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Dedication

This book is dedicated to my loving wife, Joanne. Her tolerance enabled me to

find time to work on the book without taking a leave of absence.

NetAttitude

By Stewart Alsop

Tude. Attitude. Attitude is everything! At some level, I believe, attitude is

everything anywhere in life. But, for sure, attitude is everything when it comes to

the Internet. And that’s what this book is about. Internet Attitude.

I’ve known John Patrick for a long time, since before the Internet came along,

back when he was just an IBM executive. I remember that even back then he

was good at “business development” -- that meant he got out of the office and

talked to other people including both customers and people who worked for other

computer companies. Perhaps because he was a good schmooze artist and a

smart guy, he saw the possibilities of the Internet early on. (If he hasn’t told you

somewhere else in the book, go visit his website at IBM:

where you can find out a lot more.) Anyway legend

has it that he got involved in the Internet so early that he ended up having the

IBM Web server under his desk. He was among the prime movers inside IBM

who recognized that the company should be visibly involved with the Internet and

evangelized the use of the Internet to the rest of the company. IBM, of course,

had been involved in the development of the Internet itself, mostly in its research

labs. But its research labs were often isolated from the mainstream of the

company’s real business: serving customers. Patrick was the guy who got the

Internet to become part of the company’s business. (He ended up as Vice

President of Internet Technology for the whole corporation.)

All of that was attitude. Patrick has a lot of it himself. Odd, since IBM wasn’t

always known as a place where people with a lot of attitude survive and prosper.

But good for the company, because attitude is everything on the Internet. And

totally appropriate to have a guy with a lot of attitude write a book about Internet

Attitude.

Here’s the attitude. The Internet changes everything. It changes the way

business gets done with customers and between business partners and

suppliers. It changes the way we live and enjoy our personal lives. It changes the

way we get educated, manage our governments and public policies, entertain

ourselves, produce creative stuff, everything. It changes everything.

My personal experience: I grew up in the magazine business, mostly as an

editor. I love magazines. Magazines are toast in the Internet era, mainly because

of attitude problems. People who publish and edit magazines think of magazine

readers in terms of very large groups, demographic groups or psychographic

groups or special interest groups. That magazines are toast is ironic because

they were first medium that could be targeted. Before cable television, before

radio networks, before any other medium, magazines figured out how to create a

targeted environment that was designed for just sailors, for instance, instead of

everyone who had a boat, regardless of whether it was a sailboat or a

powerboat.

Now magazines are toast because there’s a better way to target even more

specific groups of people. There’s even a way to target individuals as a group. In

fact, it really isn’t appropriate to think of “targeting” because the very notion is

founded inside the context of large mass markets, one where marketers need to

hone in to targets. But magazine people think targeting, and can’t conceive of a

different way of doing it. They just can’t get their minds around the idea that you

could write for one person at a time, or that computers could handle managing

the interaction with an individual one at a time. They don’t have the attitude.

To have the attitude, you have to embrace the Internet and all of the new abilities

it gives you, even if they challenge the most fundamental principles you learned

at home, in school, at work, or even on the street. Here are the few basic,

immutable principles that I’ve been able to discern that are relevant to the

Internet:

Personalization: The idea that you can target media to an individual is now

embodied in the phrase “one to one marketing”, popularized by consultants Don

Peppers and Marth Rogers in a book by that name several years ago. Before

that it was known as narrowcasting, as opposed to broadcasting. But it’s not just

media or marketing. On the Internet, the fundamental promise is that you can be

the single most important entity whenever you are interacting with it. Computers

can remember information about anyone. Computers can use that information to

present only the most relevant data to any individual automatically. The networks

that connect computers into the Internet can deliver that information to you

wherever you happen to be. This is personalization: It is a still a very difficult

thing to accomplish. The technology is still primitive. We haven’t done very much

personalization yet so we still don’t really know how to do it. True personalization

requires integration, which is the hardest thing of all to do with computers – to get

various computer systems to cooperate even if they weren’t designed to do so.

You’ll get example after example from Patrick as you read Internet Attitude about

how personalization could work if we had the technology and knew how to apply

it. It’s just a matter of time – and attitude.

Interaction: Before computers came along and got hooked up to the Internet,

media were static or passive. In other words, media people – writers, producers,

editors, musicians, actors, etc. – made something that you consumed. A movie

might involve several senses, but you got to consume it without talking back. The

Internet is interactive. That means consumers can talk back. This is a very, very

difficult part of the Internet Attitude for almost everyone to adopt. Whether you

are a business person or a creative person or both, you’ve been trained to

control your environment. Having everybody talk back to you all the time seems

both overwhelming and chaotic and precisely the opposite of what you were

trained to do.

