-125

Voice: 412.854.2550 | Fax: 412.854.4707 | e-mail: | www:

Copyright ã 1999-2013 by Kevin G. Barkes.

Written by Kevin G. Barkes

(See for the latest online version of this newsletter, updated several times daily.)


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Just Say No. When you call for service for a utility problem, the nice person on the other end of the line will generally say something on the order of, "We'll have someone there tomorrow by noon, okay?" The correct response to this cleverly phrased question is "No, I need someone here immediately." It doesn't always work, but in many cases you'll find you can get a repair person on site earlier simply by refusing to accept the first appointment date suggested to you. Or ask your mother to call for you and use that voice.

Who Watches The Watchers? Wired Online reports the next generation of set top cable television converter boxes will be able to record and report what's viewed through the devices. There's still debate within the industry if the capability should be implemented due to privacy concerns. Stay on the safe side: read the fine print before you sign for your next feature-enhanced cable box. Wired notes that the Cable Act of 1992 prevents cable companies from selling information it gathers from its users. However, they're not prohibited from gathering the data for internal use, and most cable companies are now owned by communications conglomerates that provide internet access, telephone service, satellite telecommunications, television shows, motion pictures, magazines, direct mail houses and Lord knows what else. Of course, you could retaliate the way one Nielsen family did awhile back... keep the TV on when you leave and order the family dog to sit in front of the set. Which, when you think about it, explains the current state of television programming. We're proud to announce that we're a Nielsen family, or will be next week, unless someone from the ratings outfit sees this. Actually, I think they may reconsider and not give us the diaries this time around. We were chosen about four years ago and received seven of those little books, one for each television in the house. With cable and satellite reception, it was a royal pain filling out the little buggers. I don't put much faith in Nielsen, anyway. Despite reporting that all seven sets were tuned to every episode of Mystery Science Theater 3000, Lois and Clark: The New Adventures of Superman, and Northern Exposure, all three shows were still cancelled. I think I'll fill out the diaries this time around to indicate we watch nothing but professional wrestling and CSPAN. That ought to really confuse the heck out of the demographers. Better still, maybe we'll observe National TV Turnoff week, which began last Thursday.

Still Nothing To Brag About: Reversing its ranking from last year, US Airways placed first in the annual airline quality survey conducted by two Midwestern colleges, mainly due to its low overbooking rate. Which is sort of like saying Moe was the smart Stooge. Still, few airlines have ever done anything as stupid as the recent gaffe committed by KLM. According to the Avweb Avflash newsletter, The Royal Dutch Airlines is scrambling to deal with public outrage over the deaths of 440 squirrels that arrived from China without the proper papers. KLM said it was forced to feed the live rodents into a meat-processing machine when, it claims, it couldn't find anyone to claim the animals. The airline later apologized, admitting to a "grave mistake on ethical grounds."

False Security: The recent rapid arrests in connection with the spread of the Melissa virus and the phony Bloomberg News page notwithstanding, cybercrime is still a major threat. While law enforcement officials deserve praise for quickly tracking and bagging the Melissa and Bloomberg perpetrators, the simple fact is the average cracker isn't quite as good as he thinks he is, especially in covering his tracks. Truly successful cybercriminals have more than mere technical talent. The best crackers succeed because of their people and organization skills and because they maintain virtually invisible profiles. Most crackers are discovered because they either fail to suitably conceal themselves or find it impossible not to brag about their conquests. You've never heard of the biggest cybercrimes - the ones involving millions of dollars - because the professional perpetrators kept their mouths shut and the victimized companies, fearing adverse publicity, never reported their losses.

Ack! Phtewie! The big hit at the Erotica USA sex-related trade show in New York was the emerging technology of teledildonics. It's virtual reality sex, facilitated by two computers, the Internet, and suits equipped with appropriately shaped, electrically powered accoutrements of which the less said the better. The term teledildonics was originally coined half-jokingly in the 1980s by computer visionary and Xanadu project mastermind Ted Nelson, whose more mainstream contributions to the lexicon include hypertext and hypermedia. One wonders if those implementing this technology should worry about being turned into pillars of silicon.

