In London last week I had a chance to catch up on the implications of demand and approaches to submarine cabling finance from an Anywhere industry insider, Vinod Kumar. Vinod is President and COO of Tata Communications and a long-time communications sector leader. Among many other submarine cable activities, Tata Communications operates SEACOM, the big cable that recently reached the shores of East Africa from Mumbai, opening up network capacity in Africa in a big way.

Bandwidth demand is booming around the world right now. Do we need more undersea cabling?

“If you wanted to write a check for more right now, I’d say the Atlantic Ocean needs another cable. Not necessarily because of bandwidth demand in total, but rather because of the rise in demand at various landing spots. I’d run one from south Florida at one end, to southern Europe at the other. South America needs another, so I’d run a branch cable down there off of the new one.”

Public markets aren’t enthusiastic about financing big speculative projects right now – and the debt that supported private equity backers is harder to get now, too. How are these projects getting funded these days?

“They can take $250M to $1B at a go. In the old days, the way it used to be funded was through the formation of massive industry consortia. Tata [via the 2006 acquisition at its core, Indian state-run long-distance network firm VSNL] was involved in quite a few. You’d get 60 to 80 firms to commit up front to the commercial demand for the capacity when the cable got laid, in order to get the project financed. But these cable consortia are tremendously complicated to manage; for one thing, you need to control how a consortium’s members push for capacity upgrades before the bulk of the project cost has been recovered.”

“Then you had the speculator model, which boomed in the late ‘90s… for instance, the private equity firm Blackstone funding SEACOM. Rather than go through all the hassle of securing demand in advance, proponents of this model had a ‘build it and they will come’ approach. That boom, though, led to several busts, when the investors didn’t sew up enough commercial commitments before proceeding.”

“Tata then pioneered a model which seems to bring some attributes of each of those models towards the middle. Maybe you’d call it the ‘private club’ model. We own the main intercontinental cable we lay, and various landing parties own the various cables that branch off regionally to local waters, like to Vietnam or the Philippines. It’s less complicated than the consortium approach because there are fewer members. The main asset is 100% owned by Tata, but about 60% of the demand for its capacity is covered by the club members who run branches off it. It’s better for Tata, since we ourselves only have to risk 40% of the investment cost and it’s easier to manage a much smaller group. It’s better than the completely speculative model for the club members, since they get to buy the capacity at our cost plus a limited markup, less than 10%, and since Tata is an experienced undersea cable operator, they can hold us to extremely strict SLAs [service level agreements] to get comfort about reliability. Since we’ve started doing that, others have mimicked the model and it’s become pretty popular.”

But with exploding demand, and Tata’s balance sheet, aren’t you tempted to go the speculative route yourselves?

“Traffic is growing at 60% a year — but no one foresaw the irrational pricing that’s driving some of that. We’ll never take a speculative undersea cable project to Tata’s board — because we don’t need to. We tell the board what our own organic load will be, and we can find the rest of the funds to keep it prudent. It’s a small industry. We have investments in almost 80 cable consortia, so people know us, and we’re good at the work itself, like figuring out how to put cables where other cables aren’t. Those sound like small details, but the earthquake off Taiwan earlier this week disrupted several cables – not ours.”

My conversation with Vinod was on a day when he and other members of the firm’s management team were showing how far the formerly India-only operator has come in the provision of global connectivity. Vinod’s ambition: for Tata Communications to become ‘the Singapore Airlines of network services’. In an episode that reminded me of those times when you suddenly start hearing about the same movie or restaurant multiple times within a few days, a lot of the rest of our talk was about the new models for wholesale network services. I’ll do another post on that shortly.

John says there are three significant battles still underway in that sector that have do-or-die stakes for the businesses in the actual battle: the mobile operating system (Nokia, Google, and Microsoft — the latter making another run at it with a rethought Windows Mobile), the mobile device platform (the usual handset suspects, Apple, and possibly some daring consumer electronics players), and the prevailing semiconductor architecture — which he sees as boiled down to a question of whether high-performance Intel processors make inroads against the widely used low-power ARM architecture.

Who’ll win that third battle, I asked. The ARM platform has a massive lead in the mobile space, its core IP going into the processor for virtually every handset sold in the world. “Intel is smart, has loads of cash, and knows this is a long-term game,” said John. “Over the next 5 years, they will co-exist. Beyond that, these two worlds — low-power handsets and high-performance portable computing — bleed together. The devices following that time period won’t be about fast web page refreshes; they’ll be about transactions, making fast hits on cloud-based data. When that happens, our mobile devices will want both low power and performance.” Given the time parameters involved, he doesn’t count out Intel’s push to take its desktop/laptop dominance into the smaller more diffused computing domain.

