FROM: kevin@edventure.com
TO: jaycross@internettime.com
SUBJECT: [The Conversation Continues] -- April 20, 2001Despite the downturn in the technology industry, the world hasn't
ended. Innovation is still occurring. In this issue, Esther
offers her report on PC Forum, our annual conference, while I weigh
in with some thoughts on Hailstorm, Microsoft's new Web services
initiative.
Your feedback is always welcome!
-k-
Kevin Werbach
Editor, Release 1.0
kevin@edventure.com
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By Esther Dyson
Last month I held my annual PC Forum in Scottsdale, Ariz. About 650
people came, roughly the same as last year. They included
technology leaders from around the world -- venture capitalists,
start-ups, CEOs, industry analysts and other interested parties.
Two of our non-business speakers canceled at the last minute, both
for political reasons -- the crisis in the Balkans and a vote in
the US Congress.
As far as I could tell, everyone had a good time meeting potential
business partners, catching up with friends, learning about new
products and services. The mood was more subdued than last year,
but the talk was about what people were planning for next year, not
about what they SEEMED to be worth last year.
Yet the press coverage was gloomy. The Wall Street Journal Europe,
for example, headlined its story "Reality Bytes." The press focused
on the contrast with last year's optimism, falling stock prices and
the like.
I may be a little thin-skinned because it's my own conference
they're talking about, but I'm trying to see beyond that and
wondering whether such negativity isn't harming things overall. The
Forum attendees were focused more on NEXT year, not last year.
The venture capitalists were looking for good new ideas surrounded
by capable management teams. The companies attending, many of them,
HAD good new ideas and capable management teams.
And it wasn't just the formal presenters; the place was alive with
start-ups and early-stage companies with interesting ideas, new
business models, peer-to-peer projects and the like.
To me, it looked like the high-tech industry at its best -- people
exploring new ideas, looking for opportunities, meeting potential
partners, testing new concepts.
Among the new ideas: how to map the Internet (so that systems
administrators can understand their own networks), how to analyze
supply-chain data in realtime, how to let users choose their OWN
ads, how to send people personal messages over the Internet, how to
get applications to work together more smoothly, how to let
customers determine the content of content sites, and more.
The glow or the hype may be over from last year, but the new
economy itself is not a quick, short experiment that failed. Many
of its components did, but those were simply the errors in a game
of trial-and-error; there are others around who got it right.
The good news for those at the Forum and elsewhere is that they no
longer have to compete with venture-funded amateurs. Most new-
economy companies are now focused more on building their businesses
and finding customers, than on Super Bowl ads, crazy valuations and
stock packages. They want to build companies; the people who merely
want to get rich have gone elsewhere.
They have to find customers at a time when customers are no longer
ready to try out the latest new, new thing. But customers ARE ready
to consider tools and services that help them operate more
efficiently, cut costs, communicate with THEIR customers more
effectively.
For example, Wal-Mart may not want to buy Amazon for billions of
dollars (as it was rumored to be considering), but it IS moving
ahead with its own online strategy, the better to reach its
customers. Companies may be cutting staff, but they don't want to
cut revenues - which argues for more effective use of technology.
They are also using technology in new ways by outsourcing, and
letting customers serve themselves through advances such as voice
recognition, better (less confusing) user interfaces and better
customer-data management (WITH the customer's permission).
Companies want to keep better track of raw materials and
inventories. They are cutting their spending until they get a good
answer to the question, "what for?"
But at the same time, there is concern out there, and beyond the
stock market. One of the bellwethers of this concern is Amazon. If
Microsoft is the high-tech industry's "environment" rather than its
competition (a position once held by IBM), then Amazon is the new
economy's canary. By watching Amazon (the theory goes), we can see
whether it's safe for us to proceed.
Amazon, of course, has gotten a lot of bad press lately: everything
from the timing of stock sales to analysts questioning the
soundness of its balance sheet to layoffs. Amazon may ultimately
compete with almost all online merchants, and competitors may
project arrogance onto it (for everything from its visibility to
its stock price to its habit of patenting its innovations). But at
the same time, it's a proxy for the new economy as a whole, and the
industry wants it to succeed.
Accordingly, we invited Jeff Bezos of Amazon.com to give the last
talk of the conference, relying on him to end the proceedings with
the right tone.
In introducing Jeff, I said more or less the following: "Now
everyone is hoping Jeff will make some news. Either he'll reveal
the fatal flaw and admit Amazon will never make money. Or he'll
guarantee that everything will work out, so everyone can go home
and relax.
"But of course, it's not that simple. His goal has got to be not to
say anything that is quantifiable news and requires SEC disclosure
treatment. But he IS going to look you in the eyes and try to
convince you that he's got things under control."
