Australian Cybermalls News

A decision by the Australian Tax Office (ATO) to force most companies to write off the cost of web site development over 2.5 years rather than the year in which the expense was incurred has drawn the ire of Internet industry bodies. The move to change the deductibility of web site development work - foreshadowed in a draft ruling by the ATO in May this year - came today in a final ruling on the matter. The ATO announced that henceforth "simple" sites will be fully deductible in the year in which they were developed, but "complex" sites (ie those that permit online ordering to occur) will be classed as software development and will need to have their costs amortised over 30 months. The Internet Industry Association, the Australian Interactive Multimedia Industry Association and the Australian Information Industry Association were all highly critical of the ruling, saying that the decision to divide sites into "simple" and "complex" was an arbitrary grey area; that the ruling would introduce uncertainty into the industry; and that it could ultimately lead to job losses, skill shrinkage and company closures. All three groups - who lobbied against the change - now intend to lobby both the ATO and the Federal Government for fresh amendments.

A new study by the National Office for the Information Economy (NOIE) estimates that an average Australian family can save up to $141 per week by using the Net to pay bills, do banking, shop, send emails and browse for information. NOIE's Save@Home study, conducted across 300 online households earlier this year, found that most saved 4 hours per week by carrying out tasks online and estimated that the average saving for doing this was around $95, taking into account postage and transport costs and the free services available online (eg: banking) which attract fees if executed in the real world. NOIE's study found that most savings accrued to large households and estimated that households with three or more children and both parents working stood to benefit the most. All the same, they found that even one-person households could save $30 or more per week by conducting transactions online. The study also estimated that as at November 2000, 37% of all Australian households were online.

The majority of webmasters appear to be avoiding paying to have their sites listed by search engines - and consumers appear to be avoiding "paid entry" search engines right along with them, according to new data released by LookSmart today. Reporting a disastrous fall in its 2nd-quarter earnings, LookSmart revealed that it had received less than 137,000 paid listings since it pioneered the concept two years ago - a mere fraction of the millions of web sites that exist on the Net. The company, which laid off 172 staff from its Australian and US offices in January, reported $US18.9 million in revenues for the quarter ended June 30th - a decrease of almost 33% from the $US27.3 million quarterly earnings it logged 12 months ago. The company also recorded a quarterly loss of $3.6 million. Two months ago a study by WebSideStory showed that most engines which had joined LookSmart in the "paid listing" movement had virtually disappeared from the Top 4 positions over the last two years. The inference drawn from the study was that Net consumers are now ignoring them in favour of engines that provide a more comprehensive and unbiased listing of web URLs.

The Electronic Privacy Information Centre, Junkbusters and several other US-based privacy groups announced today that they will file a complaint with the US Federal Trade Commission regarding Microsoft's imminent release of Windows XP, alleging unfair and deceptive trade practices. The groups say they object to Microsoft's plans to collect consumer data through XP's Passport Service and to profile Net users, and will call on the FTC to prevent the launch of the software until major changes to both the software and the company's business practices are effected. The groups say they're particularly concerned about the company's long-term plan to become the "gatekeeper" of the Net, pointing to both gaping security holes in the firm's products and Microsoft's own recent conviction as an abusive monopolist in the USA. XP - which is scheduled for release on October 25th this year - is also drawing increasing interest from US attorneys-general and senators. Both groups are also currently looking at whether XP's release should be held up or not. Microsoft said today that it was unable to comment on the privacy groups' complaint until it was filed.

A new Gallup poll has found that 97% of US email users say the application has improved their lives. 90% now use email at home and over 80% use it at work. Over half of the respondents said using email is their most common online activity, although women were more likely to say this than men. Gallup also found that 32% of email users search online, but only 4% conduct financial transactions online. Surprisingly - considering the rivalry between AOL and Microsoft over their instant messaging (IM) products - almost 60% said they never use IM, while a third use IM occasionally, 8% use it frequently and a slim 3% use it every time they go online. But 53% of respondents use email both at work and at home and 76% have more than one email address. Almost all work users of email check their email every day and 51% check it at least once an hour. 71% of home users check their email daily. Work users receive an average of 12 email messages every day and send six. Home users receive an average of 8 messages daily and send three.

US ecommerce giant Amazon.com has reported its 17th straight quarter of red ink, losing a heady $US168 million on sales of $US668 million - or roughly one dollar in every four that passed through its hands. While the result was an improvement over its US$317 million loss in the same quarter last year, the outcome fell short of the company's revenue forecasts. Amazon, however, was upbeat about the situation and said it felt it was on track to turn a "pro-forma" profit by the 4th quarter of this year. The company also announced it had received an injection of US$100 million from AOL Time Warner. Under the terms of the deal, Amazon will promote AOL to its customers and make the firm its exclusive Internet service provider. Amazon will also provide AOL customers with many of the services it provides on its own site, including personalisation features and product comparisons. The company said that it would also continue the aggressive cost-cutting program it has been pursuing ever since the dot.com crash of April 2000 by scaling back operations, closing distribution centres, shelving plans for a new corporate headquarters and laying off 15% of its staff.