For instance, one of the most central effects that the Internet has had in business

is to give individuals the ability to look inside companies in a way they were never

able to previously. So, when a company put up a site on the World Wide Web for

the first time, the senior management had to decide who controlled the

information about the company: was it the marketing department? Or customer

service? Or sales? Or information technology, which traditionally controlled

everything about computers? This led to internecine warfare inside a lot of

companies because each department viewed it as crucial to their particular

mission and didn’t want to give up control to another department. Each had a

legitimate need. Many companies still haven’t resolved this conflict, haven’t even

understood that it gets resolved by understanding that the issue is interaction and

that the customer has the right to interact. Have you tried looking up the email

address for any real human being on any corporate Web site? In my experience,

90% of companies still won’t tell you how to send an email to one of their

executives. Companies act like they are scared of their customers. That’s not

Internet Attitude.

Real timeliness: The Internet happens in real time. This was a big challenge for

my colleagues in the publishing business, where life is defined by how long it

takes to produce and distribute your publication: daily newspapers, weekly or

monthly magazines, or even books, which take at least a year. Unlike older

media, there is no logistical reason – other than the time spent thinking about or

creating the communication – for Internet communications to take time to

produce and distribute. Real timeliness takes the concept of interactivity and

cranks it up a notch. Not only does Internet Attitude call for letting customers look

inside your company, but it sets an expectation that you will actually respond to

customer communication right away, in real time. I bought a pair of shoes from

Rockport.com and they didn’t fit. I sent an email to the address shown on the

Rockport.com Web site for authorizing returns. I never got a response. My wife

took the shoes to the shipping store, so I got a credit on my credit card. But I’ll

never buy from Rockport.com again, since they don’t apparently read or respond

to email to an address they publish on their Web site. They should not have

created a Web site unless they were prepared to respond to customers in real

time. They don’t have Internet Attitude.

The technology of the internet – computers and communications integrated and

broadly available – can lead to threats as well as opportunity: invasion of privacy,

widespread spamming, computer viruses. Part of Internet Attitude is to recognize

that we are in a major transition as a society and to embrace the threats as

equally as the opportunities, to understand that we will ultimately figure out how

to handle the impact that the Internet will have on our society and not to run away

from it or try to stop or slow down the change because of the threats.

Enough already. Patrick knows Internet Attitude. He’s written a book about it.

Read the book and get the attitude.

Preface and acknowledgements

In late 1993, while I was part of the IBM corporate planning department, I began

to experiment with the Internet. I heard that a group of engineers in the company

had built a “gateway” that enabled access to the Net using an office PC. I got

connected and became captivated by the “gopher”, a program that allowed you

to browse through files in computers outside of IBM that were also connected to

the Internet. Most of these computers were at universities and government

laboratories. Being able to type the “dir” command on your PC and see what

directories (folders) and files were on your PC was no big deal but to be able to

do that on a computer thousands of miles away was amazing to me. A few

months later I installed a program called Mosaic that enable me to see the world

wide web for the first time; not just seeing the files on another computer but

seeing colorful and graphical documents that had links in them that allowed you

to click and “hyperlink” to a document in another computer somewhere

thousands of miles away It is hard to describe how amazing this was. I got very

excited about it. I saw it as revolutionary; something that would change

everything forever. I had been using online banking and proprietary online

services since sometime in the 1980s and I saw the web as something that

everyone would use instead.

Then along came Dave Grossman, a young IBM computer scientist at Cornell

University’s Theory Center, who was part of a team helping the university to

exploit their IBM supercomputer. The web intrigued Grossman also and he was

following its development intensively. One day during the Lilihammer Winter

Olympic Games he discovered that Sun Microsystems was creating web pages

showing game results on web pages. The data came from systems that IBM was

maintaining as part of its sponsorship of the Games! Grossman found out that

Irving Wladawsky-Berger, then head of IBM’s supercomputer business, Abby

Kohnstamm, new head of marketing, and I, among others were engaged in a

corporate strategy review in Armonk. He further found out that an IBM Research

team had setup a high-speed connection to the Internet in the same building

where the meeting was being held. He drove to Armonk from Cornell, hooked up

a large computer display, and gave all of us a demonstration of the web. It was

an eye opener.

I couldn’t spend enough time with Dave, learning more about the web. The more

I learned, the more excited I got. While many people saw the web as

entertaining, Dave saw it as making data universally accessible through the

browser. He convinced me that this would turn the world upside down – that the

web was going to redefine information technology. I soon found there was an

underground community of engineers and scientists in IBM engaged in many

product and research efforts based on the Internet. Together we formed a grass

roots effort and launched ibm.com in May 1994. In June two of my colleagues,

Jerry Waldbaum and Jane Harper, and I went to Internet World in San Jose,

California. Most of technology demonstrations were from little known companies.

IBM, Microsoft, Oracle and other major companies had nothing to show. I met

Alan Meckler, then chairman of Mecklermedia, who had organized the event and

with Jane and Jerry’s urging, I signed up for the largest booth Alan had for the

next Internet World conference to be held in Washington, D.C. that coming

December, 1994. Alan invited me to give a talk during a breakout session at the

conference and I shared my enthusiasm for “The Future of the Internet” publicly

for the first time. That became my theme for the next six years as I gave dozens

of keynote speeches around the world.

