January 2000 The main focus of the November 1999 Comdex, the show of shows for those in the computer industry, certainly wasn't the PC or even the Internet for that matter but that elusive specter, forever on the horizon," the future". Most of my generation looked to the year 2000 as the threshold to the future. Before Y2K fears were ever known to us, it was a date that when crossed would open into a wonderland of super technology with "Jetson" like gadgets and near miraculous scientific innovation. While everyone on hand for the show had an idea or opinionas to what is in store for us, consensus was hard to find. Here are a collection of articles stemming from the show that reflect some of those ideas and differences of opinion, now that "the future" has finally arrived. Editor How Broadband Will Change Industry By Ian Stokell While there is plenty of room for all broadband technologies, users must be aware of the security risks involved, contended a panel of industry insiders at the "Broadband Computing - How It Will Change The Industry" session at Comdex. Dan Farber, editor in chief of ZDNet, outlined broadband's promise, today's market, and its future market at the start of the session. The promise of broadband is that it will offer a single service providing Internet video-on-demand, voice and telephony, shopping, banking, billing, and other services. It is also a rich media with superior advertising functionality, and promises universal access. In addition, it makes the audience more empowered, he said. He added that the possibility of making money from its implementation in the market will speed up broadband's appearance to the consumer. In today's market, broadband has a small universe with regard where it is implemented, it offers streaming media, but the new user experience is undefined. There is also consumer confusion as users try to understand what the technology has to offer, and industry confusion as different interests jockey for position as to who will dominate. In any future market for broadband, mediums will converge but devices won't, Farber said. By 2003 there will be 26 million broadband subscribers, and advertising will drive the business model. In addition, pay-per-view will become viable and Internet Protocol (IP) video will be predominant. Also, new broadband brands will emerge, he said. A number of interesting points were made at the session, not least of which was the question of security. Users must remember, said a panelist, that when a user logs on using either a cable modem or a digital subscriber line (DSL) modem, that device gains an IP address, which in turn can be located and used by hackers to gain access to that device. Users then, need to install devices or products that put up some kind of a "wall" to prevent access, such as a router. With regard to business, a panelist contended that cable access doesn't make sense for most businesses today because it is a "party line," even if it was available to them. Cable lines, for the most part, are primarily in residential areas, and not business sectors. Interestingly, the panel also said that processor speed does make a difference in downloading from the Internet. In the event of eventual development with regard alternative broadband TV services, the panel was asked about whether traditional broadcast will survive. They exist because of investments in programming, said a panelist, but their business models will change dramatically. There is a lot of infrastructure left to go in the development of broadband, concurred the panel. "We know what the solutions are, but it will take years to implement." One major future development that will result from the increased use of broadband to access the Web, concluded the panel, is that Web sites will begin offering alternative versions of their sites - such as a special version designed for those with broadband services, with video support and more graphics. A Future When PCs Become Passe... By David Streitfeld The future is up for grabs. That was the central message of this year's Comdex, the giant annual computer expo. While the tech world is accustomed to uncertainty, there's a sense now that the companies, even the widely feared Microsoft Corp., are no longer in control. "Technology, to some degree, is not driving the market anymore," said Linus Torvalds, the creator of the "open source" operating system Linux. "It's what people want. . . . Convenience and price are the real driving factors." Torvalds, the former Finnish student who rivals Microsoft Chairman Bill Gates as a high-tech cult figure, is his own best example. Linux, the first operating system to become a true competitor to Microsoft's Windows, barely existed at Comdex two years ago. This year the Linux Business Expo received nearly equal billing to the Comdex floor show itself. "This is not your father's Comdex unless your father is a Web developer putting in an 18-hour day," Jason Chudnofsky, president of the Comdex-sponsoring ZD Events, said during his introduction of Torvalds. Torvalds's keynote speech provided a sharp counterpoint to Gates's talk, which opened the convention Sunday. Gates's keynote was full of high- tech dazzle and tightly structured. It also never directly referred to the government's antitrust suit against Microsoft. By contrast, Torvalds was low-tech, practically homespun. The screens that enabled the thousands of