From that topic we wandered over to one that’s a new favorite of mine: that 2010 is the year that mobility as a business issue rises to the boardroom. My logic goes like this:

1. The commercialization of the Internet first hit businesses as an external, largely superficial change, in which they essentially stapled websites to their existing operations.
2. But the subsequent maturation of Internet computing compelled those same businesses to pull the net throughout their activities, affecting supply chains, marketing and sales, manufacturing, and virtually every other function in the company.
3. The mobile revolution has begun similarly. Most major enterprises at this stage have now begun to create mobile experiences for their customers (although, as Carl Howe’s reports on mobile web experiences establish, at widely varying levels of quality)
4. The diffusion of the impact of mobility will be no different than that of the Internet. Thus, corporate board members should begin considering how strategically their enterprises’ leadership is thinking about mobility. How else will governance insure that the business is pushing the leverage of connectivity into every nook and cranny of its operations?

Today's version of a mobility officer

John bought it — and he took the thinking a couple of steps further: ”The first automation of business in the 20th century happened with the advent of mainframe computing. The central information systems function arose then. The re-automation of business, driven by desktop computing, pushed IT further out into the business and, organizationally, led to the rise of the CIO. What you’re talking about — the rise of mobility as a strategic issue for businesses — will mean that we’ll see the rise of a Chief Mobility Officer.”

Fascinating idea, and one Yankee Group will pursue in a research report over the next few months with Josh Holbrook taking the lead. But beware: John followed his prediction of the emergence a new type of corporate CMO with this one: “Sadly, many businesses who take this step will put a networking guy in the job. What they’ll need will be an imaginative business person, someone who’s able to look at all the activities of the business and re-think them completely.”

In this excerpt from my interview with Paul Sagan, president and CEO of Akamai Technologies, which provides managed services to power the performance and delivery of rich media online, dynamic transactions and enterprise applications over the Internet, we discuss the path to ubiquitous connectivity, obstacles to its growth, and how connectivity is accelerating human evolution.

Paul Sagan, President & CEO of Akamai Technologies (c) W. Marc Bernsau

How is connectivity changing over the next five to 10 years? What’s happening to the network from where you sit?

This is a consumer answer to your question, but I do believe this change will help power business things, too. We’re starting to see the Internet becoming television, replacing the giant gorilla in the home. Call it the HD Web, if you will. You will be able to get competitive quality, variety and control over your ‘IP television’ (that’s an incomplete term, but I don’t yet know what to call it) better than you get with conventional TV today. At Akamai, we are starting to deliver live TV streams of HD-type quality, using the term “HD” loosely. A majority of viewers are now selecting the higher-quality video streams over the lower-quality ones.

We handled the NCAA March Madness [U.S. college basketball playoffs] on the Web for CBS this year, as we have for some years now. This wasn’t the first year that they had cable-network-size audiences. We served hundreds of thousands of live simultaneous viewers, but for the first time, a majority of those viewers selected video streams of 1 Mbps bandwidth or greater. That’s a stunning milestone. And that’s in the U.S., where the potential audience has very low penetration of FiOS-quality broadband to the home.

You could argue that’s not ‘true’ HD, not Blu-Ray quality, but it’s more than watchable—after two beers, you can’t tell the difference, and maybe that’s always how college basketball is watched. ‘Two-beer HD,’ maybe we should call it.

What that means to me is that the Internet is now a challenge to TV. If you extend broadband growth out three, five or even 10 years, it’s still a pretty short horizon. TV gets fundamentally changed, and from there, so does gaming and all home entertainment. That is a sea change in the economy. All of home entertainment was completely analog until not that long ago! That affects all sorts of businesses.

How do you think we as consumers are changing as a result of a more expansive, valuable connectivity platform? Our appetites, expectations, behaviors?

What I can say for certain is that they are going to change. Exactly how, it’s very hard for anyone to know. Eighteen months ago, there was no Apple app store. Now there are over 1 billion apps delivered. There will be things you will take for granted that consumers are just starting to do.

When you have broadband at home, broadband at work and pervasive connectivity beyond 3G for lots of your devices, what’s clear is that every single business will be affected. Nothing will be spared.

What are the main changes ahead for enterprises? How will they operate in the future in terms of the nature of computing and nature of work?

Your notion of an evolution to an Anywhere Enterprise—that’s very true. A lot of data will remain centralized, but it won’t necessarily all be in one place. Tying them together will be difficult. You won’t want to have too many instances of one thing. So you’ll tie them together virtually, and that’s going to be really complex. How do you satisfy customers’ needs when sourcing across multiple systems, countries and time zones, and do it very quickly and transparently? Trying to provide a uniform experience for anyone will be very difficult for some time.

If you have the ability to deliver a seamless performance to your customers and partners, it will be a strategic advantage for your business.

What’s your take on the cloud computing concept—how significant a change do you believe it will be as part of the expansion of connectivity for the enterprise?

