Tag Archives: Circuit City Stores Inc.

About 1751 days ago Computer Security

New Tools for Stopping E-commerce Fraud

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Javed Ikbal is in the IT security business. But it wasn’t until his credit card number was stolen in the Frankfurt, Germany, airport last summer that he realized how vigilant companies have to be about keeping online transactions safe. Ikbal, who runs a Boston area IT security consulting firm, says whoever stole his credit card used it to buy $1,700 in merchandise online from Circuit City, the home electronics retailer. However, Circuit City flagged the transaction because the order didn’t include his phone number, came from a computer logged onto the Internet through a German IP address, and was supposed to be mailed to Illinois, even though Ikbal’s billing address is nowhere near there. Based on those warning signs Circuit City called Ikbal, who alerted the retailer it was a bogus order on a stolen card number. Even though it involves a large business, Ikbal uses the example to show how stopping e-commerce fraud is feasible for even a very small online merchant or other company handling financial transactions online. Measures to stop e-commerce fraud are out there and many of them are cheap — or even free, such as checking the country of origin of an online order against the buyer’s credit card billing address, he says. That’s important because many small businesses can’t or won’t spend a lot on security, says Ikbal, a principal of zSquad, in Plainville, Mass., a firm that creates and audits corporate IT security plans. “They think they have a firewall or that their hosting service will provide security,” he says. “Even for companies that make $10 million a year or more, we find shocking lapses in security.” Protecting the online store According a December 2007 report on e-commerce fraud from The Aberdeen Group, a Boston technology researcher, companies that are most successful at reducing their risk of fraud and simultaneously make customers feel safe do the following to protect online transactions: Monitor and authenticate transactions in real- or near-real time Check that customers are who they say they are, either when they open an account or during a purchase transaction Use encryption, either SSL or EV SSL, a newer version of SSL that requires certification requests to go through a more rigorous identity check and authentication process before being approved Create and enforce security policies and educate customers about safe online behaviors Create marketing to explain how safe their website is for shopping, banking, etc. Ikbal also suggests companies do the following: Warn users to upgrade buggy Web browsers. Shoppers who use older Web browsers, such as Internet Explorer 4 or 5, put themselves and online merchants in danger of being hacked because of known security breaches in those programs, Ikbal says. Since Web servers automatically detect the browser someone uses to log on, a company can redirect anyone with an older browser to a special page on the website that notifies them they need to upgrade before they can continue, Ikbal says. “They could make viewing it a condition for establishing an account,” he says. “It costs nothing. You just have to program your website to respond according.” Set strict credit card policies and stick to them. Require that the address a buyer inputs for an order matches the one the credit card processor has on file for that individual. Also require that anyone making a purchase enter three- or four-digit CCV security code found on the back of the credit card. When an order is placed, the merchant can send the data to the card processor to see if it’s a match. If it’s not “the order shouldn’t be denied, but the merchant should call the person and ask about it,” Ikbal says. Check IP location of incoming orders. Companies that process orders in real time — if they’re selling software buyers pay for and download for example — can use an IP location service such as IP2Location or Akimai to instantly identify a visitor’s geographical location. The cost is usually 30 or 40 cents per transaction or less, Ikbal says. Online merchants who don’t process orders in real time can manually look up IP addresses. “If someone sells only in the US, they should be careful if they see a transaction coming from Eastern Europe or North Korea, which are hotbeds of fake credit card transactions,” Ikbal says. SIDEBAR: Create a Security Policy One of the cheapest things a small business can do is create a security policy and post it online, according to security experts. Security policies aren’t hard to come by. The Anti-Phishing Working Group, a five-year-old industry association, posts links to security policies at several large companies on its website including: eBay, whose consumer education section includes instructions for recognizing fake eBay websites and a spoof e-mail tutorial. Citibank, which maintains a series of pages explaining, among other things, how customers can avoid getting spoofed by hoax e-mail and steps to take if they do. US Bank, which maintains a section called “E-mail Fraud: Information and Help.” Companies can also point customers to the following Anti-Phishing Working Group documents: How to Avoid Phishing Scams and What To Do If You’ve Given Out Your Personal Financial Information.