A new rash of viruses and worms designed to exploit endemic security flaws in Microsoft Outlook and IIS web servers flooded the Net (and Australia) over the weekend. Security experts have warned that one - the Sircam virus, which arrives with a random subject line and usually advises "I send you this file in order to have your advice" - is particularly severe. The virus contains a lethal payload and distributes itself through Outlook address books. Another - CodeRed, which apparently began operating on Friday 13th June - has exploited a recently-discovered hole in Microsoft's IIS web server to direct infected web servers to attack the Whitehouse.Gov site in the USA. Attacks grew so severe by late last week that the White House were forced to move their server to another IP address to escape them. Meanwhile, Australia's largest ISP BigPond.Com was embarrassed at the weekend when a group calling itself Oxyg3n posted a list of 69 broadband customer usernames and passwords on popular chat sites, alleging that they'd hacked the BigPond customer base. BigPond spokespeople said that it was more likely the details had been gathered by a trojan worm virus, and promptly changed the details for all known infected accounts. However - according to Netcraft - BigPond use Microsoft's IIS web server on Windows NT/98, so a more comprehensive hack hasn't yet been ruled out.

According to a report in the Wall Street Journal, Microsoft will no longer provide direct support for Java in its upcoming Windows XP operating system. Instead, users who wish to see Java applets on the Net will be forced to download additional software - potentially rendering many sites which use Java applets largely or completely defective when viewed under the company's Explorer 6.x browser. A Microsoft spokesperson said that the company had decided to drop Java support for "business reasons", noting that the move follows last year's legal dispute with Java's creator Sun Microsystems. This dispute, in turn, was the culmination of Microsoft's long-running attempt to build its own proprietary version of Java which would only run on its own Windows operating systems: a move that Sun had vigorously resisted, since the fundamental advantage of the language is that applications written in Java will run on any platform.

Australia's Commonwealth Bank has moved to reassure consumers their money is safe following claims by a computer technician aired on a Melbourne radio station today that he was able to hack into the bank's online system and access the accounts of around 50,000 customers. The technician - identified only as "Mr Williams" - said that a flaw in the bank's system allowed him to break into accounts and steal unlimited funds. A spokesperson for the Commonwealth Bank later denied that any account had been breached and assured customers that their money was safe, but said that the bank was taking the allegation seriously and investigating the matter. Not surprisingly, the Commonwealth Bank runs its online banking system using Microsoft's IIS web server software which - last month - Microsoft admitted contained at least one fundamental flaw that left every web site ever built on the platform vulnerable to hacking attacks. And under current Australian law, online banking customers whose accounts are hacked have no legal recourse against the bank providing the service, no matter how negligent the bank may be.

A new study of net usage patterns by Pew Internet and American Life (PEW) has found that US Internet use appears to be maturing. In a survey of 1,081 US Internet users who were polled in February this year, PEW asked participants if they go online more or less often than they did 6 months ago. 54% said they were using the Internet for approximately the same amount of time. A further 29% said they were using it more, while 17% said they were using it less. Of those who said they went online less than before, there were a variety of reasons for decreased use: some were simply less interested in going online than they had been, while others had less time to spend, some were no longer required to use the Internet for work or education reasons, and some had lost access to a computer and/or Internet connection. By contrast, at least 50% of those who are using the Net more than they had been previously stated that they had an increased need to use the Net for school or work, or had found more things they could do on the Net.

A consumer group founded 3 years ago by activist Ralph Nader has filed a complaint with the US Federal Trade Commission alleging that many search engines are now warping search results in return for payment. The group alleges that the practice is akin to deceptive advertising, which is outlawed under US Federal law, and have called for the matter to be investigated by US authorities. The complaint, filed today by Commercial Alert (CA), names MSN, Netscape, Directhit, HotBot, Lycos, Altavista, LookSmart and iWon as engines which manipulate results - either overtly or covertly - based on whether businesses pay to be included in the engines' databases and/or be given prominence on search queries. "This is just the latest example of how advertising is creeping into every nook and cranny of our lives and culture," a CA spokesperson said. "Americans are tired of it, and the backlash is growing." Ironically, a study by Websidestory released in May this year showed that most search engines which have gone down this route have lost significant market share over the last two years, and are largely being abandoned by the Internet community.

