On the agenda of the business executives we interviewed, cloud computing is an act for action. From enabling the use of cloud computing services to deploying enterprise-specific cloud computing models, business leaders are full of excitement. Their optimism is not without reason.

First, the new economic reality is driving enterprise customers to look for innovative IT solutions to keep their businesses afloat, if not prospering as they used to be. Also, technology barriers to move workloads into the cloud continue to fall as more vendors are taking an active role in addressing pertinent problems associated with service reliability, security, and interoperability. It could be in the form of strategic partnerships such as the technology coalition between Cisco, VMware, and EMC to boost the deployment of enterprise-class private clouds; and goal-oriented investments such as the acquisition of Cassatt by CA to expand its expertise in meeting the changing requirements of today’s data centers.

I agree that these are good signs of a potentially innovative market development. But healthy market dynamism should be based on a fine balance between an optimistic supply and a realistic demand. With growing pressure to control costs without compromising performance, one can only guess today’s corporations’ next moves. How do enterprise customers approach cloud computing in these days? Are they approaching the cloud with greatest ease?

The recent history of IT transformation in the business world should be a good indicator. On the demand side, business transformation initiatives are far from ending. From bandwidth utilization, IT automation, to cloud service management, the power of cloud computing has whetted corporate appetite for productivity at low cost. The growing availability of IT as a service will essentially shift IT’s role from managing hardware and software to managing services and providers.

Will 2010 be a banner year for cloud computing? Let’s prepare to review the special report with multiple lenses.

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/2010/02/01/america-mobile-converges-its-balance-sheet/ http://blogs.yankeegroup.com/2010/02/01/america-mobile-converges-its-balance-sheet/#comments Mon, 01 Feb 2010 11:24:20 +0000 Wally Swain http://blogs.yankeegroup.com/?p=3687 Just over 10 days ago, America Movil (AMX) announced a reverse takeover of parent company Grupo Carso Telecom and the consequent purchase of sister-company, the fixed line and cable TV operator Telmex.

The press was rife with speculation what this might mean. Grupo Carso majority owner Carlos Slim was quoted about convergence so the telecom press mostly went off in search of the Holy Grail of converged triple and quad everything. (Grupo Carso is the holding company for all of Slim’s investments from retailers like Sanborn’s and Sears Mexico to bank Inbursa to Grupo Carso Telecom.) The popular press – especially in Mexico – tended to focus on the consolidation of major players and wondered out loud if this was a good thing for customers or not.

Predictably – given the very high market share of both Telmex and Telcel (America Movil’s flagship) – the Mexican competitors cried for government intervention to prevent further monopolization and the Mexican government said they would study the matter.

Frankly, I thought from the beginning that this was more about financial engineering than re-engineering. Complicated transactions like this one (reverse takeover, partial or complete buyout of minority investors) are usually trying to solve some technical financial problem like weak ratios in some part of the group, inconsistent bond ratings or elimination of a holding company discount. In particular, Grupo Carso Telecom, as a holding company with no direct operating activities, could trade at a discount of up to 10% to the expected “sum of parts” valuation. It really has no “raison d’être” and so some sort of reverse takeover was inevitable. The surprise perhaps was that it took so long to happen.

More importantly Slim’s overall management style leverages very focused units with clear mandates and clear performance measurement. As I have written on other occasions, America Movil and Telmex seem blissfully unaware or unconcerned about competitors’ efforts to bundle and package fixed, mobile, broadband and TV. Telmex sells triple play offers aggressively outside of Mexico (and would in Mexico if permitted to offer TV) but so far mobile has never entered the equation even where permitted by regulation. The two companies have shown little interest in network synergies although likewise they never strike deals with strangers. Finally, merging Telmex and America Movil’s quite different corporate cultures – despite their common roots – would have been a strategic flip and probably a management distraction with little positive to show for it.

But this is just my theory and I wanted some empirical evidence. What was the “smart money” saying?

The bond rating agencies were generally delighted putting America Movil on “credit watch with positive indications” a backhanded way of saying “we think this is probably a good thing”. Bond holders are worried about cash flow. Bring together companies with significant cash flow on their own to create a single huge cash generator and they are generally happy. Bigger cash flow means less volatility and more sources to cover loan payments and bond coupons.

Equity investors were decidedly negative. It’s a rule of thumb on Wall Steet that one should “buy on rumor and sell on news”. As the chart below shows, that certainly happened: America Movil stock rose from about New Years until the announcement and then dropped like a stone: from US$50 the day before the announcement to just under US$44 today. (The red line is America Movil’s stock price indexed to its value on January 4th, 2010. The black vertical line marks the peak on January 13, 2010.)