people in the audience to see his talking points weren't quite working. "Sabotage does come to mind," he commented dryly. That was one of his many references to Microsoft and Gates, who overshadowed the convention. Microsoft rode the PC boom in the 1990s to a commanding position in the tech universe, but it was repeatedly asserted here that the next decade would be different. Whether that was a firm belief or merely a hope wasn't clear. During the Q&A period something Gates didn't permit during his own session Torvalds was asked the unthinkable. What if Microsoft were to co-opt Linux by offering its own version of it? "It's not only possible, but it's legal, and I encourage them to do it," said Torvalds. Microsoft is trying to reach beyond its dependence on PCs by co-opting the single hand-held device that has won broad consumer acceptance: the Palm hand-held computer. A stripped-down version of the Windows operating system powers a number of Palm competitors and is simultaneously bidding to become the operating system for any number of home devices. At one panel, executives from Microsoft and Palm, as well as Microsoft arch rival Sun Microsystems and Psion PLC, tried and failed to agree on what the future would look like. Panel moderator Walter Mossberg, the personal-tech columnist for the Wall Street Journal, began by noting that the PC was 22 years old and "still does not turn on when you press the 'on' button." "It's a device that has never quite lived up to its promise," he said. With the boom in e-mail and Web browsing over the past few years, consumers have concluded that they don't need a complicated PC. Thus were born Internet appliances, which range from the Cidco MailStation, an e-mail device that retails for $99, to C1 Tech's MPwow, which allows users to directly download and play music. This is the first Comdex, Mossberg said, in which appliances are really a factor: "In a way, we're at another frontier." The devices that succeed will be the easiest and most functional, said Palm Computing President Alan Kessler. "Simplicity is key," he said. "The success of Palm in the marketplace is not what we put in the device but what we left out." If consumers can gain access to the Web over a Palm or intermediate-size device, will they also want a PC at home? Microsoft Senior Vice President Craig Mundie thought so. "I tend to think of these appliances as the Internet on training wheels." He thought of the future as "the PC plus its friends." That view was practically ridiculed by the rest of the panel. The action "has moved to the Internet," said Psion Chairman David Potter. "The movement is away from being PC-centric to Net-centric." The most-cited new technology at the convention seemed to be Bluetooth, (see this issues High Tech Horizon feature for more on Bluetooth )named after a medieval Danish king who brought together competing factions in reasonable harmony. Bluetooth is a specification for using radio waves to enable computers, cellular phones and hand-held devices to communicate with one another wirelessly. With Bluetooth, consumers could move data from, say, their cell phones to their Palms without cables, as long as they were within a few feet of each other. Hundreds of companies, including Intel, IBM and Toshiba although not Microsoft have already endorsed the Bluetooth standard, and products incorporating it will be out next year. The first, demonstrated here, was an Ericsson headset, which allows hands-free use of a cell phone ideal for driving. Comdex is always full of gee-whiz prototypes of products, but there was a widespread sense this year that more of these may actually reach consumers. Hewlett-Packard CEO Carly Fiorina promised a wristwatch with Internet capability, while Samsung Electronics and Conversa Inc. debuted their wristwatch cell phone, which works by voice commands rather than a keypad. Sun chief executive Scott McNealy touted a future that "is going to look much more like the telephone industry with centralized hardware and services for a fee." That would leave little need for a PC-based operating systems firm such as Microsoft, McNealy made clear. His keynote, too, was filled with Microsoft references, including the "Top 10 Signs Microsoft Has Bought 20 Percent of Las Vegas." (One sign: "The pirates in Treasure Island really steal your money.") Posters on Comdex shuttle buses touted Sun's free StarOffice software, proclaiming, "Scott McNealy doesn't want your money." If that were true, he'd be the only one at Comdex who didn't. The larger, unasked question behind all these new PC-less devices is how much of a market there will be for them. "Unless you're a techie," said PC Week editor John Dodge, "you have a finite capacity." And maybe even techies have their limits. At the Internet device panel, one audience question came from a man who wanted to know how to deal with the "human gateway bottleneck." "I've got access to more information and data than I can handle," he said. The panelists had no advice for him. Sun's McNealy No Future For PCs By Sherman Fridman "Scott McNealy doesn't want your money." These words have been plastered all over Las Vegas; they're on the sides of busses, building walls, and billboards. But Comdex/Fall '99 visitors had to wait until they heard the keynote address by Scott McNealy, chairman and CEO of Sun Microsystems [NASDAQ:SUNW], to appreciate the significance of