After my talk in December 1994 a lot of people called and wrote and emailed

asking for copies of my presentation so I decided to build a web site to share my

views. Over 150,000 visitors have since stopped by at ibm.com/patrick and

asked questions, offered suggestions, or simply said thanks for sharing. I was

inspired by these visitors and their messages and each time I received an email I

said to myself, one of these days I am going to write a book. I thought it would be

a book about the many personal experiences I had with my web site, the people

who visited, and the things they said, but over the years I came to realize the

tremendous impact that the Internet was going to have on our business and

personal lives. I also began to see that the technology would be tremendously

important but that there was an attitude factor that would be at least as important.

In the early days I got the attitude from Dave Grossman and David Singer and

other colleagues but as time went on I began to develop a lot of the attitude on

my own. I began to witness, first hand, the differences between organizations

that seemed to have this “Net Attitude” and those that didn’t. I hope that this book

will help more organizations get a “Net Attitude” so they can be highly successful

(at whatever they do) on the Internet.

There are so many people to thank for making the book possible. First and

foremost is Nick Philipson, my tireless editor, for his countless contributions,

corrections, and helping to me to make my writing more readable. His questions

were painful at times but helped me to clarify and organize my thoughts. Thanks

to John Dvorak for introducing me to John Brockman, my agent. John Brockman

appropriately questioned whether I had anything relevant to write about but I

thank him for taking time to visit our Internet Technology Laboratory, see the

work we were doing on advanced technologies, and take the time to listen to the

story I wanted to tell. I also thank him for leading me to Nick.

I want to thank the executives at IBM who were in a position to restrain me but

instead encouraged me to live out on the edge of the Internet even though we

had no idea where it would lead or how or even if we would ever make any profit

from it. These included Jim Cananvino, Fernand Sarrat, and Dennie Welsh in the

early days and Irving Wladawsky-Berger over the past five years. Irving, more

than anyone, constantly encouraged me to spend as much time as possible out

in the marketplace, learning from others and sharing the IBM vision.

And thanks to my friends and colleagues for reading my drafts and giving me

their candid feedback about where I had gone astray or missed key points. I

express my gratitude to Jeff Auger, Tim Blair, Brian Carpenter, Andy Stanford-

Clark, Joe Eckert, Sara Elo, Dave Grossman, Mark Harris, Mike Maney, Dikran

Meliksetian, Mike Nelson, Harriet Pearson, Dan Powers, David Singer, and Irving

Wladawsky-Berger. Thanks also to Matt Graham for his assistance in

researching various trends and statistics and to Sarah James, a package

engineering intern at Nestle, for contributing references about advances in the

packaging industry.

I would also like to acknowledge the numerous fine companies I have referenced

in the book. Many of the scenarios I describe in the book, not all of which are

positive, are drawn from real experiences I have had with various companies as

a consumer. Most of these companies are highly valued customers of IBM. I

have chosen the examples to illustrate how even the most progressive and

dynamic companies may still have trouble seeing the true power of the Internet

and how it is affecting their relationships with customers or, in some cases, see it

clearly and are in the process of building out their capabilities. At this stage I

would say most companies, including my own, are wrestling with the many

extremely difficult challenges that the Internet presents. Hopefully, In Internet

time, most of the examples will be ancient history by the time you read this book.

Speaking of Internet time, there may be other things that changed between the

time I finished writing this book and when you started reading it. That is where

http://netattitude.org comes in. Once the book was out of my hands and into the

publisher’s, I began to make notes about things that happened sooner or later or

differently than I thought they would. There were also new developments that I

had not anticipated. I have tried to capture all of these changes and post them at

http://netattitude.org. It will help the book stay dynamic. There are various

sidebars – I call them “Reflections” -- throughout the book. I am sure you have

many reflections of your own. If you would like to share them or any comments

with other readers of the book and me please visit http://netattitude.org and post

them.

Part I – Rising Expectations

We haven’t seen anything yet

It was a hot summer afternoon about 2:00 PM and I had a problem. I was at 590

Madison Avenue in a conference room on the ninth floor discussing the future of

the Internet with some IBM customers. I glanced at my watch and realized that I

had until 3:00 PM to wire some money to my attorney for a personal transaction.

The money was in a money market fund at GE Capital. I called there to see if

they could get the funds wired before my deadline. The folks at GE were very

cordial and said it was no problem to wire money because I already had standing

instructions that could enable me to wire funds to my bank at any time. I told

them this transaction was not to my bank but rather to my attorney. In that case,

they said they would have to fax me a form to set up new instructions. I said I

had all the information and could give it to them over the phone. They insisted

they needed to fax me a form. I said that I could tell that the conversation was

being recorded and because they already asked me my social security number,

home address, mother’s maiden name, date of birth that surely they knew that I

was who I said I was. I asked if I could just give them the information. “What is

your fax number?” was the only response I was going to get. 590 Madison

Avenue is not where my office is located. I was borrowing an office for this

meeting in New York City and I had no idea where the fax machine was let alone

the fax machine number. So, I scurried around the ninth floor looking for a fax

machine where I could receive the form. I was fortunate to find a helpful

administrative person who told me which machine to use and he gave me the

number. I called GE back and shortly I had the form. I excused myself to the

customers telling them I would be just a few more minutes. Wishful thinking as it

turned out. Filling out the required data for my attorney was easy but filling out a

form with my personal data that they already had in their system was annoying.