About 1751 days ago E-Commerce

New Tools for Stopping E-commerce Fraud

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Javed Ikbal is in the IT security business. But it wasn’t until his credit card number was stolen in the Frankfurt, Germany, airport last summer that he realized how vigilant companies have to be about keeping online transactions safe. Ikbal, who runs a Boston area IT security consulting firm, says whoever stole his credit card used it to buy $1,700 in merchandise online from Circuit City, the home electronics retailer. However, Circuit City flagged the transaction because the order didn’t include his phone number, came from a computer logged onto the Internet through a German IP address, and was supposed to be mailed to Illinois, even though Ikbal’s billing address is nowhere near there. Based on those warning signs Circuit City called Ikbal, who alerted the retailer it was a bogus order on a stolen card number. Even though it involves a large business, Ikbal uses the example to show how stopping e-commerce fraud is feasible for even a very small online merchant or other company handling financial transactions online. Measures to stop e-commerce fraud are out there and many of them are cheap — or even free, such as checking the country of origin of an online order against the buyer’s credit card billing address, he says. That’s important because many small businesses can’t or won’t spend a lot on security, says Ikbal, a principal of zSquad, in Plainville, Mass., a firm that creates and audits corporate IT security plans. “They think they have a firewall or that their hosting service will provide security,” he says. “Even for companies that make $10 million a year or more, we find shocking lapses in security.” Protecting the online store According a December 2007 report on e-commerce fraud from The Aberdeen Group, a Boston technology researcher, companies that are most successful at reducing their risk of fraud and simultaneously make customers feel safe do the following to protect online transactions: Monitor and authenticate transactions in real- or near-real time Check that customers are who they say they are, either when they open an account or during a purchase transaction Use encryption, either SSL or EV SSL, a newer version of SSL that requires certification requests to go through a more rigorous identity check and authentication process before being approved Create and enforce security policies and educate customers about safe online behaviors Create marketing to explain how safe their website is for shopping, banking, etc. Ikbal also suggests companies do the following: Warn users to upgrade buggy Web browsers. Shoppers who use older Web browsers, such as Internet Explorer 4 or 5, put themselves and online merchants in danger of being hacked because of known security breaches in those programs, Ikbal says. Since Web servers automatically detect the browser someone uses to log on, a company can redirect anyone with an older browser to a special page on the website that notifies them they need to upgrade before they can continue, Ikbal says. “They could make viewing it a condition for establishing an account,” he says. “It costs nothing. You just have to program your website to respond according.” Set strict credit card policies and stick to them. Require that the address a buyer inputs for an order matches the one the credit card processor has on file for that individual. Also require that anyone making a purchase enter three- or four-digit CCV security code found on the back of the credit card. When an order is placed, the merchant can send the data to the card processor to see if it’s a match. If it’s not “the order shouldn’t be denied, but the merchant should call the person and ask about it,” Ikbal says. Check IP location of incoming orders. Companies that process orders in real time — if they’re selling software buyers pay for and download for example — can use an IP location service such as IP2Location or Akimai to instantly identify a visitor’s geographical location. The cost is usually 30 or 40 cents per transaction or less, Ikbal says. Online merchants who don’t process orders in real time can manually look up IP addresses. “If someone sells only in the US, they should be careful if they see a transaction coming from Eastern Europe or North Korea, which are hotbeds of fake credit card transactions,” Ikbal says. SIDEBAR: Create a Security Policy One of the cheapest things a small business can do is create a security policy and post it online, according to security experts. Security policies aren’t hard to come by. The Anti-Phishing Working Group, a five-year-old industry association, posts links to security policies at several large companies on its website including: eBay, whose consumer education section includes instructions for recognizing fake eBay websites and a spoof e-mail tutorial. Citibank, which maintains a series of pages explaining, among other things, how customers can avoid getting spoofed by hoax e-mail and steps to take if they do. US Bank, which maintains a section called “E-mail Fraud: Information and Help.” Companies can also point customers to the following Anti-Phishing Working Group documents: How to Avoid Phishing Scams and What To Do If You’ve Given Out Your Personal Financial Information.

About 1751 days ago Data Security

Would Your Network Survive a Targeted Attack?