The US Department of Justice (DOJ) has asked the US Appeals Court to speed up processes in the long-running Microsoft anti-trust case following the court's decision last month that Microsoft had made 8 separate violations of US anti-trust laws. On Friday US time, the DOJ asked for the "immediate issuance of mandate... in light of the exceptional importance of this case, and the strong public interest in prompt entry of a decree providing an effective remedy for Microsoft's illegal conduct." If the Court agrees, the move would slice up to a month off proceedings. In related news, the US state of New Mexico pulled out of further action in the case on Thursday Australian time after reaching a private settlement with Microsoft; and Microsoft announced that it will vary licensing conditions with PC makers which will allow them to remove the Internet Explorer icon from the Windows Start menu. Microsoft said it will also let consumers delete Explorer from the company's upcoming Windows XP release, which is currently scheduled to debut later this year.

The Australian Domain Authority (auDA) approved a radical set of recommendations by its Competition Model Advisory Panel yesterday to put the management of .com.au, org.au and other Australian domain name registries out to tender. The moves would see the single registry that currently exists for all Australian domains split into several smaller ones (eg: .net.au, .com.au, org.au etc), each under the control of a successful tenderer who may not necessarily be an Australian company, and also see auDA surrender most of the hands-on control over the Australian domain name system that it currently maintains. At present, all Australian domains are stored in a single registry and are largely handled by a single registrar (Melbourne IT). While the auDA foreshadowed a move to allow additional registrars to compete for domain name sales some time ago, the new recommendation to split up the central registry into smaller chunks - each possibly under the control of a different company - has not been seen anywhere in the world. Nonetheless, auDA is upbeat about the move. "(We're) confident that the model recommended by the Panel will deliver the benefits of competition to all Australian domain name holders: cheaper prices, more choice and better quality of service," CEO Chris Disspain said of the move. "The model will provide certainty for industry and consumers alike by ensuring a level playing field and setting accepted standards of behaviour."

Australia is the second-best country in the world to live in, according to the United Nations - but it's only the 9th most technologically savvy nation on Earth and not even one of the world's top 30 technology exporters. The ratings were announced yesterday in the UN's Human Development Report for 2001, which rated 72 leading countries on a number of criteria including overall livability and technology achievements. Although Australia ranked as the second best country in the world to live in (in terms of human development), we ranked 9th in technological development behind Finland, the USA, Sweden, Japan, South Korea, the Netherlands, the UK and Canada. And according to the UN report, Australia was also a very poor technology exporter, failing to even score a Top 30 position against former Iron Curtain countries such as Hungary and the Czech Republic.

Australia's Fairfax media empire announced today that it was writing off $6 million worth of online investments, though it said it would still meet its profit forecasts for the 2000-2001 fiscal year. The company - which a few years ago had said it believed the bulk of its future business would come from the Net - took the loss on its f2 and TradingRoom ventures. Analysts project that the conglomerate will post a final profit for the year of $124 million, roughly 25% less than last year's $168 million. In other news: 131shop.com.au effectively ceased to exist today, metamorphosing itself into a listed company shell for former Sausage Software supremo Wayne Bos. The firm has been renamed Focus Technologies and will act as a holding company for Bos' Tomorrow Ltd. 131shop raised $7 million from investors when it listed on the ASX in July 1999 at the height of the dot.com boom, but rapidly lost the lot - most of it on what former staff described as "largely wasted" ad campaigns and heavy overestimation of the B2C marketplace. Focus Technologies will now be used in a takeover bid for Brisbane-based mining software development company Mincom.

Industry analysts today began to question the viability of Microsoft's .Net and HailStorm initiatives after world-wide outages involving the company's MSN Messenger service entered their 7th day. Last week users of MSN Messenger reported that they were experiencing connection problems and missing buddy lists. The outages soon became so severe that Microsoft pulled the service offline completely in an attempt to rectify the problem. Last Thursday (Australian time) the firm claimed the problem had been fixed and had been due to a rare set of circumstances involving twin disk controller failures - but widespread reports on Net newswires today suggest that many users are still experiencing great difficulty with the service and that the problems have yet to be remedied. Today industry analysts began to openly question how viable Microsoft's .Net and HailStorm initiatives might actually be in light of the week-long outage. This is because MSN Messenger is intended to be a key component in the overall architecture, which is slated to be able to drive a new generation of online services. The current gaffe is the latest in a seemingly endless string of failures in the company's Internet technologies - such as last month's embarrassing admission that a critical defect in its IIS server meant that every one of the millions of web sites built using Microsoft's web platform were vulnerable to being hacked.