Then I got to the bottom of the form. It was labeled “Signature Guarantee”.

2:30 and counting

A lump forms in my stomach and I am getting nervous. It is 2:30 and I have only

until 3:00. Even though I knew what “Signature Guarantee” meant I had this

naïve feeling that maybe I could talk GE out of it. After all, someone had already

asked for my personal data on a recorded line and confirmed all my security

information. I called to confirm what I feared. I would have to go to a bank and

get my signature guaranteed. Horrors! A bank! Not my favorite place to visit. I

called information and asked for the nearest Chase Manhattan Bank. The

address I got was just a block away. Relief. I raced for the elevator and ran down

the street. On the big glass door was posted a sign: “We have moved to a new

location”. I raced around the corner and down the street to the new location.

Beginning to sweat. I went into the bank and got in line behind quite a few other

people. At the head of the line was a person who was talking to the teller. Not

sure what they were talking about but the teller was thumbing through a Rolodex!

A Rolodex? Here we are in the new millennium and I am standing in an office of

one of the largest banks in the world and the teller is using a Rolodex? This

does not bode well for my signature guarantee much less for electronic

signatures! Finally I got to the head of the line and made my simple request for a

signature guarantee.

“That won’t be possible” said the teller. “The branch manager is out to lunch”. It

is now 2:45. “You don’t understand” I said, I need this in a hurry”. “You don’t

understand” the teller said, “the branch manager is out to lunch”. Now I am

getting very nervous. “Get in the line to your far left and you will be first in line

when she gets back”. It must have been my lucky day for as soon as I got in the

new line the branch manager returned. She looked at my driver’s license and put

the official bank stamp on my wire transfer request form. I rushed out the door

back to 590 Madison Avenue, up the elevator to the ninth floor, back to the

conference room sweating profusely to apologize to the customers again and tell

them that for sure I will only be a few more minutes. I placed a jubilant call to GE

Capital. It is 2:55. “One other thing, Mr. Patrick”, as she explained that they

would also need a fax of a Federal Express or Airborne shipping label to verify

that I had purchased an overnight fare to send them my wire transfer request

form. GE wanted to make one hundred percent sure that they were going to get a

piece of paper with real ink on it. I said that was ridiculous and they said “maybe

so but we won’t wire the money until we see this additional fax”. “Then you will

wire the money?” I asked. “Yes, as soon as we see that second fax”. “How about

if I don’t actually send you the overnight package?” I asked. The woman

explained that if I was dumb enough to purchase an overnight Federal Express

shipping label and then not ship it that it would be my problem. I ran down the

hall, got a blank (free) Airborne shipping label, filled it out, faxed it to GE Capital

and then called them yet again. It is now 2:59. Still sweating. GE was happy and

wired the money. I was exhausted. I threw the Airborne shipping label away. I

figured if a wire transaction is this hard to do it should be next to impossible to

undo. This fiasco was not e-business.

The story is not about GE. In fact GE is a model company in many ways and is

making a rapid, focused and effective move to become a highly advanced

Internet technology-enabled business from top to bottom. I am sure they will be

successful. My sad tale of woe could have been through a similar experience at

almost any financial services company in the world. Many would have been

much more difficult.

The heart of the problem

Why couldn’t my wire transaction have been a few mouse clicks on a web page?

Is it a technology problem? Definitely not. It would not be much more complex

than clicking to buy a book or reserving a hotel room. Encryption technology and

digital ID technology are available from numerous companies that could have

secured the transaction. Is it a legal problem? Some would say so but if GE was

willing to accept a fax then they have already agreed to accept an image of my

signature. That same image could easily be created from my laptop or from a

web server. No, the problem is not technical or legal; it is an attitude problem.

Net Attitude – or lack thereof. Net Attitude is about preparing your organization,

the people that are part of it, and all its systems and processes, to take

advantage of everything the Internet has to offer. The Internet has changed not

only how people communicate but also has changed their expectations of what is

possible online and at the same time created a strong distaste for many of the

old-fashioned business processes that exist today. Whether a consumer or a

corporate purchasing agent, people’s expectations for what an e-business should

be able to do for them are expanding by the day. Currently, most web sites don’t

even come close to meeting those expectations. In many cases people leave

web sites without buying anything or signing up for anything because they

couldn’t find what they wanted or the server crashed or they clicked for more

information and were told, “Call us Monday to Friday during our normal business

hours of nine to five!” In some cases they are even told “Print out this form and

fax it to us”.

Who accommodates whom?

The issue starts with how you define e-business. Some would say an e-business

is an electronic business where you can “click here to buy”; i.e. e-commerce. E-

commerce is a key part of being an e-business but it is just one part. An e-

business is an electronic business that reaches all constituencies of a business –

not just those who want to buy something. It includes buyers, suppliers,

stockholders, employees, business partners, the press and financial analysts

who follow the company. An e-business not only reaches this broad constituency

but it provides all transactions and interactions that any constituent may need.