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A small company selling products from its website had bare-bones security in place. Its executives had figured its small size would put it beneath the radar of hackers and other cyber-criminals. After all, cyber attacks are usually aimed at large organizations such as the U.S. Commerce Department or Circuit City, or in one stunning case, the entire nation of Lithuania. Why would anyone bother to attack a tiny company with only a couple of servers and a handful of employees? Someone did, though. A hacker managed to crack this company’s not-very-elaborate security system, gain access to its network, and obtain credit card information for its customers. Not only that, the hacker left a root kit  that continued to collect new credit card numbers as they came in. (Root kits are rogue software designed to give unauthorized outsiders administrator-level access to a system.) It took not only a new security setup, but completely wiping and reinstalling the company’s computers to resolve the problem. “The common belief is, ‘I have nothing of value, so no one will bother me,” says Dirk Morris, CTO and founder of Untangle, an open-source network gateway company that helped the small e-tailer rid itself of the hacker.  ”But we keep running into small businesses that are getting hacked and having their machines taken over.” Smaller companies tend to have smaller security budgets and weaker security in general than larger ones, he explains, and that makes them attractive. Organized crime may be involved “We view targeted attacks in the same category as zero-day attacks,” notes Adam Hils, primary research analyst specializing in small and mid-sized businesses for Gartner. “It’s essentially the same problem as with zero-day attacks: they will never show up on any virus definition list.” (For more on zero-day attacks, see previous article.) Hils adds that as hackers become more sophisticated, targeted attacks are “trickling down” to smaller and smaller companies. To make matters worse, Morris says, organized crime is beginning to take advantage of security vulnerabilities, coordinating and managing cyber-attacks—and tracking which campaigns are most effective. This has led to an increased focus on hacking small businesses, because the success rate there has been higher. For instance, he says, some attack campaigns target small businesses specifically by masquerading as e-mails from the Better Business Bureau, notifying the company of a complaint against it with a link to click for more details. “You click it, and it’s malware.” What’s the best defense against these kinds of attacks? There’s an old joke about two campers being chased by a bear: one camper notes he need only outrun the other camper to reach safety. In the same way, you may not need the tightest security possible to preserve against targeted attacks — as long as your security is as strong or stronger as that of other small companies. Having anti-virus, anti-spyware, anti-spam, and a firewall all up to date can go a long way toward providing the necessary protection. “Hackers look for the weakest defenses, so if you have credit card numbers, you’d better have better security than the next guy,” Morris says. The same goes if your servers contain personal information on customers, valuable patents, insider financial information, or anything else valuable enough to be worth stealing. Targeting a single computer Some attacks aim very small. “Things like botnets target individuals, rather than companies,” Hils says. In a botnet attack, one or more of your users’ computers becomes a “zombie,” sending out virus-carrying spam or otherwise doing the hacker’s bidding, usually without the user being aware of it. That’s what happened to furniture maker Summer Hill, Ltd. “This is a small company, with 35 employees,” Morris says. “They started catching tons of spam, and a large number of attacks. It was all coming from one machine inside the network.” It turned out a botnet program had overcome the security on that one computer, and taken it over. The best way of coping with botnet attacks, Morris says, is careful monitoring of network activity since an unexpected increase in little-used applications may be the first indication that something is awry. In this case, the user’s computer was using internet relay chat (IRC) to a surprising degree. “I doubted that the person using the computer even knew what that was,” Morris says. Sure enough, the zombie computer was using IRC to send out spam — and scan the entire Internet in search of other vulnerable machines.

About 1873 days ago Telecom and Wireless

Tech Talk: Wireless Office Better Serves Clients

Moore Consulting Group was founded in 1994 as a one-person marketing business located in a one-room office. During the past 14 years, the company has expanded to a 20-person staff that now occupies an 8,000 square foot office building in Tallahassee, Fla. Richard Moore, chief operating officer of the business, tells IncTechnology.com how setting up a wireless office has helped the firm service customers. Elizabeth Wasserman: Why did you decide to go wireless in your office? Richard Moore: We’re not totally wireless yet. We are a combination of hardwire and wireless. As we continue to move from towers to laptops, we’ve become more wireless as we go along. Part of the need to go wireless is that clients come in and want to use their laptops. We give them a source to tap into the Internet and then into their servers by way of a 3Com switch. We use it primarily to have something for our clients to be able to use when they came in. What we’re finding is that because of the strength of the wireless switch it allows us to have more freedom over where we can work – not only within the office but even outside of the office. Adjacent to the building, we built a covered back deck for when it’s nice out and people need a break. They can take their laptop out there. It’s a nice little wooded area and the wireless reaches all the way out there. We also have some of our children who come in.  For instance, my son will come in after high school and will want to work out of the backroom. He has a notebook that can wirelessly tap into our server. And for our clients who come into our conference room and need that service, too. It started out meeting that need and now it’s kind of warped into meeting many needs. Wasserman: How did you go about setting it up? Moore: Two years ago, the way we really started is we tried to initially set up our own wireless network with retail type devices. We went to Circuit City, CompUSA, and tried three or four brands. It was not very satisfactory at all. They were not very strong. They’re not designed for commercial use and certainly not designed for an 8,000 square foot building. We needed something that was more robust than we could get from retail side. At that time, our outside tech support came in and recommended we use a 3Com switch. We used them to install it. It was pretty quick. I don’t think we realized any noticeable downtime at all. It installed very quickly, very easily. They set up the wireless side with security passwords and all late one afternoon when basically everyone was ready to go home and we were up and running the next day. Wasserman: What are you able to do now that you couldn’t do before? Moore: We’ve had several results. One of the things that really limited us was the graphic design we had being produced in the office. These are very big files. They used to totally jam up when ever someone wanted to e-mail those files around. The 1GB switch has allowed us to send those files very fast. We are finding we are using the wireless portion of it more and more. We’re looking to be more mobile. In the equipment we now purchase, we’re looking at laptops because we do a lot of traveling. The clients love it. Our conference room is in high demand from several of our clients. They can come in here with their boards and everyone has a laptop and everyone can connect. One of the things we have is the ability to have guests sign on from one password and staff signs on with another password. So we still maintain that security for our staff and our guests using it also through our server. It will also enable us to do voice over internet protocol. We’re not doing this now but it may be something we want to grow into.