Australian etailer dStore, which lost AU$23 million before being sold to Harris Scarfe last December for AU$3 million, may now pass into the hands of yet another owner - this time for as little as AU$615,000. Brisbane technology company HotShed announced today that it had made the offer to Harris Scarfe administrator Ferrier Hodgson. HotShed said that it believes it can get dStore to turn a profit by slashing staff from 120 to 10 and using a "virtual fulfillment model" which would see some of the company's inventory and delivery functions performed by wholesalers. HotShed said that it feels dStore could achieve break-even under the new model on sales of as little as $300,000 per month and that it would expect the site to generate $200,000 in profits the first year, rising to $600,000 in Year 2 and $1.5 million in Year 3. However, the offer has yet to be accepted. Meanwhile, News Interactive's GoFish auction site will cease trading tomorrow after losing an unspecified amount of money for its owners. The site hasn't accepted any new listings since June 26th and will now direct visitors to rival eBay's site instead.

Contrary to the general doom and gloom surrounding dot.com failures, the Boston Consulting Group (BCG) reported yesterday that their latest research indicates consumer e-business in the Asia-Pacific region is booming. BCG say that B2C markets in the Asia-Pacific are still growing by more than 100% per annum - mainly as a result of the online activities of large established consumer companies - and that revenues (which topped US$6.8 billion in the region last year) should hit US$14 billion by the end of this year. BCG also project that the number of Internet users in the region will rise to 245 million by 2004 (up from the current total of 98 million), and that nearly all advanced countries in the Asia-Pacific area will have at least 50% of their populations online at that time. BCG suggest that the 3 "killer categories" for B2C business in the region are financial brokerage services, computer products and online travel, and that between 10% and 20% of all business in these categories will be transacted online by 2004.

In a study likely to have strong parallels in Australia, the Gartner Group report that 42% of business Net users in the USA now check their work email while they're on vacation, and 23% (or almost 1 in 4 business users) now check it during the weekend when they're not in the office as a matter of routine. Further, 53% of those polled check their email at least six times a day when they're in the office, while another 34% admitted to checking it almost constantly. Gartner found that most business users in the USA now spend an average of 49 minutes per day managing their email and that they receive an average of 22 emails every working day. However, they also found that only 27% of these messages required immediate attention and 34% were “occupational spam” (ie unnecessary email messages from colleagues). Amusingly, Gartner also note that email appears to have become a security blanket in some corporations, and point out that many executives who receive less than the normal volume of email soon come to miss it and feel "out of the loop".

The Net is becoming less and less a male preserve as time goes by, according to as new study by Nielsen/Netratings (NN). They report that the total number of women now slightly outnumber the total number of men online in the USA and Canada, and that women in the Asia-Pacific region are also rapidly catching up with their male counterparts, accounting for an average 36% of the online audience in May 2001. NN found that women now make up 48% of the Australian online audience, 46% in New Zealand, 45% in South Korea, 44% in Hong Kong, 42% in Singapore and 41% in Taiwan. Furthermore, NN report that women appear to surf the Net differently to men and are - on the whole - much more efficient about it. "Women spend less time online," an NN spokesperson said. "They generally know what they're looking for and leave once they achieve their goal."

More than 555 "substantial" dot.coms have collapsed around the world over the last 18 months, Webmergers reported today - and almost 60% of those closures occurred in the first 6 months of this year. Webmergers, which has tracked the dot.com collapse ever since it began in April/May 2000, noted that so far 62% of dot.com collapses have been in consumer-oriented web sites, followed by business web sites (28%) and general ones (10%). Together, though, ecommerce and web content dot.coms accounted for almost 3 in every 4 implosions, followed by access, infrastructure and professional services companies. And since November last year, average shutdowns have ranged between 49 and 59 companies per month - a trend that still shows no sign of abating.

The number of live Australian web sites underwent a major upswing in Sydney, Melbourne and rural Australia during the last month according to our monthly Australian Internet Growth Index, but also fell off in at least half the other state capitals. The AIGI showed an average nationwide increase of 7.5% in the number of web sites during the last month, a rise on the previous month's 5.7% growth rate. However, growth was once again far from uniform - perhaps indicating that some new sites have been incorrectly classified, or that previously-listed sites had been incorrectly classified. The July 1st figures (with June 1st figures in brackets) are as follows:

Australian Internet Growth Index June 2001
(Figures Show Estimated Live Sites)

Brisbane - 9,043 (9,519) Sydney - 46,674 (35,629) Melbourne - 33,717 (27,637) Adelaide - 6,318 (6,651)	Perth - 7,349 (7,819) Hobart - 2,983 (2,762) Canberra - 7,238 (7,954) *Darwin - 8,314** (6,705)
NB: The Darwin figure includes rural Australian sites