I have always said that it's not the Web but the Internet - universal connectivity and free storage - that is the innovation of our time.
We're about to see that in the wildly divergent paths taken by the two technologies causing the greatest excitement today on Wall Street - wireless and Interactive TV.
Wireless gives you the whole Internet. Its current incarnation uses tiny slivers of bandwidth, along with tiny screens, and it's driven by the E911 service going into digital cellular phones. For a phone to know where it is, it has to pass data, and this means it has a data channel the carrier can exploit.
Time and location sensitive applications do best in this environment. Think of the Web behind the phone as being a giant pyramid, with the screen showing only the very top brick. What's below that is a database that itself is adaptive to time and place. I'm at Montrose and Westheimer in Houston and I need a new battery for this phone - where do I go and can I get a deal?
Sites like Mapquest have to adapt rapidly to the smaller screens, but what if visitors to my office had their own directions automatically? . That would be cool, too. (Note that the output URL is hopeless for display on a cell phone.)
But there's something else going on, wireless broadband. Between them MCI and Sprint own nearly 200 local licenses for what's called MMDS technology. These are great heaping hunks of bandwidth, 200 MHz in each location, and the only problem seems to be the speed of the wireless access device. MMDS delivers great broadband speeds in homes and businesses - they're going to eat cable's lunch - but the real fun starts when you get something like a cable modem or DSL device inside your Palm Pilot. Nokia is one of the companies on top of this .
Now I promised something on Interactive TV. Cable operators like AT&T and AOL think this is the "killer app" that will beat the phone lines and the wireless operators. The idea is you get free interactive services through new set-top boxes. These services interact with the TV pictures so you get the emotional pull of TV advertising, but they also let you act on those emotions immediately. The interactive element of the service comes from the Web, but there's some technical work to be done by the Web sites (mainly upgrading to TV speeds) and (here's the best bit for the cable companies) everyone pays for carriage.
In other words, you get TV quality and broadband speeds, but you don't get the whole Internet. That, in the form of cable modem sales (which could be integrated with the set-top remote) is the up-sell. The cable guys figure it's a win-win-win for them. Sites pay or they don't play, so there are two revenue streams. It's something the competitors don't have, so it's a competitive advantage. It could, if it works, re-assert the dominance of "big media" over the Internet for all time.
Leo Hindery, now CEO of Global Crossing , probably put it best in his @d:tech speech last November. The only way to get the Internet's installed base over the 50% mark is to subsidize it, ads make the best subsidy, and even poor folks have cable. (This also creates a private alternative to government-subsidized (and controlled) Internet access.)
My guess is that political problems will markedly slow the growth of Interactive TV. If they did a revenue share with providers rather than charging for carriage, and emphasized the technical investments needed to happen rather than their status as gatekeepers, they might have a chance. But they're still the cable guys which means they're stupid.
When given a choice between these new technologies, bet on wireless because it's open.
We have moved our server and finally have a set of e-mail addresses that make sense. From now on you can always reach me via firstname.lastname@example.org. You can also reach me at email@example.com. If you know anyone who could benefit from a few good Clues, send this issue to them and let them know subscribing is FREE from our home page.
I write daily for ClickZ, and weekly at Andover.News. I write monthly for NetMarketing, Boardwatch, and Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.
Remember that it's still journalism that keeps the Clues coming. Give me a shout at 404-373-7634.
Takes on the News
The Fall of B2B
The "tidal wave" of b2b revenues (and savings) is still coming, but the days of the b2b stock boom may be ending.
Gartner Group has put some numbers on the boom. Worldwide B2B e-commerce totaled $145 billion in 1999, 63% of that in North America, and that's due to grow to $7.29 trillion in a few years, with the bulk of the growth coming in Europe.
But the problem with b2b marketplaces on both sides of the pond is that they can be as easy to manipulate as the old penny stock market. (Europeans are more sensitive to this than Americans, since they're prone to assume foreigners are doing the manipulating.) Even NASDAQ has proven vulnerable to manipulation by its market makers, and intervention on behalf of liquidity is the job of New York Stock Exchange specialists, who unlike their NASDAQ brethren are strictly regulated.