About 2298 days ago PCs, Laptops, and Notebooks

Where to Buy Computers

Is 2007 the year your business will buy new hardware? Despite this year’s twin Microsoft releases of Office 2007 software and the Vista operating system, there’s no evidence that 2007 will be a banner year for small and mid-size businesses in terms of hardware purchases, says Michael Speyer, senior analyst with Forrester Research, of Cambridge, Mass.  “It depends very much on where companies are in their hardware cycle,” he says.  “In certain areas, we might see an uptick over last year, like in purchases of storage and PCs,” or laptops, which continue to grow in popularity.  But for many companies, he points out, upgrading to Vista won’t require new hardware. Moreover, small and mid-size businesses often take a wait-and-see approach to new technology purchases. But if 2007 is your company’s year to buy, where should you look? Shop Around Online and Offline The number of options for buying hardware for business use is overwhelming. In addition to traditional brick-and-mortar electronics stores, Web-based shopping venues hawking computer equipment have mushroomed. Meanwhile, small businesses continue to show a strong preference for buying direct from manufacturers like Dell. Value-added resellers (VARs) are an  alternative for those who seek customized hardware. But prepare to pay more for this option. You’d better shop around, as the old song goes, and preferably online first, to get the best price and selection. In fact, some hardware items may be hard to find anywhere but in cyberspace. While the venues for buying hardware seem nearly endless, here are some to consider: Online Comparison Shopping Try sites such as Yahoo Shopping, Amazon, CNET Shopper, or Pricegrabber to sniff out the bargains. Relatively easy to use, these sites allow for easy price comparisons of like products from literally hundreds of vendors, and include vendor reviews, which may or may not prove reliable. Online Computer Stores Newegg, a computer geek’s paradise, has won a slew of awards for its prices and selection, including Forbes’ Best of the Web 2004 and Computer Shopper Shopper’s Choice awards in both 2004 and 2005. Other popular e-tailers include TigerDirect and CDW. Electronic Megaretailers Circuit City, Best Buy or CompUSA. All three have locations nationwide, the option of eyeballing the merchandise before buying, and in-store warranties for those who desire them. Moreover, it’s often easier to return items or seek repairs through a traditional store. Computer Shopper readers rated Best Buy their favorite brick-and-mortar electronics store; many of its locations now feature Geek Squad 24/7 on-site troubleshooting services. CompUSA offers TechPro on-site service. Deep Discounters If bargain-basement prices are a top priority, don’t rule out sites like Overstock.com or Buy.com. Because they are often reselling overstocked items or cancelled shipments from other retailers, they can offer real bargains, especially to those who already know what they want. Direct Buys Going straight to the source remains a very popular option: according to a February 2006 survey by Forrester Research, Dell was named as the most popular computer and equipment vendor by the 700-plus small and mid-size businesses surveyed. Value-Added Resellers. VARs are companies that take computer components and build unique, customized units for their clients. Often, they link hardware and software from different vendors to do this. Since VARs specialize in custom design, they can also design training programs, database development, and consulting and research services. In fact, the line between services offered by VARs and big-name consulting firms, such as Accenture, is quickly blurring. However, VARs are more likely than consultants to work for smaller businesses. And, according to a June 2006 Forrester Research report, small and mid-size businesses are increasingly seeking out VARs instead of consultants to meet their needs.