And that is what Jeff did. Not with any miracle deals, secret
funding sources or proprietary products, but with persistence, cost
controls, flexibility as the market changes -- and the certainty
that he is offering something customers want.
Will he succeed with the precise model he's got now? Maybe yes,
maybe no. But he HAS a plan and he also has a history of adjusting
his plan to changing circumstances.
If the economy gets worse, if sales slow, he knows how to lower
costs, and has done so. He can stop expansion; he can raise prices.
(But right now the model says he doesn't need to.) Maybe it will
make sense to merge with a physical-presence retailer, maybe not.
The point is not that Bezos is ignoring the current challenging
economy. He's reacting to it. But what makes him so cheerful is
that even as market valuations go up and down, he is steadily
building a business of intrinsic value -- one that in the long run
will deliver more of what customers want, more cheaply than they
could get it elsewhere.
That's the real measure of success. With luck, it's a theme we'll
celebrate at next year's forum.
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THIS MONTH IN RELEASE 1.0
Glimpses of the New Network: The Real Convergence Story
(April 24, 2001)
By Kevin Werbach
Hybrid services that combine voice and data are the tip of an
important iceberg. Above the waterline, these services suggest how
the Net will change the ways billions of people communicate. Below
the surface, phone numbers and domain names are coming together,
paving the way for the convergence of the Net and the global
telephone network.
This convergence won't happen overnight. And it won't necessarily
happen the way one might expect. The component parts of the Net and
the telephone network are gradually being swapped out with ever
more parallel hardware and software. While attention has focused on
bandwidth and on traffic migration to Internet protocol (IP)
telephony, companies are developing converged applications that
provide value to service providers and to end-users. Meanwhile, the
emerging ENUM protocol promises to unify telephone and Internet
addresses, removing what may be the last important barrier to
widespread deployment of IP telephony and related new services.
COMPANIES COVERED INCLUDE:
- Keen.com (phone-based expert advice)
- SoundBite (interactive broadcast phone messaging)
- Pagoo (IP telephony call management and provisioning)
- Acallto (Web/PBX integration for incoming phone calls)
- AOL (AOL by Phone and Moviefone services)
Order this issue or subscribe online at <http://www.release1-0.com>
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INTERESTING WEB STATISTICS
A recent report from CyberAtlas (http://www.cyberatlas.com/) based
on data from Alexa Research suggests that, contrary to
expectations, Web users are visiting *more* sites as time goes on.
Like most media, the Web has gradually become more concentrated,
with the top sites such as Yahoo! and AOL sucking up a huge
percentage of total traffic. The latest Alexa data, however, show a
contrary trend:
In June 2000, the top 10 sites received 18.6 percent of pageviews,
the top 100 received 33.7 percent and the top 1000 received 53.3
percent.
In January 2001, the top 10 sites received 16.6 percent of
pageviews, the top 100 received 29.6 percent and the top 1000
received 48.3 percent.
Other ways of looking at the data: 27 sites accounted for a quarter
of total pageviews in June 2000, and 695 sites accounted for half
the total. In January 2001, the equivalent numbers were 50 sites
and 1,210 sites.
This is a good thing! It means that, despite all the dot-com
mergers and sites going under, users are actually finding *more*
sites they want to visit. Maybe, just maybe, the Web is a new
medium after all, more open and interactive than television or
print, and therefore a phenomenon that won't conform to historical
usage patterns....
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INITIAL THOUGHTS ON MICROSOFT'S HAILSTORM
By Kevin Werbach
Microsoft launched its Hailstorm Web services initiative last
month. Worth watching closely, if for no other reason than that it
ties together virtually every hot topic in the computer industry
today: distributed computing, component software, instant
messaging, XML, Web-telephony integration, online privacy, the
post-PC world, user-centric interfaces, you name it.
Hailstorm is the first attempt at a unified field theory of 21st
century software. Most of the conceptual pieces have been around
for a while. For example, Java and older component models such as
CORBA and COM promised common interfaces and data models spanning
devices and systems, the centerpiece of the Hailstorm white paper
(http://www.microsoft.com/net/hailstorm.asp). But the deep
connections between these ideas and, say, peer-to-peer networking
have never been so apparent.
I'm struck by how similar Microsoft's vision sounds to the one
Novell articulated over the past two years under Eric Schmidt,
especially with its Digital Me services. The whole thing is built
around identity and authentication; in Microsoft's case, the
Passport technology originally acquired with Firefly (a startup
best known for its collaborative filtering engine). Of course,
Novell doesn't offer the same range of Web services to plug into
the platform, and it doesn't have Microsoft's end-user apps and
developer tools.