The computer industry has been looking for another one of those Y2K-type opportunities, where they can sell all their customers completely new technology. So you have to listen carefully when vendors start talking about sea changes like cloud computing. But I do believe that we will ultimately move to a new cloud-based software model—it’s just going to be a very big evolution. One major vendor sort of says it’s just one new model, that it won’t overtake all other applications. Another sort of says it’s not going to happen at all. But I think it will start slow, then suddenly, it will be all over. Nothing dies off as soon as you think it’s going to—so it will be gradual for a long time, then there’ll be an explosion of conversion to the cloud model.

A lot of stuff—data, applications—is centralized in the enterprise for a good reason. Some data is concentrated in one place to get economies of scale, but the need to access that data more broadly—by more employees, more partners, more customers—is growing. So what’s happening is that enterprises are trying to both consolidate infrastructure and expand the reach to it. That’s an opportunity for us at Akamai. I like to say companies are ‘SaaSifying’ (software as a service) themselves.

You want to make sure you put your digital assets in places where anyone can get to them from anywhere.

At Yankee Group, we talk about connectivity reducing latency. Businesses should be looking for where delays could be eliminated. Agree?

Latency is evil! We believe that less latency always translates into happier customers and higher sales. We stamp out latency and get paid for that. We have actually estimated the billions of hours saved by speeding up all the Web experiences across our customers. It’s just milliseconds here and there, but it adds up to a big number—over 4 billion hours since we began measuring it at Akamai. We have delivered about 20 percent of the Web faster for 10 years, so there’s a measurable improvement in human productivity terms.

You have an insider’s perspective at Akamai: What do you think needs to happen to ensure the opportunities of ubiquitous connectivity are realized?

There is no magic bullet. But we need to find ways to encourage the fastest possible growth of broadband, particularly in the U.S. We’re way behind. In France, you can be in the suburbs of Paris, and for 20 euros/month, you can get 20 Mbps bandwidth. But here in the U.S., I can’t tell if my phone company can even find my house to install fiber! Singapore is making aggressive moves to increase broadband. It has some advantages due to being a small island, but they are going for it and proving that it makes sense to do so, in terms of its contribution to their economy.

We need to think about what the government can do and be very wary of what it shouldn’t do to retard the growth. We should not meter the Internet; I don’t think we should do anything to discourage adoption of new things.

If you were advising a business manager on how to prepare for the changes in consumers and enterprises—their customers, themselves—from the emergence of mobility and broadband, what would you tell them to do?

We are in a demand economy now, not a supply economy. In the past, sellers had a lot more power. You decided what hours you were open or closed, and you could see your competition by driving up and down the street. You could force your market to get your brand messages—if you ran commercials, they couldn’t skip them. Customers had very little alternative messaging and didn’t have a lot of independent consumer reviews other than Consumer Reports magazine—certainly they had nothing that was just one click away. The supplier could dictate a lot of the terms of the market. It didn’t mean you had no competition, but it was pretty limited.

Today, the buyers have full control. If your message isn’t credible, they’ll click away. They don’t even want to go elsewhere for reviews—they’d better be right on your site. You don’t have to be lowest in price, but you’d better be reasonable and not let customer service be done poorly.

The formula for the future is this: Think about whatever business you’re in. What were the terms when the supplier was in charge? And now what are the terms if the buyer’s in charge? What had you better do quickly to make sure you can win when that happens?

– Paul Sagan, Akamai Technologies

May 2009

“What will Google do next (to us)?” has been the prevailing question in virtually every executive conversation I’ve had. It’s safe to say the industry fears Google’s brand, cash, capabilities, and perhaps most of all, sheer audacity. I suspect if Google announced plans to put a new data center on the moon, the network community would nod sagely and say, “Sure; it was only a matter of time.”

Google CEO Eric Schmidt keynoting the 2010 Mobile World Congress (c) Monty Metzger

Tuesday night, Google CEO Eric Schmidt entered a packed auditorium, nominally to give a conference keynote. What he really did was subject himself to the Spanish Inquisition. He did offer some formal remarks, but following that, with poise a politician would envy, he fielded questions from attendees for close to 45 minutes.

Diplomacy was the order of the hour; he took pains to talk about how honored he was to attend, how Barcelona is now “the place to be” for the computing industry, and how the enormous success of the mobile sector to date is due to the community gathered here this week.