About 2329 days ago Wireless Networks

Why You Need a Computer Network

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If your employees are happily tapping away on individual computers that aren’t connected via a network, it might be tempting to leave things the way they are. But without an office network, you may be depriving your business of significant productivity without even realizing it. An office network makes it much easier for employees to share files and information — especially if you start storing data on a central storage server that is hooked into the network, says Chey Cobb, certified information systems security professional and author of Network Security for Dummies. “If you have a central storage server, everybody can get to the information on that server rather than having to go sit at the machine with a USB thumb drive or a disk, burn information, and walk back to your other machine,” Cobb says. “It’s basically convenience.” Benefits of an office network An office network enables a host of other benefits: Storing data on one central, networked server frees up local storage space on individual computers. It also makes backups of your company data easier and simpler — as long as everyone is storing their data to the storage server, you only have to back up that one machine. A network also makes printing much less complicated because you don’t have to purchase extra printers and connect one to each computer. Just connect your printer to the network, and all machines will be able to print to it. In the past, small business owners might have shied away from networks out of fear that they would be too difficult to set up and maintain. Today, experts say, that’s no longer a reason to hold back. “There are hosts of different organizations or individuals who can do this very simple network setup for you,” says Michael Speyer, senior analyst at Forrester Research, Inc., a Cambridge, Mass., research firm. “If you go buy your products from retail outlets like Circuit City or Best Buy, they have services like Firedog or Geek Squad, who will come and do it for you. It’s not nearly as much of an issue as it was five years ago.” Networks need to be maintained Maintenance of a small-business network requires just a bit of a basic knowledge, which easily could be found in one of the hundreds of guide books on the subject. Don’t worry if you can’t afford a dedicated information technology staff, but do designate one person as network administrator. “I would suggest that if you’re a very small company, you make it one person’s job to look after the network,” Cobb says. “You can’t have everybody in the company going in and fiddling with the different configurations.”

About 2451 days ago PCs, Laptops, and Notebooks

Where to Buy: Getting the Right Deal on Computers and Equipment

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To keep up with the fast-paced changes in technology that are impacting U.S. companies, allowing workers to become more mobile and commerce to be conducted 24/7, business owners are going on a shopping spree. A survey published in February 2006 by Forrester Research of 700 IT decision makers at small and medium-sized businesses in the U.S. found that they plan on replacing an average of 26 percent of their PCs in 2006. More than a quarter of those new PCs will be laptops and many will represent a major upgrade over the firms’ current technology, the report found. The question is: where to buy? There are value-added resellers, a discount electronics stores or and a plethora of computer websites. The options are greater than ever before, but a growing number of computer sales will be researched and completed over the Internet. But even online, shopping requires multiple visits, specs checks, engine searches, slogging through peripheral paraphernalia, and eye-catching prices for products that may no longer be on store shelves. Before you start browsing for new PCs, check out these ten options. Yahoo Shopping filters sort price and offer “highest ranked” items on the search engine. While some “reviews” are written by ax grinders, they give a sense of whether a seller is legit. One key asset: ability to compare products side-by-side. Amazon or eBay are both great resources and a way to double-check prices. Amazon has better product pictures, but too many links. With eBay, it’s let the buyer beware – if inspection is out of the question, purchases are only as good as online promises. At the least, stick with sellers who garner the most positive feedback. Best Buy has brick-and-mortar stores nationwide, and online prices are backed up by in-store warranties. Online purchasers can pickup goods at store branches near you. The website has few filters, so have your hardware in mind before logging on. Circuit City offers to have online orders in a local store branch within 24 minutes of checking out. If not, you get a free $24 gift card. Not exactly free pizza, but with current gas prices, it amounts to a free trip home. Offers free shipping and “lowest price” guarantees. It’s worth giving their Web page a look to compare prices. Staples and Office Depot can both be found offline in malls across America. From furniture to hardware, their value is the weekly deal. Both websites are a bit of a slog, with too much information to make an easy decision online. It’s worth visiting the stores, if only to take a test drive. Frys, located in nine states, has been a cornucopia for gamers and tech geeks for years. What was once a parts store has turned into a bona fide bargain basement. Costco is a membership-only store offering everything from gas to bulk grapes, but it occasionally has tech bargains ripe for picking. The website offers more gear than offline stores. The trick is navigating to find them on a website that leaves much to be desired. CompUSA is a mega-retailer with stores nationwide, featuring Mac and PC deals and on-site repairs in many locations. Encountering epic repair lines makes you long for the Westinghouse repairman. But they frequently offer “package” deals on computer products that may suit your business needs. MacMall has only three locations nationwide, but its website bills itself as the ‘#1 Apple Direct reseller. Its sister site is PCMall, which offers 40,000 items online. Dell Computer was listed in the Forrester survey as the most popular computer and equipment vendor by small and medium-sized business IT executives. Dell, by and large, offers low prices on wide ranges of computer items. But many grumble about returns. However, they wouldn’t be one of the most successful online retailers if they didn’t deliver.