Usually investors punish the buyer and reward the seller. In this case all three participants in the deal, America Movil (AMX), Telmex (TMX) and Grupo Carso Telecom (TELECOMA1.MX), are all affected. This shows that investors have little faith either in cost synergies or upside from convergence. All they know is that buyers – especially those attempting to restructure, especially those trying to take out minority shareholders – usually wind up overpaying.

Admittedly this has been a rough month for Telecom stocks: AT&T, Verizon and Vodafone are all down and Telefonica has received a series of bad news of the kind that makes investors decidedly nervous (steep devaluation in Venezuela, rumors of squabbles among the Telecom Italia ownership group of which Telefonica is the leading shareholder, orders for Telecom Italia to divest Telecom Argentina).

The final nail in the coffin of convergence at America Movil / Telmex came recently when Slim told reporters that they would NOT be bundling fixed and mobile in Mexico anytime soon. Clearly he was thinking about the difficult regulatory and political situation for his companies in that country, although he seemed to dismiss the bundling idea generally even in countries where he legally can offer all four services either alone or in bundles.

For all the excitement created in the press – aided and abetted by the analyst community – this was a strategy devised by lawyers and finance types. Convergence was just a bit of spin-doctoring that eventually backfired.

Star Walk iPhone app on iPad

Based on all the details Wednesday, I’ve written an iPad analysis report that clients should be able to dive into later today. The bottom line: no matter how much you may think Apple ran its hype machine this week, the iPad will be a force to be reckoned with. Why? Because Apple has a unique vision for Anywhere devices and the marketing muscle to back it up. If you have comments or disagreements after reading it, please send them.

Meanwhile, a number of questions and objections to the iPad have popped up online, and given that I’m one of only about 500 people who has used an iPad for a half-hour or so, I thought I’d repond to them here. So without further ado:

Isn’t iPad just a big iPod touch?

Yup, that’s exactly what the iPad is. But before you dismiss it as a snoozer, I think you’ll find that it’s the execution as much as the concept that wows you (to say nothing of the fact that more than 20 million iPod touches have been sold to date). Specifically:

Why doesn’t the iPad have a SD card slot, USB ports, floppy drives, or PS2 mouse support?

Apple’s design philosophy is that its products are defined as much by what they leave out as much as what they put in. Leaving out unneeded technology lets them move the designs ahead faster, make the user experience more differentiated (for better or worse) and create fewer distractions for the user. At the same time, it allows its developers to get rid of a lot of legacy support issues. Apple’s philosophy for iPad is that Bluetooth and the 30-pin iPod dock connector provide access to keyboards, video, I/O, flash memory peripherals, and a host of other add-on devices. Adding more interfaces would just make the device less elegant, not more.

Why won’t Apple support Flash?

This is admittedly a philosophical issue, but I buy their thinking. Apple’s issue is that Adobe controls Flash, and it has some design decisions within it that don’t work well with Apple’s designs. Further, Flash technology creates black holes in the technology of the Web, raising havoc with everything from URLs to Google’s Pagerank algorithm of counting links. Finally, HTML5 addresses most of the need for Flash video and scripting in an open, Internet standard way, and Apple has spent significant energy implementing that standard. And as noted in the answer to the previous question, Apple has no interest in hitching its newest shiny creation to a proprietary technology it thinks is headed for the dumpster; it defines its products as much by what it leaves out as puts in.

What about multitasking! I need multitasking!

Apple’s trying to drive a completely new user interface model with IPad and iPhone. It takes some getting used to, but if you are complaining about all the “Pro” features Apple left out, you probably aren’t the target audience for the product. Your children and your parents probably are, but you aren’t. See this well-argued screed for more details.

You’re clearly in love with Apple. Most analysts are disappointed in iPad.

Yeah, I’m a big admirer of Apple, mostly because they do world-class consumer design and marketing, unlike many famous technology companies who sell tech for tech’s sake, and only pretend to care about those things. I’m happy to criticize them when they get things wrong, but frankly, they haven’t been doing a lot of that in recent years. See last quarter’s earnings report for proof — if they keep this up, they’ll pass Microsoft in market cap in the next year or two.

But there’s a world of difference between reading about the iPad and using it. Given that I was one of fewer than 15 industry analysts who were present at the event and have actually used the iPad, a lot of the doubters just don’t have any way to properly gauge the experience that Apple is delivering with this device.