Biting The Bullet: To be fair, one of the reasons Microsoft has had problems developing and improving Windows NT and 2000 has been its policy of trying to make the new operating systems execute programs originally written for DOS, Windows 3.x and Windows9x. Many older programs are rather inelegant, doing unpleasant things like bypassing the operating system to address hardware directly. Microsoft has opted to make Windows 2000 more reliable by dumping the shaky code that allowed old software to potentially violate system integrity. The bad news is that you're going to have to trash and/or substantially modify a lot of old programs to use 2000. Sensing the potential for additional revenue, a number of firms have announced plans to port popular software packages to 2000, and some companies are producing migration tools to help automate program modifications. The migration period will be painful and expensive. In the meantime, bear in mind we're still taking about beta code, and the release date has slipped again, to mid-May. And that's only one of the four possible flavors of 2000: 2000 Pro, Server, Advanced Server, and 2000 Datacenter. I'll stick with VMS until all the shouting is over. VMS only comes in one variety: functional.

Only A Matter of Time: Expect a major battle between the Feds and local government over Internet taxation. The Internet Tax Freedom Act (ITFA), passed in 1998, calls for a three-year moratorium on state and local taxes for electronically conducted commerce. It also requires the creation of a commission to examine the matter and make recommendations. Local government organizations have filed one suit and are threatening another over what they consider to be a stacked deck. Instead of a balanced panel, nine of the 16 available seats have been filled with representatives of the business community. States and local governments feel they've been hemorrhaging revenue due to uncollectable taxes from traditional mail order businesses, and they're going to do their best to make certain to get their due from Internet commerce. (Are you aware that mail order purchases may not be subject to Pennsylvania sales tax, but that you are required to list those purchases on an annual form and pay an identical "use" tax to the state? If the Department of Revenue ever really enforced the law, virtually every business and individual in the Commonwealth could be cited.)

Dead Letter: March 31 marked the death of the purely mechanical postage meter, done in by its electronics-based successor. Microprocessor controlled meters offer a number of advantages, the greatest of which is far less vulnerability to fraudulent tampering. KGB still considers the no-lick postage stamp to be the ultimate advance in recent postal technology, not counting the Young Elvis. Our recommendation concerning the new systems which allow you to print postage labels with your PC? How many of you can successfully print envelopes on your laser printer on the first try? Right.

Misdate Solution: Have you ever metered a whole bunch of letters and then discovered the wrong date was printed on the envelopes? The post office can get really cranky about this, especially when some people "accidentally" mail bills and tax returns several days after the imprinted date. The way to handle it? Set your meter to the correct date, set the postage rate to 0.00, print out the number of labels you need and stick them under the original meter imprint. Just be certain not to obscure the first imprint.

Making Sense of Internet Finances: Morgan Stanley Dean Witter's Mary Meeker, Wall Street's top-ranked Internet analyst, expects a "big correction in Internet stocks sometime this year." Commenting in The New Yorker, Miss Meeker compares today's Internet stock frenzy with the 17th century tulip bulb fiasco in Holland, noting that "there will be many stocks that in hindsight look like tulip bulb stories." The article, by John Cassidy, helps put the entire Internet stock frenzy into perspective, and explains how a company like America Online can have a book value almost as great as General Motors, Ford, and Boeing combined. The answer: artificial stock shortages. A company's capitalization - what it's worth - is generally calculated by multiplying its per-share stock price by the number of shares issued. This works well when most of a company's stock is available for sale, as is the case in most traditional businesses. With Internet companies, though, only a fraction of the shares issued are actually available for public purchase. The founders and original investors hold the rest. This creates an artificial shortage of available shares, which inflates the per-share price: simple supply and demand. Let's say you want to buy shares in KGB Consulting, Inc. As founder, I own a million shares. I divide that million into our outstanding assets and cash on hand, and get a per-share value too small to register on my calculator. But let's assume I can somehow start a buzz that says KGB Consulting will be the next America Online. We have an initial public offering of 10,000 shares, and they sell for $100 each. Voila- we just raised a cool million. So, what is KGB Consulting worth? If we use the traditional method, we multiply the per share price - $100 - by the shares issued - 1,010,000 (remember, as founder, I have a million shares, and I issued another 10,000) - so KGB Consulting is worth $100 x 1,010,000 = $101,000,000. From zero to $101 million overnight! Now, is the company actually worth $101 million? Of course not. If I tried to cash out and sell my million shares on the public market, supply would vastly overwhelm demand, and the stock price would implode. But this silly calculation is still used to determine the company's capitalization, which is why it looks like Internet companies are worth far more than they actually are. Now, it's still possible to make money. I could pick up a quick $10,000 by quietly selling a hundred of my founder's shares. But insider-trading rules would prohibit me from unloading too much without public disclosure. And once the market gets wind I'm bailing out, the price drops through the floor, I have a bunch of investor lawsuits, and I'm back to policing the couch cushions for change to mail this newsletter.