Some highlights:

• For Google, mobile now comes first. Following a punchy introductory film that emphasized how much better than a computer the mobile phone is, the theme of his prepared remarks was “Mobile first.” To Google, this means that the introduction of new features and services should appear first on the mobile platform, versus afterwards as an afterthought.
• “Lonely devices” won’t sell. We’ve been talking at Yankee Group about Anywhere devices: connected things that meet a few key criteria to help us become the Anywhere consumers and workers that the future needs. Schmidt: “It’s now abruptly obvious [a nice phrase] that any device or application in the future without connectivity will be lonely. And it won’t be able to make anyone go, ‘Wow’.”
• Phones can now solve problems bigger than they are. “When you’re limited to the processing power of a phone, to the memory capacity of a SIM card, you can’t solve interesting problems. But a lot of those opportunities, like speech recognition, are just data or processing problems. So when you add the network’s capacity and processing power to the phone, that changes. Phones can’t yet think as well as we do, but they now have a better memory.” Google lieutenants came out on stage and demonstrated real-time voice recognition followed by real-time translation, as well as Google Goggles (web search by image) used to do optical character recognition from a restaurant menu, also followed by real-time translation.
• Google will collaborate but not kow-tow. The communications sector has been angered by what it interprets as Google’s expectation that infinite network capacity should be available without limitation to it and its customers, without regard for the economics of its provision. In thoughtfully selected phrasing, Schmidt clearly said, “We have to solve the data problem. We have to figure out how to handle the 1% of the users who consume 70% of your capacity. This is a shared problem. But we have to figure out not how to say ‘no’, but how to say ‘yes’… Realistically, operators will have to move to tiered pricing.”  In response to a question about lessons from the fixed web that he felt were relevant to the mobile world, he added, “For everything to work out, it’s now clear that large numbers of people need to be able to make money – not just one or two firms.”
• The phone is the way to pay. Answering a question about facilitating commerce online, Schmidt remarked, “The correct credit card is clearly your phone.  We would like to help with that.” Asked who owns the customer, Google or the network operators, he said “Both. The operator has the billing relationship; Google has consumers who want us to know about their activities, friends, and preferences. One of those relationships is optional, one is required.”
• Google doesn’t want to be an operator — but doesn’t want operators to lag. Some of the most aggressive questioning went over the same ground multiple times: the recent ultra-high bandwidth fiber-optic network trials Google announced in northern California. Schmidt: “It’s clear that we as users will eventually want 1 gigabit in bandwidth; we don’t know why yet, but we’ll want it. At Google, we want to anticipate that. To break through the 100 Mbps ceiling of today’s networks to see what it’s like, there’s no other way to do it than build it ourselves.” To my ears the unsaid message was, “…So don’t dawdle in growing the network’s capacity.”
• Don’t call him a thief. His fastest comeback in the interrogation he received was to this question: “Why is Google stealing the operators’ talk minutes?” Referring, we all supposed, to Google Voice as an app riding on flat-rate data plans. His immediate response: “If that’s the way you think about it, then operators are stealing their own customers’ talk minutes by selling them SMS.”

Did he try to make nice? Definitely. Was it successful? Doubtful. But can the combined forces of the mobile operator community forestall the impact Google can have on it with its data, its cash, its IP… and its sheer audacity? Probably not.

P.S.: Why do all speakers at mobile events feel compelled to pull out their personal handsets and wave them in front of us for emphasis while they talk? That gesture, along with beginning every talk with a few factoids designed to try to shock us all into understanding the earth-shattering impact of the expansion of mobility, is tired shtick indeed.

My third beef about most mobile speakers is the borrowing of their kids as data points. Makes it tough for us analysts making a living doing real research when one 13-year old whose dad brings home the industry’s latest and greatest stands in for the more substantive trends in our business.

At least Eric was only two for three.

Yet another example of the gradual expansion of the Anywhere Network.  It’s a natural hole to fill in the network fabric.

Here’s another one: Eurostar. I was stunned a few months ago when, after settling into my seat and carefully arranging my work things around me, I discovered that the train — a bastion of regular London-Paris commuters — was completely network-free.

Given that Google seems to be inclined to make large gestures to try to stimulate the behavior of others in the marketplace, perhaps its holiday-time free airport Wi-Fi should be followed up by free Eurostar Wi-Fi — perhaps during Roland Garros?

To be sure, the school students may not be using the access for schoolwork only. But the point is this: eventually we will find it incredibly anomalous to be offline. And talk of “going online” will feel just as incredibly dated. All of the things we will want to do while we’re moving around on public transporation — including the things that the providers of that transportation want us to do, like read their safety instructions and absorb advertising for their on-board food and drink — will require the network.

In this excerpt from my interview with Axel Haentjens, senior vice president Marketing, Brand and External Communications for Orange Business Services, Haentjens provides his take on how the upcoming ubiquitous connectivity revolution will change how enterprises do business, both internally and with their customers.

What do changes like pervasive connectivity and embedded IP in broader devices mean for enterprises?
I have been in the communications business for 15 years at France Telecom [FT]. In 1995, it was very clear that the desktop had to be connected. Now we’re at the point where we have laptops, BlackBerrys, PDAs, and more. So in the last two to three years, you could access documents and e-mail through a PDA from everywhere — from a train, on holiday, etc. For Orange [FT’s key brand], that translated into a huge success for our Business Everywhere tool. We have more than 1.3 million users.