The analogy I’d draw is that the difference between looking at a catalog description of a butter-soft cashmere sweater and actually trying it on in the store — the look, feel, and experience of the real product is what seduces you. That opinion doesn’t come from just me—check out this article by Steven Fry where his hands-on iPad experience made him a convert. With 283 Apple stores world-wide, Apple will have the opportunity to convert 50 million store visitors a year to its new Anywhere device with an in-depth personal experiences.

My bottom line: iPad is the product that Steve Jobs believes is the most important thing he’s ever done. Anyone who picks up an iPad knows what I’m talking about; everyone else is critiquing the catalog description, not the real thing.

I’ll be publishing a detailed analysis for clients about the Apple iPad and its effect on connected devices (i.e., it’s a big deal) in the next day or so. I have also posted photos that I took of the press, VIPs, and tablets we saw today for those who are interested.

However, I also had some takeaways from the event that fell somewhere between the immediacy of my tweets and the detailed analysis mentioned above. As I look toward the iPad shipping in late March/early April, I see some changes coming. Specifically:

• iPad will knee-cap the netbook market. Despite the millions of units sold, netbooks deliver a lousy user experience; in fact, some netbooks have return rates of 33% or more simply because of that poor consumer experience (see the October 2009 Yankee Group report, Little Netbooks Can Sink Big Brands for details). Unless you’re an analyst or other traveler who has to spend much of your time writing, iPad will be a better investment. Oh, netbooks will survive, but they’ll be in the traditional race to the bottom of the price ladder, while Apple scoops up all the profits from the segment. Said another way, if you know that a device like the iPad will be available, why would you ever buy a netbook?
• Consumers will struggle with whether to buy the 3G iPad. iPad is the archtype Anywhere device: its broadband connection and its links to networked apps and content are what make it special. But given that adding a 3G connection adds more than 26 percent to the iPad’s purchase price, consumers will have trouble deciding whether it is worth it, even before the prepaid broadband connection.
• Prepaid iPad broadband will win over consumers. Apple’s announcement of AT&T’s mobile broadband pricing for iPad just told the consumer world that they are paying too much for mobile broadband on postpay plans. Most of the rest of the world already has some sort of prepaid mobile broadband; it’s just a matter of time before the U.S. gets with the program.
• iPad represents the beginning of the end for the PC desktop metaphor. Windows, mice, title bars, and open-save dialogs have been mainstays of PCs for more than 25 years; in fact, the introduction of the original 1984 Macintosh made them cool. Yet the iPhone and iPad use none of the software elements of these 1980s, opting instead for a full-screen multi-touch experience that makes smarter use of screen real estate. Once someone figures out how to integrate multitasking with multi-touch (10/GUI perhaps?) without dramatically increasing the consumer’s cognitive load, consumers may well decide that these graphical elements no longer serve any useful purpose and finally let them die a natural death. At the very least, they are unlikely to ever be cool again.

"Last time there was this much excitement about a tablet, it had some commandments written on it." -- the Wall Street Journal

Here are my quick reactions to today’s Apple Special Event; expect some more thoughtful analysis in a few hours. But the highlights of the last few hours were:

• A new Anywhere tablet device called the iPad. The $499 iPad lets consumers listen to music, watch video, read books and periodicals, and view TV shows, all from a 10-millimeter-thick multi-touch LCD tablet. The iPad is designed to be a media device, not a PC; the major software packages available will not be suites such as Microsoft Office, but media-oriented software such as Apple’s own iWords, which Apple is releasing in touch-enabled form for the iPad. That said, the iPad will run all iPhone apps, and additional packages from independent developers for iPad will be sold through the iTunes App Store. 
• High speed wireless connectivity via 3G and WiFi. iPad boasts more than 100 Mbps wireless Ethernet connection using the 802.11n standard for connecting to content in the home. Versions sold through and AT&T will also feature 3G mobile broadband connections, which will be offered on a prepaid basis. Up to 250 Mbytes per month will cost $14.99; Unlimited monthly broadband will cost $29.99.
• A new iBooks book reader application. Apple decided to attack the Kindle market by offering an eBook reader on the iPad and added online purchasing via a new iBook Store. The iBook store has 5 publishers signed on to deliver content already; more are in the works. 

Will it catch on? Based on a few minutes of hands-on playing with one, absolutely. The iPad bears the same relationship to a netbook that the original Mac did to DOS PCs: it’s a complete rethinking of the reading and media consuming experience. Apple’s full-color, full motion device makes not only netbooks, but any product with an E Ink display look tired and dated. And if you’re a publisher who lives and dies by what your content looks like, you want to be talking to Apple now; any other digital distribution is going to look very last decade.