Day Trading at Night: Upset because your regular job keeps you from the potentially lucrative daytrading craze? NASDAQ is looking at establishing a second, four-hour long trading session that would begin at 5 or 6 pm Eastern Time. If all goes according to plan, the extended hours could go into effect sometime this summer.

Location, Location, Location? Merrill Lynch notes that the spread of electronic commerce is affecting all aspects of traditional business. Expect a decline in the value of certain commercial real estate properties, as the net makes physical business locations for some industries less important and therefore less valuable.

Wired War: Civilian communications technology is playing a major role in the current European conflict. American news organizations are communicating via email with citizens affected by the NATO bombing of Yugoslavia, and Motorola's satellite-based Iridium telephone system has become the only reliable communications link between refugees, relief workers and the outside world. While the circumstances are tragic, the situation does prove Iridium's ability to provide telephone service anywhere on the planet. So far, however, Iridium is less than a stellar success. Only 3,000 Iridium phones have been sold, the company lost $440 million in the last quarter, and its president just resigned.

CIH Reminder: The CIH virus was set to activate Monday, April 26. If you didn't use an antivirus, your bios has probably been corrupted and your hard drive erased, so take a nice walk in the park and buy the missus some flowers. It's out of your hands, and you now have a marvelous excuse for not having those records for your upcoming audit.

Lunch With Mr. Science and Little Jimmy: KGB had the great good fortune of lunching with Pittsburgh radio legends Larry O'Brien and John Garry last week. A devoted listener since their arrival in Pittsburgh in 1972, KGB made occasional contributions to their all too brief mid-90s return to WTAE Radio. (My proudest moment: a call-in contest winner declining theater tickets and asking instead for the O'Brien and Garry Wand of Existential Despair, KGB Labs' most significant achievement.) The lunch date was, surprisingly, the first time KGB had ever met Larry and John in person. An interesting bit of trivia: John is actually taller on radio than he is in person.

Getting Old: My son says The Matrix is this generation's Blade Runner. I thought Blade Runner was this generation's Blade Runner. Times do change. In the past you had to leave your home to buy a pirated copy of a current-run movie. Thanks to modern technology and broadbandwith communications, you can now watch The Matrix at home. Several college students have posted the film on college websites. While far too large to download from a dialup line, persons with high-speed connections can now see the Keanu Reeves movie on their PC screens. Expect significant copyright enforcement action by the motion picture industry.

In Perspective: Small businesspersons frequently feel they bear more than their fair share of burdens. The next time you feel put upon, consider Eleanor Castine, 66, of Jeannette, PA. The Pittsburgh Post-Gazette noted a flood destroyed her furniture store in 1978, a tornado razed its replacement in 1983, and after she opened a restaurant, the Pennsylvania Turnpike Commission decided to tear it down in 1997. She's now undergoing radiation treatment for cancer. Ms. Castine was one among several recognized by the St. Francis Health Foundation's 1999 Courage To Come Back Award program.

No Winner: No one answered our last trivia question: February 29 is Superman's birthday, selected by the comic book writers because it's the rarest of all earth dates. This week's quiz: Who was Big Max Calvada, and what's significant about his name?

Useless website of the week:, belonging to someone called Vincenzo of Soylent Communications, listed at a post office box in Mountain View, California. Sometimes you wonder if the cost of having free speech is too great.

Quote of the Week: "The good news is Salmon Rushdie has published a new novel. The bad news is it's called "Buddha, You Fat Bastard."-Saturday Night Live's Weekend Update


Switching To Paper: Many Latin American governments are starting to switch back to paper record keeping systems, acknowledging there's no way they're going to have their Y2K problems solved in time. Unlike the US, where the Securities and Exchange Commission has forced large corporations to report at length on the efforts and monies expended for Y2K remediation, governments south of the border are tight-lipped. Or grim. Columbia admits it doesn't have the $11 million needed to fix its air traffic system, and controllers are boning up on the old-fashioned radio and index card tracking methodology. Venezuela's effectively thrown in the towel, and is planning to have its armed forces and 15,000 engineers standing by to handle emergencies. Ironically, one potential source of assistance-American software vendors-probably won't be of much help, since many foreign governments use bootlegged, illegal copies of US software. Pirated software is unsupported.