But this year, we see something else. We’re now at the point of pervasive reachability, where you need to talk to people using various means that are all integrated. We ought to be able to start one way, and then move to another.

And it’s not only human connectivity.

Right. There will be five times more objects to connect than people, at the very least. There are mature applications today in tele-monitoring, fleet management and tracking goods. Orange operates mobile networks in 28 countries, including 15 countries in Europe today: 15 percent of our mobile B2B revenue is already M2M. It comes from SIM cards embedded into devices either for fleet management or remote monitoring, and it’s growing at a rate of about 20 percent per year.

Clearly tele-metering is ready. You’ll find security companies doing it, utilities also, and energy companies doing tele-measuring for gas and electricity. We see a lot of apps in vehicles, helping to manage thousands of trucks via geo-location and route optimization.

And just beginning now is remote monitoring of healthcare patients, like monitoring pacemakers. We are working with a U.S. company that puts a very small chip in the pacemaker that talks to a Bluetooth device in the house, which has a SIM card that sends info to the doctor. If there is anything abnormal with the patient’s heart, the doctor can be informed very quickly, can react and call the patient. We started deploying it in the second half of 2009, and by the end of 2010, we’ll have full-sized deployment underway.

In connectivity technology, what are the biggest areas of opportunity for enterprises to address sustainability?
There are three areas. The first is video conferencing and other collaboration tools, anything that saves you from having to travel. Within FT, we now have a model where, if you buy Telepresence services, we can tell you the CO2 footprint of what you buy, including the carbon cost of creating and operating the solution. We can show what kind of savings you can realize, and how many tons of CO2 you’ll save based on the travel not done, etc. It’s pretty straightforward.

The tough part is life cycle analysis. If you’re serious about CO2 footprint–that’s the hard part. You need the initial carbon cost for building, installing and maintaining, etc. But we are moving from qualitative to quantitative. We were all talking about this for the last two years, but it was poetic and not very measurable. Under the pressure of green auditors, who said they can’t certify applications without measurements because it’s not serious enough, we are moving to demonstrable KPIs. So the next step is to create tools we’ll give to the customer to help calculate the savings.

The second is IT virtualization. We have done it inside FT. We have clearly measured that when you virtualize IT, you make better usage of your IT resources. Typically, you can move the rate of server usage from 15 to 60 percent. Within FT, we have removed 40 percent of our servers. The win in terms of energy savings is several megawatts. We’re not talking about CO2 savings, because we have a lot of nuclear energy in France and it doesn’t issue much carbon. But in the U.S., which has a lot of coal-fired power generation, the carbon impact of that kind of power savings would be huge.

The third is M2M tele-measuring/tele-monitoring solutions. A company very involved in energy management in France is claiming that 15 to 20 percent of its energy consumption could be reduced by remote monitoring: getting the exact temperature of buildings and doing remote management.

What do you think are the factors that could accelerate or decelerate the pace of change around sustainability?
When we look at sustainability solutions, there are three critical success factors.

The first is cost savings. I don’t believe you can sell any kind of green solution if it’s more costly. Telepresence has to save on travel, virtualization has to save IT capex and power, and tele-monitoring has to save on costs.

The second is environmental benefits. We talked about that already.

Finally, when you combine those two, you also usually find a business benefit. For instance, with Telepresence, the business benefit is increased productivity. If I don’t have to travel to Sydney, I save two days’ travel time, I’m less tired and I make better decisions. For virtualization, the performance is better because you can have very smooth, optimized management of resources. With tele-monitoring, you can optimize refilling of the gas tank, do better routing of vehicles and see less time wasted.

We’re working our way globally through a major recession. Is now a good time or bad time for introducing sustainable solutions through connectivity?

Anything that saves costs is easy to propose, but less easy to sell. The negative point is the need for capex. Telepresence solutions are a huge capex spend.

Consider the several categories of customers that we talk with. For those just trying to survive, you can’t sell them anything like this. If customers are just striving for cost-cutting but are otherwise in good shape, they’ll say they love the solution, but they need something capex-free. Then, we have the opportunity to put a leasing solution into place. The third category is customers in good shape that will move forward with these. We do have some of those. McDonald’s is not hurting right now, for instance.

If you were advising a business manager on how to profit from the expansion of connectivity in the world, what would you say? What are the priorities? What’s mandatory, and what’s optional?
Focus first on rich availability everywhere: the right laptop, the right BlackBerry. Jump into the technology, and provide things that are reasonably close to state of the art. We’re in a world where you need to be connected. Don’t shy away from the basic connectivity trend—being away from that could be away from business. Be fully savvy about those technologies.