About 2574 days ago Computer Security

Adobe was Their Partner, Then Everything Changed

For 10 years, Karl De Abrew and Sam Chandler had a happy, productive relationship with Adobe, developing plug-ins to enhance Acrobat PDF software and consulting with the software giant, based in San Jose, California, on developer support. And Adobe seemed just as happy with ARTS PDF, De Abrew and Chandler’s Melbourne, Australia-based company; it even sponsored ARTS PDF’s online community of PDF users, Planet PDF. By 2003, ARTS PDF had 30 full-time employees and half of its $3 million in annual revenue came from Adobe-related projects. But the two partners were plotting a move that once would have seemed insane–severing the relationship and instead competing with Adobe with a PDF product of their own. The problem was the way Adobe had begun treating third-party developers like ARTS PDF. Since the release of Adobe Acrobat in 1993, such developers had been key to Adobe’s strategy. The company created the application with an open standard, giving any developer access to the software’s specifications and a free license to create applications to extend its capabilities. Hundreds of third-party developers had based their businesses on Acrobat. ARTS PDF, for example, scored a big hit with a plug-in that, among other things, allows users to activate Web links in PDF documents, and sells the software on its own website, PDF Store. But Adobe’s CEO, Bruce Chizen, who took over from co-founder John Warnock in 2000, had grown wary of working with outsiders. Warnock used to refer to the hundreds of third-party developers as Adobe’s “ecosystem.” Under Chizen’s leadership, however, the company began reengineering the third-party plug-ins itself, incorporating them into new and increasingly complicated versions of Acrobat. That sparked concern among developers. If consumers could buy Acrobat software loaded with the latest extras, they would no longer need plug-ins. De Abrew and Chandler were as tuned into the PDF community as anyone, and they knew what was coming: Their plug-in business was disappearing before their eyes. At the same time, they sensed that there was a market for an Acrobat alternative. People were changing the way they used PDF applications. Instead of using the software simply to create and read files, more businesses were embracing the PDF format as a collaboration tool to let workers share digital documents, inserting revisions and comments along the way. Acrobat can do all those things, but the cost can sting when a company needs to push out the software to large groups of employees. What’s more, many companies don’t need Acrobat’s whiz-bang graphics capabilities, which tend to slow down performance. De Abrew began asking customers what they thought about Adobe. Their responses backed up his hunch. He says he heard complaints from many executives who were tired of paying between $350 and $450 per user to license the software. Acrobat, they said, was sometimes overwhelming and confusing. They wanted a cheaper version that was faster and easier to use. And if ARTS PDF built it, they’d buy it. De Abrew and his colleagues had been kicking around the idea of creating an alternative to Adobe for years but had never seriously pursued it. Now it seemed like a good idea. Adobe was huge, with revenue of $700 million. But a 2003 research report found that the PDF market had the potential to reach $1 billion. De Abrew and Chandler were confident that ARTS PDF had the industry knowledge and engineering chops to pull off a cheaper, scaled-down version of Acrobat. What’s more, the open PDF standard meant anyone could develop applications to compete with Acrobat, so there was little possibility of a lawsuit. The way De Abrew and Chandler saw it, they had two options. They could stick it out and hope that Adobe reconsidered its approach toward third-party developers, the chances of which seemed pretty slim. Or they could try to get a slice of the PDF market for themselves. That would mean alienating their biggest partner. It would also mean refocusing most of their limited resources on developing the new product and all but abandoning the plug-in business that had been so profitable. The stakes couldn’t be higher: If the competing product failed, Adobe wasn’t likely to let them return to the fold. There would be no turning back. The Decision One muggy afternoon in December 2003, in the 100-plus-degree heat of the Australian summer, De Abrew and Chandler sat down with their four-member board of directors at the company’s headquarters and began sketching out a strategy for going up against Adobe. The mood was tense, but as the group looked out a conference room window at the city’s skyline, they knew there was nowhere to go but forward. “We decided we’d rather have our own Acrobat and a shot at a growing market than a slice of a declining one,” De Abrew recalls. Shortly after the meeting, the company’s engineering team, which is based in Nitra, Slovakia, started work on the new product, Nitro PDF. It would be a leaner version of Acrobat’s powerful and feature-rich software and would retail for $99, less than a third of the price of Adobe’s entry-level offering. Thanks to their contacts with Acrobat users and developers worldwide, they already