Y2K Scorecard: The White House released a generally upbeat report on Y2K. Banking, communications, transportation and electrical suppliers appear ok. There may be minor disruptions with oil and gas producers. (See related story below.) The food supply looks good, since supermarkets generally beef up their inventories in the winter to compensate for delivery problems associated with bad weather. The administration did harshly criticize doctors and hospitals, many of which have not yet checked to see if their billing systems will work correctly. Small health providers may be forced to shut down, the report warned.

Fuel Stockpiling: A Department of Energy official told a US Senate committee he didn't expect widespread fuel supply problems, but recommended homeowners and businesses should keep their heating oil tanks full as Y2K approaches, just in case. Then a Coast Guard official said consumers shouldn't hoard petroleum deposits or fill their tanks the day or so before New Years Day to avoid disrupting energy supplies. Y2K experts are beginning to replace the computer software companies as the major producers of FUD (fear, uncertainty and doubt). Again, while American oil suppliers are in pretty good shape preparing their systems for Y2K, there could be problems with foreign firms, who produce half of the oil we use. The US says it would use supplies from the country's strategic petroleum reserve, if necessary, to help stabilize the market. We're going to go out on a limb here and predict gasoline and heating oil prices will increase in January. Ahem.

Nuclear worries: US officials are more concerned about Russian nuclear power plants than nuclear weapons. There are 65 Russian-designed atomic power facilities in nine countries, including one plant close to Alaska, and their Y2K readiness is unknown. Fortunately, the plants' safety and control systems are not computer controlled.

Are You Covered? The Department of Transportation has warned foreign and domestic airlines to make certain their liability insurance coverage includes claims related to Y2K. Many insurance companies have been trying to add clauses to existing policies to exclude Y2K related damages.

Another Bailout? It appears that really small businesses-those under $1 million in sales-are depending on gritted teeth and the federal government to bail them out if things really go haywire on Y2KDay. From conversations with small businesspersons, we've come to the conclusion that most people think things aren't going to be too bad, and if there is some major problem, the Feds will offer various forms of assistance and dispensation to get them over the rough spots. They bailed out the S&Ls, right? In any event, the real problem probably won't be technical, but human... people creating shortages through hoarding. As the Tommy Lee Jones character in the sci-fi comedy Men in Black observed, "A person is smart. People are dumb, panicky, dangerous animals, and you know it." Play it safe, and get The Official KGB Y2K BeanieÔ . At least it shows you've given token thought to Y2K issues.

More Windows98 Bugs: Remember that December fix to Windows98 that squashed all the Y2K bugs? Well, there's another one. Microsoft will shortly release three more patches that correct additional Y2K-related problems. Rumors in the tech community say Microsoft has more lawyers working on Y2K than programmers. The software giant also released fixes to Internet Explorer 4 and 5 that plug up some additional security holes.

Variations On A Theme: Readers of the KGB Report online version may note that in addition to the posting of new items, old items may disappear, combine with other items, or have spelling and grammar changes. That's because the online version is actually the rough draft in progress for our print issue. We're looking at ways to deal with this situation; your suggestions are welcome.

Feeling left out? KGB Report friends and subscribers get the version of our weekly mailing that doesn't include our promotional literature. We do this in order to keep you as friends and subscribers. However, some folks (hi Mom!) want to receive everything we produce. If you'd like to get all the KGBstuff we generate, just give us a call or drop us a line.

All About Us:

Kevin G. Barkes publishes the KGB Report, a somewhat curmudgeonly-skewed weekly look at business and technology-related issues. Our main business is database publishing/automated typesetting services and system design, which means we take huge gobs of database information, convert it into neatly typeset material, and design systems that can do the same. We also do mailing list database work, which includes cleaning up and maintaining your lists. We perform Year 2000 compliance auditing for small businesses, and help companies adopt appropriate computer-based systems if needed. ("Three by five cards don't crash."-Ian Shoales.) We operate the website, which contains an online version of this newsletter, additional information about our company and links to other interesting places on the Internet. Paid subscriptions to the print version of KGB Report are $50/yr. Fax and email subscriptions are also available: call 412-854-2550 for additional information. The paid print edition contains material not available in the online version. Advertising space available for all media. Copyright Ó 1999-2013 by Kevin G. Barkes. All rights reserved. So there.