Second, rethink the way you work. I’ve been experiencing it a lot in the last two years. The way we work has to become more flexible. It’s not about working hours vs. leisure hours; it’s more integrated. We don’t want to work all the time, but we can be more flexible about the way we live and apply some freedom. Think about working in ‘project mode.’ Determine who the key people are on a project, and then be proactive about figuring out how to keep them connected. Use all the possibilities creatively. If it’s brainstorming, you need to book a Telepresence room, since you want eye contact and you want to see body language. But for project advancement—what’s the status of this, what’s next and working down a list of things—using SharePoint and an audio conference should be enough. Think a lot about what kind of communications you need for what purpose.

You have to develop, as an organization and as individuals, a keener sense of the strengths and weaknesses of each type of communications, what works best for the work you’re doing.

Yes, well put.

Do you see the need for businesspeople to campaign inside their organizations for this next wave of communications change?
Yes. FT clients tell us that IT departments are a bit resistant to things they want to do. IT departments like simple things that are fully managed. They are struggling with the fact that they need to accept multiple devices and lots of access via different methods. Diversity is a big roadblock for IT organizations.

Young people coming into the company—that’s a very strong lever for change. They come from university, where they have been using IM, webcams, and so on. They won’t accept just a desktop computer. Change is being driven by the arrival of young people in the company.

There are other strong levers for change. C-level people. For instance, the CEO who is now keen with state-of-the-art technologies, or the CSO who wishes to equip his or her sales force with the latest online sales application and device.

Like a sandwich, with IT in the middle.
Yes. And to be fair, IT organizations tell me they know they have to change.

How will IT organizations have to change?
Diversity is the big driver. IT had to manage desktops—very standard equipment and processes. Now in the next 10 years, IT will need to manage any device from anywhere, anytime. We’ll see convergence between fixed and mobile, M2M activities. We also see diversity in the contact center. Start the discussion, then go to a Web site and add a video session. We’ll see this total interoperability and interchangeability of any connection. IT will have to manage this; otherwise, the company will be out of business. And it will have to do it without spending too much money.

How should managers feel about the urgency of these changes? How fast do they need to move? What kinds of companies need to move fastest, and which have more time?
Manufacturing companies are probably less immediately impacted. Assembly line and big process companies might be impacted, but not so much the people.

On the other hand, all services businesses—banks, insurance, travel agencies and governments—need to worry quickly. Their customers will demand to be served immediately. They use these tools in their personal lives, and they expect the same from the businesses they work with.

My favorite message is the network is not a commodity. It’s a very sophisticated way to manage voice, video and data; mobile/fixed/remote; IP, non-IP; and Internet and non-Internet. Managing these networks will be a critical mission. One of the biggest challenges we’ll face in the next 10 years is making it all work to its potential.

– Axel Haentjens

Orange Business Services

]]> http://blogs.yankeegroup.com/2010/02/03/anywhere-and-sustainable-enterprises/feed/ 0 http://blogs.yankeegroup.com/2010/01/24/metcalfe-on-anywhere/ http://blogs.yankeegroup.com/2010/01/24/metcalfe-on-anywhere/#comments Sun, 24 Jan 2010 19:24:23 +0000 Emily Green http://blogs.yankeegroup.com/?p=3622 When researching my new book, ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business, I was fortunate to interview more than 50 thought leaders in connectivity. Their input was invaluable, and their ideas, advice and examples provide very rich context for the Anywhere vision.

I wish we’d had room to incorporate more of our interviews in the book — but with the infinite capacity of the Web, I’m sharing some of them here.

In this excerpt from my interview with Dr. Robert Metcalfe, co-inventor of Ethernet, founder of 3Com and general partner of Polaris Venture Partners, we discuss the path to ubiquitous connectivity, obstacles to its growth, and how connectivity is accelerating human evolution.

Bob Metcalfe (c) Marcin Wichary

Universal, ubiquitous connectivity—yes or no?

Of course it will become universal. The only exception is the normal one.

What’s that?

Well, if you look at that famous picture of the Earth at night, you’ll see huge swaths of black—for instance, most of Africa.

That’s a pretty big exception.

Right. So it’s a question of time. Impatient people say the digital divide is a condemnation of technology—that it’s nothing short of criminal that we haven’t reached everyone yet. I say, ‘Au contraire. Don’t blame me for not getting them connectivity yet when you haven’t gotten them electricity, roads and clean water.’

You sound like you take it personally.

Sure. You can’t talk about connectivity without talking about Metcalfe’s Law, so how much more personal can it get? It’s not my fault there will be tribes that don’t get connected.

What are the biggest impediments to ubiquitous connectivity?

The complicated link between prosperity and connectivity. They are correlated, that’s clear—but which way does the causality go? I say both: it’s a virtual cycle, a feedback loop. The more prosperous you are, the more connectivity you can afford; and the more connected you are, the more prosperity you acquire. It’s a chicken-and-egg question.