Buying something, selling something, getting a price, checking the status of an

order, signing up for the local blood drive, changing employee healthcare benefit

choices, listening to a quarterly analysts briefing, participating in an electronic

meeting, or collaborating on a new product design in a virtual laboratory.

The bottom line is about Accommodation. Organizations of all kinds have a

fundamental decision to make. Choice number one is to accommodate the

Internet, but continue to do business the way they have been doing business.

“Yes, we are really into the Internet. We have an e-commerce web site.” While

“accommodating” the Internet, they tacitly embrace their old vocabularies, old

attitudes, and old ways of doing business. Choice number two is to become an e-

business and embrace the Internet as the primary relationship mechanism -- not

an alternate mechanism -- with all constituencies; while accommodating the way

they have been doing business until they are able to morph those old attitudes

and processes into more Net based ones. Primary relationship mechanism. That

is a very big commitment. It means that the Internet is not an alternate

distribution mechanism or an additional channel for customer support or a

supplementary approach for simulating a new product design collaboratively with

engineers on another continent. It means the Internet is recognized as the new

medium for all communications and is the primary way in which the organization

relates to all of its constituencies. It doesn’t mean it is the only way but it means

that the strategies of the organization are all built around the Net. Customers will

be judging organizations based on their on-line presence; they are already

beginning to make decisions about whether or not to do business with companies

based on their on-line experience with them, whether or not they have a physical

presence. There isn’t time for a six-month corporate task force to study this. Nor

for multi-year business process reengineering projects. Consumers and business

customers are getting impatient. They know what is possible and they expect it.

Time is of the essence.

Millions of e-businesses

The next evolutionary stage of the Internet will allow for the creation of millions of

new e-businesses. They will include consumers selling directly to other

consumers -- consumer-to-consumer e-business or c-to-c. They will also include

businesses that provide information and products to consumers -- business-to-

consumer or b-to-c. They are often called e-tailers and their process e-tailing.

The b-to-c e-businesses will be of all sizes. Very small businesses like the Italian

jeweler in Verona, whose family has probably been making fountain pens for

decades, who is now operating an e-business selling pens to buyers around the

world. (They probably didn’t do an IPO to bring their web site public and their

market cap is probably modest, but every single day they are selling fountain

pens and likely making a handsome profit.) The handful of giant b-to-c

companies, such as Amazon and eBay, will likely succeed but there will be a

much larger number of e-businesses that are extensions to existing businesses.

The extensions will give those existing companies new reach. They will all

become global and, if they set the right price and have great customer service,

they will be successful by any measure. E-tailing is very much alive and well

around the world

While I am very optimistic about the future for these business-to-consumer e-

businesses, the biggest part of e-business will be e-businesses that provide

products and services to other e-businesses – business-to-business (b-to-b).

However successful business-to-consumer e-business may become, business-

to-business e-business is going to be five to ten times bigger. Meanwhile, behind

the scenes there is something even more profound beginning to develop -- a

vibrant, multidimensional agora, enabled by electronic connections that include

consumers, public sector and industrial buyers, suppliers, designers, customer

service representatives, and specialists of all kinds. They will all be participants in

electronic marketplaces (e-marketplaces) that facilitate information sharing,

standards creation, collaboration, and commercial transactions.

The e-marketplaces will be a form of trading hub and they will exist in every

industry as the major players get together and form relationships. It won’t just be

the top X companies in an industry but perhaps will include geographic or even

ethnic clustering of companies, forming their own e-marketplace as a way to

share their buying power. They will expect other e-marketplaces to be responsive

to their needs. E-marketplaces will become an important and fundamental aspect

of most industries; some will become companies themselves and compete with

others in the industry. Companies who are not part of an e-marketplace and who

choose to stand by and watch the phenomena emerge may find themselves

paying fees to an e-marketplace and being disadvantaged.

e-backlash

During the last months of the year 2000 we began to see many failures of

“Internet” companies. In fact, webmergers.com reported that at least 210 Internet

companies folded in the year 2000. The Wall Street Journal ran a headline about

the failure of a European e-tailer called boo.com that said, “Boo.com's Collapse

Further Darkens E-Tailing Picture”. The implication is gloom and doom. Actually,

business failures are not a new thing. According to data from The American

Bankruptcy Institute, there have been an average of more than 60,000 business

bankruptcy filings in the U.S. per year since 1980. The failures have nothing to

do with the Internet. Business failures are caused by not properly segmenting

your market, not setting the right price, not having a great fulfillment system for

whatever it is you deliver, or not having world class customer service. Those will

be the factors that always separate the winners from the losers.

It surely isn’t the Internet that caused the business failures. A business not using

the Internet is like a business in the 1990’s that didn’t have a fax machine. The

last months of 2000 and continuing into 2001 have seen an e-backlash not seen

before with Internet startups laying off thousands, some closing up shop

completely, and market capitalization of many dropping from hundreds of dollars

per share to pennies. The layoff of twenty people, the acquisition, merger, or the

restatement of goals by an Internet startup company makes front-page news.