those words. McNealy's message - in a Comdex event devoid, he said, of any "substantive announcements" - was that software, particularly operating system software, should be free; and the money he does not want is the several hundreds of dollars which consumers have used to pay to purchase operating system software. And McNealy lived up to those words, as everyone attending Comdex/Fall '99 had the opportunity of receiving any number of full- version copies of Sun's office suite known as StarOffice. In fact, McNealy said that in the almost two months since its been available as a free download, over one million people have taken advantage of the offer. In a keynote address peppered with monopoly jokes and Windows- cutting sarcasm, McNealy asked, "Who cares what operating system makes our telephones have a dial tone, or powers the turbines at our utilities?" Operating software should be a free, integral part of the devices and appliances we use. To make his point, he asked, "When was the last time you bought an operating system for anything except a PC?" Looking to the future, McNealy said, "Everything digital or electrical will be connected to the Internet." In fact, he added, the connectivity of devices would be many times greater than the connecting of people. As examples he said that today's automobiles have between 50 and 100 electronic devices on board. Each of them could be connected to the Internet to provide real time information, like the Sun-sponsored Formula I race car which constantly transmits information back to the pits while speeding around the track at 200 miles per hour. In a more tragic example, McNealy asked why airplane crash investigators have to wait for the recovery of black boxes? Why not have airplanes transmit crucial data, in real time, on to the Internet, where it would be instantly available? Even items as mundane as a light bulb could have a chip installed that would sense when the bulb was nearing the end of its useful life and signal the manufacturer to ship a replacement bulb. The manufacturer benefits because it has a built-in source of replacement business; the consumer benefits because the drudgery of shopping for light bulbs, or having one go out during a critical period, is eliminated. McNealy believes, "there should be sensors in everything." In McNealy's future, the computer as we know it, in its gray box, will have little importance. What will have dominance will be the devices that control connectivity, such as wireless telephones which he estimates will number over one billion by 2004. Everything in McNealy's future world will be connected to the Internet, and be wireless. Even today, McNealy said, a survey taken by America Online (AOL) found that one-half of home PCs went unused, except when their owners wanted to go online. "How many cell phones," McNealy asked, "go unused?" In the future, information should be a utility, he said; and it should be as easily available to everyone as water and electricity is today, and some day, all houses will have broadband connectors in every room to take advantage of a service-driven Internet. In McNealy's future, "Computing will be as easy as using a terminal." Microsoft Banking Heavily On Streaming Media By Bob Woods Microsoft Corp. [NASDAQ:MSFT] Chairman and Chief Executive Officer (CEO) Bill Gates linked what he called the upcoming success of streaming media - audio and video delivered to a user in real time via the Internet - to the PC and Net-capable devices, all of which would presumably be running various flavors of his company's Windows operating system. During his keynote address today at the Streaming Media West `99 conference and exposition in San Jose, Gates said the streaming media arena is one Microsoft "really believes in, we're investing very heavily, and it's going to become a mainstream part of the PC and digital device experience." Ideally, a news Web site would have streaming media at the ready as soon as the site is accessed, he also said. During his keynote speech, Gates showed many examples of streaming media, including one clip Taken from the MSNBC cable TV network Microsoft co-owns with NBC. Gates also again espoused his "anytime, anyplace and on any device" model for Internet access, extending it to the streaming media world, "allowing people on a wide variety of devices, getting all those devices working together." To carry out this vision, a "lot of new software will need to be created," Gates said. Of course, Microsoft is developing that enabling software, including the newest version of Windows 98, he said. Industry partnerships will also be a key to bringing together technologies that will enable streaming digital media to be received in the home, at work and places in between, Gates also said. "Digital audio and video are radically changing computing and the Internet for consumers and businesses alike," Gates said. "The digital media revolution offers tremendous opportunities for industry innovation, creates new business models, and dramatically improves the computing and entertainment experience." To bring this experience to consumers and businesses, Microsoft and its partners are working to bring to market technologies and services, infrastructure and software, Gates said. Microsoft, however, will not be the "publisher" of the information. "Rather, our goal is to provide the infrastructure for everyone who is doing