But in there, the lack of prosperity is an obstacle. So they start small and spin it up. Cell phones connected to car batteries to recharge them when there’s no grid to plug into: That’s someone jumping ahead of the chicken-and-egg problem. That’s what makes it slower than you’d like.

Another obstacle is ignorance. Having a met a thousand sensible people who told me for a decade that Ethernet was doomed before it got off the ground, that I was stupid, and then having been proved right, I am now handicapped forever. When I am surrounded by sensible people, I reject everything they say (he smiles).

Another obstacle is that we need some more silver bullets. I agree that there is an inexorable trend to increase the capacity of the network. Build it and they will come—I believe that. But in order to do that, you have to make technical progress on some very basic fronts. We need more dense-wave-division multiplexing. We need terabit Ethernet. The Moore’s Law-ish trends have to keep going. That opens connectivity to ever wider groups, as it reaches down into their level of prosperity to get cheaper.

And, of course, we have the constant impediment of governments. Governments, well-meaning as they usually are, are in possession of the status quo. The standard joke is that AT&T used to be good at transmission, then it became good at billing and service, and now what it’s good at is lobbying and litigation. Governments end up making rules that slow down the spread of innovation because they’re protecting existing investments, sunk costs, revenues.

Prior to 1968, it was illegal to connect anything to the telephone network that was not made by Western Electric. The arguments got dramatic—the Bell system suggested there would be big safety issues for the consumer! So it was a big leap forward for connectivity when innovators were allowed to connect answering machines, modems, fax machines to the network, adding to the connectivity in the world.

Each wave of connectivity innovation then becomes the status quo. Its leaders switch to protecting it. I get that—they have kids who need to go to college—but they become the enemies to a new generation of innovators.

Another obstacle is lack of imagination. We all suffer from it. When I was a consultant to GE years ago, my talks got prepared with slides produced by some outside company. The bill from one slide presentation I remember was over $30,000. PowerPoint is now my life—my favorite sentence with entrepreneurs is, ‘OK, send me your deck.’ Who could have imagined that? I certainly didn’t.

That’s why I’m screwing around with Twitter now. I realize I have to watch what happens. Everyone’s favorite thing is to beat up on Twitter. It just points to the lack of imagination. I can remember when e-mail was nonexistent. ‘Why would you ever want to do that?’ people would say to me. At 3Com, we were shipping e-mail traffic an average of 40 feet, just up and down an office hallway. People couldn’t understand then why that was worthwhile. Now we don’t think twice about that, but we argue instead that Twitter is stupid.

What will be the biggest impacts on consumers? How will lives change in ways we don’t anticipate? What are people getting wrong about this expansion?

I will give you a perfect example. I look forward with great relish to the bankruptcy of the New York Times. I realize it’s not a Christian thing to do. But it’s nepotistic, narcissistic—all the ‘-istics.’ The big service that the insolvency of the Boston Globe is providing us with is that it’s going to bring down the Times. What’s the replacement? Blogs. They’re a bit limited today. But again, that’s just a failure of imagination. Blogs are evolving. The New York Times requires a huge audience to be profitable—paper, postage, printing. The future is the long tail; publications that meet the needs of a long tail are where we’re going. So the impact is the democratization of news and opinion.

But I think the biggest impact of ubiquitous connectivity is the facilitation of collective intelligence. When people talk, they are combining their intelligences. That’s why teams can be smarter than one person. The Internet has given us a much higher level of aggregate intelligence. We can vet ideas, move the ball forward.

You’re saying that connectivity is accelerating evolution.

Yes. Read Ray Kurzweil’s book ‘The Singularity is Near.’ He’s pointing to a time when devices are smarter than you or me. But the broader point is that the world is getting smarter, faster and faster.

Beyond Metcalfe’s Law, there are a bunch of other laws that attempt to quantify the network effect. David Reed did his (Reed’s Law about the ability of a network to support forming groups); there’s been a series of laws. The cover of IEEE’s Spectrum magazine a while ago had a photo of three professors who tried to debunk Metcalfe’s Law. They say it’s not only wrong, but dangerous. They say it gives rise to Internet bubbles.

Another reason to take it personally.

Well, if there’s a defect to Metcalfe’s Law, it’s that the net result [the computation of the value of the network] just goes up and up, with no acknowledgement for negative effects that are introduced that impair that value. Spam, for instance, definitely affects the value you get from the network.

There are unintended consequences, and we need to pay attention to them. But we shouldn’t allow them to stop progress. Spam, availability of porn to the wrong people are two. The people who built the Internet (and that wasn’t me) decided anonymity had to be valued. To me, it’s an exception. You must allow it, but it should not have been the rule. But they designed the Internet to make anonymity the rule, and now we’re suffering with people wreaking havoc with our systems, our kids, etc., and being able to hide. I think the ability to establish the identity of any actor is important. They found the craigslist killer through his IP address.