Ironically, Digital Me hasn't conquered the world in part because
it was seen as too closely tied to Novell's proprietary products
(NDS eDirectory), and because Novell no longer has enough clout to
pull along the industry and the developer community. Microsoft
doesn't have the latter problem, but as a result it has the former
one in spades. Building Hailstorm on open standards such as XML and
SOAP is a good start.
A second striking element of Hailstorm is that Microsoft will
charge end users for use of these new services. (From the Microsoft
whitepaper: "Hailstorm will help move the Internet to end-user
subscriptions, where users pay for value received.") Is this an
enlightened recognition that the hype-driven days of the Internet
free lunch are over... or the re-emergence of Microsoft's original,
discredited notion that it would take a "vig" on virtually all
commerce running over the Net?
Predictably many commentators see this as an effort to undo the
Web's Copernican revolution and make the world once more revolve
around Redmond. I'm not so sure. The first question to ask is
whether Microsoft is right that users should and will pay for Web
services. If they won't (and they haven't so far), then Microsoft
will fail. If they will (and a great many tech companies' business
plans assume this is the case), then Microsoft will deserve credit
as the company to show the model can work.
Microsoft has often crushed competitors by giving away for free
what they charged for -- just ask Netscape. For the first time,
though, Microsoft faces a foe that can do the same thing to them:
AOL Time Warner. When your customers pay you $21.95 per month for
access (or more for Time Warner's cable subscribers), you can
afford to give away pretty much any piece of software for free.
Viewed in this way, the Hailstorm fee model is more defensive than
offensive -- an ante to stay in the game rather than a vig for
taking a bet.
Third, it appears that the initial leverage point for Hailstorm is
instant messaging. Though Microsoft says it will built Hailstorm
APIs into every one of its products, its current examples show
services tabs (for things like eBay or Groove) inside a souped-up
version of MSN Messenger. Yet IM is one of the few desktop
applications where Microsoft does not enjoy a strong market
position. MSN Messenger usage has been growing steadily, but is
still far beyond AOL's AIM and ICQ services.
Is this a calculated attempt to extend Microsoft domination into
IM? An acknowledgement that IM is the launchpad for a new
generation of real-time services, where Microsoft has to play even
though it's not the market leader? Or something else?
(Coincidentally or not, ICQ just quietly announced that it is
opening up its API, at least to a degree.)
As far as I'm concerned, the jury is still out on these questions.
But I'm glad to see Microsoft articulating its vision more clearly.
This puts some real meat on the bones of .Net, and is food for
thought for the industry whether whatever one thinks of Microsoft.
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CALENDAR OF UPCOMING TECHNOLOGY EVENTS
May 1-2 -- Pervasive Computing 2001 (Gaithersburg, MD)
Sponsored by the National Institute of Standards and Technology,
this year's event will focus on applications. Contact Teresa
Vicente at 1 (301) 975-3883; fax, 1(301) 948-2067; email,
teresa.vicente@nist.gov; www.nist.gov/pc2001.
May 1-5 -- Tenth World Wide Web Conference (Hong Kong)
Discuss the latest developments in web technology and the issues
and challenges facing the web community as it moves into the 21st
century. For more info, contact info@www10.org.hk; www.www10.org.
May 6-11 -- Networld + Interop (Las Vegas, NV)
Network with the networking community. For info, call 1 (650) 578-
6900; fax, (650) 525-0224; www.key3media.com/interop/lasvegas2001.
May 21-24 -- GigaWorld IT Forum (Las Vegas, NV)
Giga Information Group's flagship event. Will address the
technology and management challenges represented by the Internet.
To register, call 1 (888) 577-4442; email, conferences@gigaweb.com;
www.gigaweb.com.
May 22-25 -- Vortex 2001 (Dana Point, CA)
Bob Metcalfe and John Gallant pan for gold at the convergence of
the Internet, telephone and television worlds. Call 1 (800) 633-
4312; fax, 1 (650) 577-7840; email, registrar@idgexecforums.com;
www.idgexecforums.com/vortex2001/about_2001.html.
May 30-June 2 -- eMediatainment World (Los Angeles, CA)
Entertain yourself at this conference focusing on traditional and
digital media, advertising, emerging technologies and sports.
Contact Kathryn Ullman at 1 (804) 727-6238;
kullmamn@emarketworld.com; www.emediatainmentworld.com.
June 12-14 -- eBusiness Conference & Expo (San Jose, CA)
There's no business like e-business! For more info, contact Ivan
Resnikoff at 1 (415) 538-8946 or via email at iresniko@cmp.coml.;
www.kingbird.com/ebusiness.
November 7-9 -- EDventure's High-Tech Forum (Berlin, Germany)
Call Daphne Kis, 1 (212) 924-8800; fax, 1 (212) 924-0240;
daphne@edventure.com; www.edventure.com *#
* -- events Esther Dyson plans to attend
# -- events Kevin Werbach plans to attend
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