that," Gates added. Gates' speech was covered via - appropriately enough - a streaming media feed. Microsoft today also announced a myriad of deals that will help bolster its streaming media software. The company said it inked pacts with cable-TV converter box manufacturer General Instrument Corp., to use Windows CE software in GI's DCT-5000+ set-top box for streaming audio and video. The software giant also signed with Texas Instruments Inc., to develop processors that convert audio and video to a digital format, and with Thomson Multimedia to equip the RCA Lyra portable music players with Windows Media support. Microsoft also said it now has more than 45 partners supporting its "Windows Media Broadband Jumpstart" initiative, which provides consumers with high-speed connections to the Internet with access to online music videos, movie trailers, full-length feature films and CD-quality Internet radio, among other features. In the digital music commerce arena, Supertracks and Preview Systems will add Windows Media support in their respective end-to-end solutions for retailers for digital download of music. And Hewlett-Packard will use Windows media for its Enterprise Computing organization's global marketing communications activities, Microsoft added. Financial details surrounding the deals were not disclosed. While streaming media is being touted as the hottest thing since sliced bread, one communications industry executive said the new technology will actually supplement traditional media. Jan Brzeski, chairman and chief executive officer of STV Communications Inc., said streaming media will make possible the creation of thousands of additional video channels for niche programming. Streaming media's main problem is that it tends to "crowd out" data and other types of Internet protocol (IP) traffic, because media streams are broken into "packets" like other forms of Net-based data. "Constant interruptions of as little as one second would ruin the experience of listening to a song or watching a movie, and few people would bother to listen or watch," he said. To counter the problem, the streaming media will "build a network of `side roads' that will be able to deliver audio and video over the Internet without crowding other traffic off the main road," Brzeski said. Brzeski added that the evolution of streaming media into a major entertainment medium will occur rapidly. "We're creating a way for people who own a lot of valuable unused audio and video content to unlock it and make money from it," Brzeski said. "It's already happening with audio, and it's starting to happen with video. STV Communications does encoding and hosting of streaming media. ABI Forecasts Major Increase In Voice Over DSL By Sherman Fridman Digital subscriber line (DSL) is not just for data transmission, according to a new study released by Allied Business Intelligence, Inc. Although considered one of the best methods for the delivery of data, the report concludes that DSL will also be a successful delivery vehicle for voice calls in small and mid-sized businesses as well. In an interview, Marc Liggio, director of broadband research for Allied Business Intelligence (ABI), said that the appeal to smaller sized firms and businesses is primarily based on three factors: Voice over DSL (VoDSL) is a less expensive alternative than other methods for transmitting both voice and data; the enterprise need deal with only one service provider and hence one bill, making accounting easier; and, the VoDSL facility is handled by the service provider. Liggio considered this last point important because many smaller sized businesses do no have, nor can they afford to have, their own in-house information technology (IT) department. Also, "Voice over DSL is a good solution for service providers," Liggio said, since it allows up to 16 voice lines to be derived from one DSL line. With VoDSL, a single copper pair of wires can provide both data bandwidth and a number of voice lines. According to the study, the market for VoDSL equipment was practically non-existent this year. However, the study predicts that over 2 million gateway ports will be shipped, worldwide, in 2004. This represents a compound average annual growth rate in excess of 250 percent. Liggio said that the study's projections were based upon interviews with manufacturers of the gateway ports, carriers and end users. Although not surprised by the growth in VoDSL, he said that the growth-rate projected in the study exceeded his prior expectations. VoDSl works by digitizing, packetizing, and compressing voice calls at the subscriber premises for transmission over the local telephone loop. When the call arrives in the service provider's central office, the data signals are routed onto data networks and voice transmissions are sent to a voice gateway which decompresses and depacketizes them into signals which can be sent through standard telephone lines. Liggio anticipates that early deployment of VoDSL will occur first in the United States as "this is where the companies are, and we are ahead of everyone else" in developing this technology. However, Liggio also foresees strong VoDSL growth in the next four years in Europe, and in Russia - both within the present country and its former constituent republics. Allied Business Intelligence's Website is located at http://www.alliedworld.com . Comdex Panel Differs On Focus Of