Some of the headlines make it sound as though there have never been any

business failures before. If there weren’t business failures we should really be

alarmed because that would mean that perhaps not enough innovative ideas are

being tried. The Internet provides a way to try business ideas at a much lower

cost and with a much greater speed than has ever been possible before, so we

should expect that not all the new ideas will turn out to be good ones.

We may see some existing “brick and mortar” companies fail too -- because they

studied the Internet too long. Some may not be able to come to grips with the

reach, the range, and the disruption to traditional business models made possible

by the Internet. Some may not be able to face the gut-wrenching changes

needed in their distribution channels or in the way they would have to provide

customer service and support. In other cases it may be the decades long

dependence on agents such as securities or insurance brokers, that became

sacred. Some of the CEOs used to be such agents for their company and they

may not be able to bear seeing their former colleagues be eliminated or

redeployed.

The good news is that the bold (some of them too bold) ideas that got launched

in the form of large numbers of Internet startup companies or “dot coms” have

shown all companies the tremendous reach, range, and potential of the Internet.

The result is that existing organizations of all kinds have gotten the wake-up call

and have leapt to action. Some of the world’s largest retailers, banks, airlines,

and electric utility companies are becoming the pace setters. Many from the

throng of people who left these established companies to join startups are now

returning to their former employers and sharing what they learned out on the

“frontier”.

In late 2000 we saw a backlash with the business models and profitability of pure

Internet companies. It may last awhile. In fact, it is possible that the Internet has

so penetrated every business and institution that there may not be much room for

a pure Internet company. Every company is, or should be, using the Internet in

what they do. The original pure Internet companies were the pioneers and

showed the way; hence the huge initial valuations in spite of no profits. But, once

everyone else started following, and started to leverage the Internet, those same

companies no longer looked so pioneering; they just looked like bad businesses

with no profit. This is why the bubble burst. A close examination of the statistics

will show that e-businesses are alive and well even though the pure Internet

business segment may not be. Once everyone is using the Internet, you need a

much better business model and a lot better execution to survive in the

marketplace. Irving Wladawsky-Berger, co-chairman of the Presidential

Information Technology Advisory Committee, says, “We are still in the early

stages of the revolution, and much more needs to be done to make the

technology highly usable and reliable. Somehow the high valuations caused

people to forget how much more there is to be done.”

The Next Generation of the Internet

The Internet we use today is undergoing a massive evolution -- bringing about far

more change in the next few years than in the last ten. The Next Generation of

the Internet, or NGi, will make today’s Internet seem primitive! Many parts of the

NGi are here already. Everyone doesn’t have it yet but millions do. There is no

arrival date but each day we get a step closer. Not only will the Next Generation

Internet be orders of magnitude faster but it will also be Always on, Everywhere,

Natural, Intelligent, Easy, and Trusted. The impact of these characteristics on

organizations of all kinds will be dramatic. Many people expect or hope that the

NGi is going to bring us incredible speed for surfing the web. Speed is in fact one

of the characteristics of the NGi but all seven characteristics are profoundly

important.

I abbreviate the Next Generation of the Internet as NGi for a reason. The capital

letters of next generation are to signify that the focus is on what is coming next

because it is so profound. The word Internet is generally capitalized to signify the

collection and interconnection of many networks around the world into a single

Internet. I use the small i in NGi to signify that the Internet will become such a

natural part of our lives that we will take it for granted.

Fast: Adam Smith's invisible hand is at work on bandwidth (the speed of the

Internet). Competition among cable, telecom, satellite, and other media to

provide Internet access, as well as technology advancements will assure the

rapid expansion in bandwidth. Using the NGi will be a dramatically different

experience compared to using the Internet of today. High quality full-screen jitter-

free video will enable experts to appear on video walls in hospitals and

classrooms from thousands of miles away.

Always on: no more logging on; you will just be on. You don’t log on to the power

grid to use your toaster; you won’t long on to the Internet to tap the vast

resources that it offers. They will just be there. We will begin to think of the

Internet as a powerful communications network that is not just for surfing the

web, but since it will be Always on, we will use it to monitor real time data from

weather stations, industrial processes, and even medical monitoring equipment

attached to real people.

Everywhere: the Era of the PC as the center of the Web is over. Mobile phones,

kiosks, PDA's, pagers, and new wireless devices will enable the Internet to be

everywhere; not just where our PC is. Digital signatures will enable us to wire

money, transfer securities, and sign contracts electronically from wherever we

are: at home, on a train, walking down the street, or from an airplane moving at

500 miles per hour. When we walk down the Champs-Elysees in Paris our

mobile phone will vibrate and remind us that we are walking by a store that

happens to have that rare wine we have been looking for.

Natural: envision a real-time multilingual intercom for customer service.

Integrated telephony and voice recognition within web pages will enable us to

ask a question of customer service in the language of our choice and have that

question be routed to the most knowledgeable expert who will answer the

question in their native language and then enable us to hear the answer in our

own language. All forms of media, in fact our entire collection of pictures, sound,

and movies, will be able to be carried around in our pocket

Intelligent: A new web standard called XML (extensible markup language) will

add context to web pages that will enable people to find things and will enable

application software programs to be seamlessly integrated with each other.