had a strong sense of what the market wanted, not to mention an instant test group for prototypes. De Abrew and Chandler were up front about the move with their contacts at Adobe, which was putting most of its effort into pricier, high-end offerings, and the business relationship between the two companies remained intact. Meanwhile, ARTS PDF went through a radical restructuring, redirecting 80 percent of the company’s employees and cash flow–which formerly had been spread evenly among its plug-in business, Web store, online community, and consulting group–to developing and marketing the software. The other divisions continued to exist, staffed by a skeleton crew and receiving minimal marketing and development dollars. Thanks to this strategy, ARTS PDF was able to stay profitable throughout the entire ramp-up process–and it didn’t have to lay off any full-timers. Eighteen months after starting, ARTS PDF’s team of 60 part-time and full-time engineers completed the application. But the real work was just beginning. In the past, the business had sold its products only through its online store, telephone sales, and a global network of corporate resellers. Now, De Abrew and Chandler began courting big-box retailers. Since they had no retail contacts, they hired a publishing and distribution partner with an established network to negotiate deals for them. They also added staff to their small sales office in San Francisco to establish a bigger U.S. presence and started a word-of-mouth marketing campaign by distributing free beta versions of the software to hundreds of users through the Planet PDF website. In April 2005, De Abrew and Chandler officially unveiled Nitro PDF at a software trade show in Orlando. An Adobe executive speaking at the event mentioned the release in her keynote speech, briefly referring to new competition as she talked about the changing PDF industry. She didn’t show a hint of hostility, but the general reaction from the Adobe team was chilly. In years past, the two groups would have greeted each other like old friends. This time, the conversation was curt. Throughout the conference, the ARTS PDF booth was packed with people interested in learning more about Nitro PDF, and the company left the event with dozens of sales leads, Chandler says. It needed them. Shortly after the conference, Adobe pulled its sponsorship of Planet PDF and launched a competing site, AcrobatUsers.com. It also stopped giving ARTS PDF consulting work. Ricky Liversidge, a director of product marketing at Adobe, says the company’s decision to compete with Acrobat did not come as a surprise. “That changed the relationship to a form of ‘coopetition,’ ” Liversidge says. “In this industry, that’s nothing new. We face that with many different companies.” ARTS PDF isn’t quite the “other Adobe,” but the company is on track to sell 100,000 units this year, according to Chandler. De Abrew and Chandler expect revenue to ramp up significantly this year, fueled by sales at nine major retailers, including Amazon, Office Max, and Circuit City, and 19 corporate resellers around the world. The company’s main concern, Chandler says, continues to be its loss of revenue from the plug-in business. ARTS PDF will eventually start to feel that loss as its Acrobat plug-ins, which the company is no longer developing, become obsolete. “We’ve bet the farm on Nitro and restructured the entire company around our new direction,” Chandler says. “We are playing with the big boys now, but we remain utterly convinced that it was the right decision.” The experts weigh in Corporations won’t buy it ARTS PDF has bet the store on this strategy. There is demand for a lower-cost version of PDF software. That said, I don’t think many large corporations will jump over to Nitro, even if the lower price means they can buy more copies for their employees. Corporate users expect a high level of service from software providers–that’s one of Adobe’s strengths. Smaller companies can’t deliver the same service. Tim Bajarin President Creative Strategies Campbell, California It’s a matter of trust It’s a double-edged sword. Increasingly, I get calls from clients who are upset with Adobe’s pricing model. There are many companies that will say, “Hey, we just need these basic functions and we don’t want to spend the extra money for Acrobat.” On the other hand, Adobe is an extremely well-known company. It’s very hard to overcome that kind of brand loyalty. It’s almost like somebody coming out with an office suite to compete against Microsoft. People know Adobe. I’m not sure they would trust another brand. Rita E. Knox Research vice president Gartner Research Van Nuys, California Creative marketing is key It sounds like a smart strategy, but it won’t be easy. De Abrew and Chandler saw some chinks in Adobe’s armor, studied the marketplace, and found out what people wanted. The question is whether they have the resources to promote Nitro PDF with enough marketing and advertising. They really need to get their message out if they are going to make inroads against a big company like Adobe, which has much deeper pockets. Dave Dolak Founder Marketing by Dave Dolak Charlottesville, Virginia What do you think? Should ARTS PDF have gone head-to-head with Adobe? Sound off at casestudy@inc.com.