E-commerce In Future By Sherman Fridman, What was billed as a panel discussion on strategies for conducting e-commerce in the next millennium, turned into a heated debate about what is currently wrong with how business is being done online. Comdex/Fall '99's Millennium Perspectives: Electronic Commerce Panel was chaired by Lou Dobbs, former president of CNNfn, and presently CEO and chairman of the celestial-focused Web site, Space.com. Joining him on the dais were panelists, Gideon Sasson, Enterprise President, Electronic Brokerage, Charles Schwab & Co., Inc.; Linda Dorshak of Value America, Inc.; Phil Terry, CEO of Creative Good; Tony Certies of Yahoo, Incorporated; and, Jeff Bennett of Lycos. Making a slightly tongue-in-cheek suggestion that maybe the "e" should be dropped from the term, Dobbs asked each participant to give their view as to what e-commerce means to business. Jeff Bennett defined e-commerce as the means for enabling electronic buying and selling. However, he quickly added that it also meant the creation of new paradigms by which transactions are carried out - new methods of selling have sprung up, and he gave the example of online auctions as a new form of selling that is people-to-people focused, rather than the more traditional merchant-to-consumer. Linda Dorshak felt that e-commerce is "the underlying financial outlet on the Internet," but that it was also a means of giving consumers and buyers control over the method and manner in which business serves them. "You don't own customers on the Web," she said, warning against merchants taking a first-time buyer's future business for granted. Gideon Sasson said that he believes that e-commerce is adding a new dimension of service to business, and that it should be part of every retailer's business strategy. Tony Certies expressed concern that online businesses recognize the fact that the Internet is global in reach and the different cultures and habits to be found around the world have to be taken into account. In this regard he mentioned that Yahoo receives hits by 100 million prospective customers a month, and that to accommodate them his company has a local presence in 21 countries, and offers its services in 11 different languages. Phil Terry took the most skeptical view. It was his opinion e-commerce represented a new business channel that brought with it the promise of new relationships, but that this promise was not being met. Terry was all for Dobbs' suggestion that we do away with the "e" in e-commerce and focus on commerce and business. "Forty percent of the people who want to buy online, weren't able to do so," he said, believing that the focus on online retailing was too technologically driven for many potential buyers. In a remark that mirrored the sentiments of Carly Fiorina's keynote address earlier that morning, Terry warned online businesses not to be driven by technology, but by service instead. However, in addition to being the most skeptical of the five panelists, Terry also drew the biggest applause when he labeled the keynote remarks of Bill Gates, CEO of Microsoft Corporation, as being "incredibly bogus." He took issue with Gates' example of how people will use the Internet to learn more about the products they were buying, or had bought. Terry said that consumers were "not close to doing the things on the Web that Gates was talking about." Certies seemed to echo these sentiments by remarking that fully one-third of the world's population have never even made a telephone call. Each panelist had their own view as to what aspect of e-commerce deserved the immediate attention of e-retailers. Certies said, "The most important predictor of a future purchase is a past purchase that's worked," and he stressed the need to tailor e-commerce to the buying habits and customs of consumers. Dorshak emphasized that distribution and service are the toughest aspects of e-commerce. E-commerce is "about moving product," she said. And, as the need for warehouses is reduced due to online selling, businesses had to be prepared to pass the savings on to their consumers. Otherwise, she felt there would be no reason, other than occasional convenience, for anyone to shop online. Sasson stated that for e-commerce to thrive, businesses must learn to combine their online retailing with their brick-and-mortar outlets so that the buying experience is blended into one service oriented relationship. As an example, Sasson said that a purchaser of a product online must be given the option of returning the product, or obtaining customer service for the product, in an actual store, without any distinction being made as to how the item was purchased. Sasson also believed that any business that was not prepared to cut costs between 30 and 50 percent would find itself squeezed out of e-commerce in the future. Bennett disagreed with Sasson's severe cost-cutting message. Although he felt that a 15 to 20 percent reduction in costs would be required, Bennett also believed that the value of added services - such as convenience, variety and information - which e-commerce could provide the consumer would offset purchasing decisions based on pricing alone. The one point which each panelist seemed to be making, albeit in different ways, was that consumers, not business, will determine the future viability of e-commerce, and the businesses that engage in it. iBiz     iBiz Table of Contents