Given the problems in these highly liquid (and tightly regulated) markets, is it any wonder some might look askance if, say, the largest auto makers created their own marketplace and ordered suppliers to use it? There are a host of such deals coming into play now , where vendors (like US Steel) are taking major positions in the markets they promise to work in .
For players to participate in a marketplace they need confidence the game isn't rigged. Since all the recent deals are taking equity from either market players or software companies (who might be biased on behalf of their own systems) there's a growing credibility gap. There are only two ways to bridge this gap. One is to have a strong, independent hand controlling the market, an honest broker dedicated to honest dealings. The other option is to have government play that role. I know which option you would prefer. But you can't always get what you want, and if you try sometimes you just might find you get what you need .
Looking Inside the Tribune-Mirror
The acquisition of the Times-Mirror Co. by Chicago's Tribune Co. marries two of the most Clueless media empires ever created. The two companies say they want to build an online powerhouse but they're going about it in entirely the wrong way.
Basically, they want to "leverage" (media heads love that term) their news "assets." They figure that combining their traffic puts them ahead of the New York Times, and that's a good start.
But it's not the game. I gave ClickZ readers a few Clues the Tribune-Mirror folks are likely to ignore. Respect the net and encourage crosstalk everywhere. Respect the Web and use hyperlinks liberally. Account for your newsgathering costs on the Internet balance sheet. (I say they won't listen to these suggestions simply because they haven't done it before, so why should they change?)
The problems of all these newspaper chains in regard to the Web is arrogance bred by an insulation from the market, and a feeling that they own "news monopolies" that are (in fact) fairly bogus. Fortunately there is a model that can be followed toward profit, namely that of the British Broadcasting Corp. One new thing the BBC has done which I commend is to farm out the U.S. commerce end of the business to an outfit called BBC America . The BBC America site mirrors the content of the UK sites, but places a much heavier emphasis on commerce - it calls itself "the virtual gateway to all things British."
Linking your town with the world, and its fans around the world, is one of the primary missions of a good local site. Want some real Vienna dogs in Venezuela, or some Muscle Beach t-shirts in Nome? Make it happen and make some money. (I know because I have myself a genuine Sheffield Wednesday kit and to heck with the drop.) Get that working and you can start enabling e-commerce within your market. That's where the real money is in local news.
Software Fights the Net
We've seen music fight the Net, and we've seen the movie business fight the Net. Despite taking some individual casualties, we all know the Net will win those battles.
Why should the software industry be any different? That's why the law Virginia Governor James Gilmore signed with great fanfare last week , codifying the nonsense in software license agreements, is so aggressively Clueless. The industry claims this will simplify the law governing electronic contracts. In fact, it will simply send software companies to court for enforcement of nonsense that consumers don't read anyway.
Common sense, not legal niceties, will control how, when and where people pay for digital property. You buy a CD and rip it into your Rio. You buy a DVD and play it under Linux. You buy some software online and share it with your kids. You like this letter and e-mail a copy to your friends (please do the last). No law (especially a state law) is going to change common sense, or make greed an enforceable "right" against it. The fact that Gov. Gilmore thinks differently is his problem. Listening only to "Big Internet," in the form of big online businesses, instead of "Little Internet," in the form of people who participate on the Internet, is going to be a common political mistake of our time. Whenever people feel they need relief from that mistake (they don't yet, because they feel they can ignore it) the political price will be paid.
Clued-in is Russell Shaw , the first writer (besides me) to actually write something for a-clue.com. His Web site is finally happening.
Clueless is Forrester Research , for giving up on sales tax reform and instead saying online buyers "should" pay tax based on their location, rather than that of the merchant . Let's open that Portland cyber café and warehouse right now! (Oregon has no sales tax, while Washington State's rate is 7%.)
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