Stay tuned for more details and a deeper analysis for clients over the next day or two.

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.

1. Connected Cars
2. eReaders
3. 3D-TVs

 I’ll start with a short post on connected cars, as this is really the first year where they received standout coverage: Over 380 in-vehicle technology exhibitors graced CES’ floors this year, Ford CEO Alan Mulally delivered a keynote, and a CEA press release issued before the show claimed that sales of in-vehicle technology topped $9.3 billion in 2009. Yes, you heard correctly, $9.3 billion.

A number of players will profit when more technology finds its way into our cars. Some statistics presented during the show highlight just how much network operators, automotive companies and legislators stand to win. Take a look:

• Network Operators: Demand for voice and data carriage in connected cars will open up a new market for network operators. On average, over 26 million hands-free calling minutes are purchased each month by OnStar subscribers. Alcatel-Lucent’s ngConnect Program prototype also demonstrated what LTE data plans will do for in-car streaming media.
• Automotive Companies: In-vehicle technologies are driving automobile purchases more than many analysts had anticipated. 32% of Ford buyers indicated that Sync was critical or important in their purchase decision when buying a car. What’s more, 70% of customers who participated in Sync demos across the country indicated that they are more likely to buy a Ford vehicle.
• Legislators: Legislators concerned with driver safety will be pleased with some statistics from Nuance, a speech recognition solution provider. Analysis of driver eye movements shows us that drivers keep their eyes on the road 200 to 300 percent more when using speech rather than manual input for tasks like music selection.

Given the diverse set of players in this emerging market, Yankee Group is including a number of questions on connected cars in its updated Consumer Survey. As data begins to come in, expect to see a publication on the subject in the near future.

But, like in Emerging Anywhere countries, even though we didn’t have power, we did have Internet access via our mobile phones. And that strange disparity—the ability to call people and access information from the rest of the world when we didn’t have basic infrastructure services—provided personal emphasis to stories I’d recently read in the news over the weekend.

The Boston Globe noted how mobile phones are changing Africa in its Ideas article, The End of the Office and the Future of Work. The lead paragraphs told of a Boston company I hadn’t even known about:

By the end of the month, a company called txteagle will be the largest employer in Kenya. The firm, started in its original form in 2008 by a young computer engineer named Nathan Eagle and, as of this coming June, based in Boston, will have 10,000 people working for it in Kenya. Txteagle does not rent office space for these workers, nor do the company’s officers interview them, or ever talk to most of them.

And, in a sense, the labor that the Kenyan workforce does hardly seems like work. The jobs – short stretches of speech to be transcribed or translated into a local dialect, search engine results to be checked, images to be labeled, short market research surveys to be completed – come in over a worker’s own cellphone and the worker responds either by speaking into the phone or texting back the answer. The workers can be anyone with a cellphone – a secretary waiting for a bus, a Masai tribesman herding cattle, a student between classes, a security guard on a slow day, or one of Kenya’s tens of millions of unemployed. The jobs take at most a few minutes and pay a few cents each (payment is sent by cellphone as well), but a dedicated worker can earn a few dollars a day in a part of the world where that is a significant sum.

The UK’s Guardian had an article from its Katine blog that noted other new business opportunities within Africa made possible by the rise of mobile phones:

While access to a fixed landline has remained static for a decade, access to a mobile phone in Africa has soared fivefold in the past five years. Here, in one of the poorest parts of the globe, nearly one in three people can make or receive a phone call. In Uganda, almost one in four has their own handset and far more can reach a “village phone”, an early and successful microfinance initiative supported by the Grameen foundation.

One recent piece of research revealed how phone sharing, and the facility for phone charging, has been an engine of this small-business revolution. Particularly in rural areas, a small investment in a phone can first create a business opportunity, then maximise its reach by overcoming the possible limitations of real or technological illiteracy – because the phone operator can make sure the call gets through, and can cut off the call at exactly the right moment to avoid wasting any part of a unit. And what a difference a phone call can make.

Now that our power is back on, I’m sure I’ll go back to just expecting lights, running water, and heat as a normal part of the environment. But nonetheless, these examples from Emerging countries are great reminders of how Anywhere is reshaping the parts of the world that we don’t read about every day. And of course, there are more examples and details in our recent book, Anywhere: How Global Connectivity Is Revolutionizing The Way We Do Business.