Finding things on the web will no longer be an exercise in frustration. Instead of

millions of matches, we will get a few relevant ones. A new design for computers

called autonomic computing will enable systems and networks to become self-

healing much like the human body.

Easy: A software system developed by a student in Finland, called Linux, is

changing how computers will operate. From Beijing University to Taiwanese

entrepreneurs, Linux is taking Asia and the rest of the world by storm. As more

and more computers use Linux and more and more students come from school

with Linux skills, it will make e-businesses much easier to build and maintain. A

new approach to creating software applications, called “web services”, will allow

web sites to do much more than “click here to buy”. The result will be that web

sites will do much more for us and we will stand in fewer lines in the physical

world and have to endure fewer telephone call centers that want to control us.

Fulfillment models at our favorite retailer’s web site will result in the staple goods

we need just showing up outside the garage door when we need them.

Trusted: Security is not going to be the biggest issue. Authentication is. Who is

that web server you are dealing with? How do they know it is really you they are

doing business with? The NGi will use Digital ID's so that we can have

authentication; i.e. be able to establish that we are who we say we are and

without having to go to a Notary or a bank. We will also know that web sites we

visit really are who they say they are. We will be able to send messages to

friends and businesses that only they can read, be assured that no messages

were changed, and allow our financial transactions on the web to stand up in a

court of law. Once we establish who we are we will also be able to establish the

level of privacy we would like to have.

The potential of the Internet is much greater than meets the eye. As the Internet

evolves to the NGi, it will be so pervasive, reliable and transparent that we will

take it for granted. It will be part of our life—like electricity or plumbing. We know

that the Internet is already transforming business, education and entertainment.

Even larger changes are coming as the Internet becomes more reliable and

robust. Net Attitude will help you get comfortable with the seven characteristics of

the NGi and allow you to start planning for how to take advantage of them.

Next Generation Attitude

To build a successful e-business requires insight about what the Next Generation

Internet will make possible and an e-business strategy that is deeply embedded

into the fabric, the culture, and all the operational systems of the company. Also

required are a solid business plan, a robust technology plan, and in-house or

outsourced human resources with all the latest skills. But even having all of these

things at your disposal is not enough to build a successful e-business. In fact, all

the technology and money on the planet won’t enable you to meet people’s

expectations if you don’t have the right attitude. It is essential to have a “next

generation” attitude imbued in management at all levels of the organization --

company, university, hospital or government – so they are prepared to think and

act in new ways that meet the rising expectations of customers and

constituencies.

Part of Net Attitude is looking to the future, following the Internet standards, and

anticipating new technology -- but a bigger part of it emanates from the grass

roots thinking that was part of the evolution of the Internet itself. It is a way of

thinking that is extroverted in nature – very people-oriented. A Net Attitude is

hard to describe but you will know it when you see it. Young people tend to have

it but it is not really an age thing. An increasing number of seniors have it too.

The masses of people in the middle layers of large organizations often don’t have

it. It is not that there is anything wrong with them as people; it is just that the

bureaucracies of large organizations have shielded them from the new way of

thinking and in some cases Darwinian instincts have caused them to bring up

their own shields. Net Attitude includes the ability to think globally but act locally,

to think big but start simple, to think outside-in instead of inside-out, be able to

accept “just enough is good enough”, engage in “trial by fire”, transform to a

model of “sense and respond” instead of the traditional model of “plan, build,

deliver”. These new ways of thinking will all be discussed in more depth.

Goals

This book will give you the background and insight to enable you to adopt a Net

Attitude. It provides the cultural insight that the author has gained from years of

participation in the center of the evolution of the Internet. Net Attitude explains

the new attitudes of your future customers. It provides commonsense examples

and personal vignettes that executives and managers can relate to. It explains

the importance of talking to teenagers and seniors, the two segments of the

population that “totally get it” even if the middle management layers in companies

and universities and government agencies sometimes don’t. It describes the role

of the “Skunk works” and how to set one up in your organization without breaking

too much glass. Bottom line, Net Attitude tries to help you think like an Internet

startup while capitalizing on your existing strengths.

What to expect

Net Attitude will provide you with a view of each of the seven emerging

characteristics of the Next Generation Internet: Fast, Always on, Everywhere,

Natural, Intelligent, Easy, and Trusted. Each of these characteristics is profound

and Net Attitude provides the practical examples that will help you understand,

apply and capitalize on the incredible capabilities that are just ahead. The focus

of Net Attitude is the customer; be it a consumer or a corporate purchasing

agent. Net Attitude tells you how to “get connected” in a way that will bring your

constituencies to you at the least cost and form lasting relationships. Net Attitude

focuses on the human and management aspects that are important to get an e-

business started and links them to how the evolution of the Internet is changing

the game. It will also help you get the right mindset for e-business. The only

prerequisite for reading this book is a strong desire to meet the rising

expectations of people growing up on the Web. The economies of the world are

rapidly transforming to Internet digital economies causing a major shift of power

from institutions to people. Think outside in. Outside is where the people are.