About 2725 days ago PCs, Laptops, and Notebooks

Gift Guide: For the Office

Stylish Stylus Made by adding translucent enamel and touches of 18-karat gold to a precision-engraved pattern, this Trellis fountain pen ($4,500) by David Oscarson makes most Montblancs look like Bics. David Oscarson launched his eponymous Wildwood, Mo.-based company in 2000, adopting the same technique used to make some Fabergé eggs. Oscarson designs the pens himself, importing special parts from Germany and France, and finishing them with a team of British goldsmiths and silversmiths. The Trellis collection is his company’s seventh and latest line. The pens come in azure (shown), black, sapphire, red, and white. The company makes only 88 pens in each color; they are also available in a roller ball version. www.davidoscarson.com Plug and Play The Klipsch iGroove ($280) frees MP3s from their ear-bud chains. The speaker system was designed for the iPod, but comes with an attachment that works with most MP3 players. Klipsch, a 60-year-old family business in Indianapolis, sells speakers and stereo components through stores like Best Buy and Circuit City. CEO Chris Pyle (whose second cousin founded Klipsch) says its products are made with both science and instinct. After technical sound tests, employees known as the “golden ears” test the devices by listening to a favorite CD or DVD. Personally, Pyle tests with The Hunt For Red October. www.klipsch.com Time to Reflect With Kikkerland’s Spy Clock ($20) you can surreptitiously keep tabs on who’s about to barge into your two o’clock meeting. A cross between a timepiece and a security mirror, the wall clock is about a foot in diameter. Kikkerland, based in New York City, works with designers like the Spy Clock’s creator, Pieter Woudt, to make whimsical toys, games, and housewares. The whimsy extends to Kikkerland’s name, which is Dutch for “land of frogs.” It’s also a nickname for Holland, from which Kikkerland’s founder, Jan van der Lande, hails. The clock is sold at stylish home shops like New York City’s Mxyplyzyk. www.mxyplyzyk.com Note-Worthy This Bachelor Pad ($90) by Schleeh Design is no Post-it dispenser. Made in the company’s Montreal studio, it has a cherry base and a stainless steel slider for tearing off just as much paper as you need. For start-up capital, founder Colin Schleeh sold his house in 2002 and lived for a spell in the backroom of his studio. The pad is sold in high-end gift shops. Refills are $24. www.poeme-online.com Morning Mud At six inches tall, this hand-painted Brooklyn Bridge mug ($19) by Our Name Is Mud can handle the grande-est cappuccino. Founder Lorrie Veasey, who designed the mug, was a teacher who made pottery to supplement her income. These days, her company has four New York City retail stores–in three of them customers paint their own pottery–and a wholesale division. www.ournameismud.com

About 2725 days ago PCs, Laptops, and Notebooks

Gift Guide: For the Office

Stylish Stylus Made by adding translucent enamel and touches of 18-karat gold to a precision-engraved pattern, this Trellis fountain pen ($4,500) by David Oscarson makes most Montblancs look like Bics. David Oscarson launched his eponymous Wildwood, Mo.-based company in 2000, adopting the same technique used to make some Fabergé eggs. Oscarson designs the pens himself, importing special parts from Germany and France, and finishing them with a team of British goldsmiths and silversmiths. The Trellis collection is his company’s seventh and latest line. The pens come in azure (shown), black, sapphire, red, and white. The company makes only 88 pens in each color; they are also available in a roller ball version. www.davidoscarson.com Plug and Play The Klipsch iGroove ($280) frees MP3s from their ear-bud chains. The speaker system was designed for the iPod, but comes with an attachment that works with most MP3 players. Klipsch, a 60-year-old family business in Indianapolis, sells speakers and stereo components through stores like Best Buy and Circuit City. CEO Chris Pyle (whose second cousin founded Klipsch) says its products are made with both science and instinct. After technical sound tests, employees known as the “golden ears” test the devices by listening to a favorite CD or DVD. Personally, Pyle tests with The Hunt For Red October. www.klipsch.com Time to Reflect With Kikkerland’s Spy Clock ($20) you can surreptitiously keep tabs on who’s about to barge into your two o’clock meeting. A cross between a timepiece and a security mirror, the wall clock is about a foot in diameter. Kikkerland, based in New York City, works with designers like the Spy Clock’s creator, Pieter Woudt, to make whimsical toys, games, and housewares. The whimsy extends to Kikkerland’s name, which is Dutch for “land of frogs.” It’s also a nickname for Holland, from which Kikkerland’s founder, Jan van der Lande, hails. The clock is sold at stylish home shops like New York City’s Mxyplyzyk. www.mxyplyzyk.com Note-Worthy This Bachelor Pad ($90) by Schleeh Design is no Post-it dispenser. Made in the company’s Montreal studio, it has a cherry base and a stainless steel slider for tearing off just as much paper as you need. For start-up capital, founder Colin Schleeh sold his house in 2002 and lived for a spell in the backroom of his studio. The pad is sold in high-end gift shops. Refills are $24. www.poeme-online.com Morning Mud At six inches tall, this hand-painted Brooklyn Bridge mug ($19) by Our Name Is Mud can handle the grande-est cappuccino. Founder Lorrie Veasey, who designed the mug, was a teacher who made pottery to supplement her income. These days, her company has four New York City retail stores–in three of them customers paint their own pottery–and a wholesale division. www.ournameismud.com