Of course, those who think that technology is bad would point out that craigslist enabled the killer.

Sure. All technologies are an alloy of good and bad things.

Will our computing change completely as a result of a ubiquitous network? Marc Benioff, the head of Salesforce.com, says this is a complete transformation. Microsoft says ‘No, we’re just moving to a mix of local computing and cloud-based computing.’ Which is it?

My hunch is that it’s a long-tail phenomenon. That is, big enterprises will be the last to move their apps to the cloud. Smaller companies, which can’t afford the alternative, will do it first.

Does that further democratize the small company versus the large one?

Sure, but I don’t like the word “democratize”.

You used it first.

True.

Nicholas Negroponte, founder of One Laptop per Child, told me his image for how networks would evolve was the way that water lilies expand to cover most of a pond, allowing frogs to jump from pad to pad. Will it be the right analogy eventually?

He’s a god; I hang on his every word. You know the term ‘Negroponte’s Reversal,’ right? He noticed that there was a time when television was wireless and telephone was on copper cables, and we all thought long-haul telecommunications would be done via satellite. But it flipped: phone calls went wireless, TV went to cable and long-haul is optical fiber.

The water lily pad model has already been happening. Think about how enterprise networks evolved. We began with LANs (local-area networks), and then connected them with a WAN.

He’s right in his vision, but it’s not happening fast enough. He’s directionally correct.

Ironic, since he’s the guy who once said, ‘We tend to over-predict the near term and under-predict the long term.’

What advice would you have for managers about how to prepare for a new kind of consumer or new kind of enterprise as a customer or partner? How should they think differently about products, services, experiences?

A key point that you’ve made to me, which you should make very clear to your readers, whatever their conception of communication is, is that all our conceptions aren’t finished evolving. There will be a surprising and chaotic future to all this. Don’t make the mistake of taking Twitter or Facebook or blogs as they are today. One of the things complicating this revolution is that it will develop in surprising ways. When powerful forces are unleashed, it’s very hard to predict how they play out in combination.

The current dominant feature of this inexorable trend is mobility. Another one is embedded smarts, like the smart energy grid. That won’t be complete until we’re managing energy within objects that currently have microprocessors in them but are not yet networked to each other.

My standard list of the dominant features of communications right now: mobility, video and embedded connectivity. Those are the big things that are happening in communications. I have left social media off that list—I guess that’s because I’m more of a plumber.

My other observation is that that chaos, that uncertainty, doesn’t mean you give up, that you can stop planning, scheming, paying attention, experimenting. I don’t defend Twitter, I’m just trying to figure out what’s going on there. Think of it as an ongoing brainstorming session. Spreadsheets surprised me. PowerPoint surprised me. I refuse to be surprised by Twitter.

– Bob Metcalfe, April 2009

And that was the plan… but e-book publishing is still a bit new and a few technical hiccups stood in the way.

No surprise that I had to withstand a few gentle gibes during our webinar last week, when a few of you pointed out immediately that the Kindle version wasn’t on offer yet.

But as of this weekend, the Kindle version is now available from Amazon. Kudos to McGraw-Hill for pushing this through. We had a quick look at it Tuesday; while you sacrifice a few of the chapter opening graphics, it’s all there and quite readable.  How very Anywhere.

Just in time for Yankee Group’s e-reader forecast, coming out later today!  More ANYWHERE e-book developments are in the works; I’ll post more on this later.

“Where we work, connectivity saves lives,” he said very simply. “The network lets us find patients, alert them to the arrival of medications, and monitor their health. When we can do that, people’s life expectancies rise — we’ve proved it. And when their children live longer, the parents invest more in their development.”

Partners in Health has done ground-breaking work in Haiti, training Haitians in community healthcare and creating Haitian-staffed hospitals around the country that have changed, and extended, many lives.

Following the devastating earthquake this week, their hospitals thankfully are still standing. If you’re looking for an organization that is on the ground in Haiti already and can benefit instantly from your support by increasing its supplies of medications, bandages, and more, please consider going to www. pih.org and making a donation on line.

For some context on the challenges of helping Haiti, see Tracy Kidder’s excellent editorial today in the NYT.

• Glenn Lurie, President, Emerging Devices, AT&T
• Walter McCormick, President & CEO, U.S. Telecom Association
• Paul Sagan, President & CEO, Akamai Technologies
• Sriram Viswanathan, VP, Architecture Group, Intel
• Nigel Waller, Founder & CEO, Movirtu, Ltd.

A special thanks to each of them for taking the time to chat about Anywhere and illustrate their own business’ opportunities and challenges. If you missed the presentation, the replay is below–I would be delighted to hear your thoughts.

The webinar runs about an hour: audio (mp3) and slides (pdf).