They have the power. Net Attitude will help you walk in their shoes.

Power to the People

In some respects it seems like everything has happened, that everybody is

connected, that we are almost finished with what is going on with the Internet and

that nearly everyone is using it. The truth is we’ve only just begun. The number

of people actually doing something on the Internet right this very second, as a

percentage of the world’s population, rounds off to a very small number. There is

almost nobody connected! Let’s take a look at the numbers. By the time this book

reaches your hands there may possibly be a half billion people using the Internet.

If you assume that on average half of them are actually doing something at any

point in time (while the other half is sleeping) then that would be two hundred fifty

million people. The world’s population is over six billion. The two hundred fifty

million people would round off to about four percent. You might argue that for

some segment of the world’s population that is well educated and lives in a well-

connected part of the world that the percentage of that segment using the

Internet is very different than four percent. Lets take twenty something year old

graduate students living in Palo Alto, California for example. Perhaps ninety

percent or more of them are using the Internet. However, even for this

demographic, if you look at what things that could be done on the Internet that

they are actually able to do on the Internet, you find that it is a very small

percentage.

We are at the very beginning

According to Mike Nelson, former White House technology advisor, the Internet

Revolution is less than 3 percent complete. No matter which metric you use, he

says, it is clear that we are at the very beginning. Nelson’s numbers follow….

1) Number of people using the Internet: 3-5% of the world's population

2) Amount of time people spend connected to the Internet: less than 3% for most

normal people

3) Speed of the Internet connection being used by most people compared to

what is available from new technologies such as cable modems: about 3%. In 3-

5 years, broadband Internet connections one hundred time faster than today's

dial-up connections will be commonplace and no more expensive than a

telephone line is today.

4) Amount of data on the Internet compared to what will be there: tiny

percentage. According to IBM Research, the amount of data stored on the

Internet will increase a million-fold between 2001 and 2010, to millions of times

the amount of information in the entire Library of Congress.

5) Number of computer applications on the Internet that people find very useful:

hard to measure but likely a very small percentage.

6) Number of devices the average person has connected to the Internet

compared to the number they will have within the next few years: about 3

percent. Today most people use 1-3 devices to access the Net, usually a PC or a

cell phone. In the not too distant future, each of us might have 50 to 100 devices

that somehow connect to the Internet.

Try your own math. What percentage of web sites really meet your needs? For

those web sites that you really love, what percentage of the things that site could

do for you is it actually doing for you? What percentage of the banner ads that

you see are compelling and valuable enough to you to click on them? No matter

how you look at it, we are the very early stage of the impact that the Internet will

have on our business, professional, and personal lives.

In five to ten years we will likely see:

10 times as many people using the Internet

100 times as much speed when we use the Internet

1000 times as many devices connected to the Internet

1,000,000 times more data on the Internet

There are some related things going on that are at the beginning too. Every day

we pick up a paper or magazine or surf our favorite web site and we read about

some aspect of the transformation from an economy to an e-conomy. In fact,

many CEO’s that I’ve talked to around the world say “John, I have heard e-nough

about this. But the fact is we are at the very beginning of that evolution too. It is

not a “new” economy but rather an incredible transformation of the existing one.

It has just begun.

In the technology area, we are clearly at the beginning compared to where we

are headed. The fundamental laws of physics have not been exhausted and

continued rapid progress will be made in the size, functionality, and cost of all

forms of electronic devices. Today’s PC monitors display approximately a half

million “pixels”. Each one can display a combination of red, green, and blue

colors and the human eye sees the whole screen as a single high quality image.

Soon we won’t think it is so high quality anymore. IBM Corporation recently

introduced a new display measuring twenty-two inches diagonally that displays

nine million pixels. A picture shown on it looks like the quality of a magazine

cover. Doctors will be able to detect the smallest of imperfections in an x-ray or

mammogram using these displays. Continued dramatic increases in the capacity

of magnetic storage devices will make it possible to have these high quality

images on personal computers and the high speed networks that are emerging

will make it possible to transfer the images as easily as we send emails today.

The functionality and power of handheld devices will soon approach what were

recently considered to be very powerful computers. The story goes on.

Everything will be smaller, faster, cheaper and larger in capacity.

Wires and cables connect today’s world of computers. Starting with the wires and

cables surrounding our PC at home to the briefcase or backpack full of cables we

carry with us to the Internet itself there are wires and cables everywhere. That is

changing. A new technology called Bluetooth will soon allow devices that are

within roughly twenty-five feet of each other to recognize each other and transfer

data back and forth using radio signals. No wires. Walk in the house with your

notebook computer and music you downloaded from the Internet automatically

gets transferred to your home digital sound system. Wireless Internet antennas

will soon be built into the case of notebook computers and “connectivity” will be

available to you in virtually all hotels, airports, train stations, and public areas.

Changes are also happening in the software arena. A new form of computer

software is beginning to change the way computers will be programmed and who

will write the programs. The best example of this is Linux, software written by a

young Scandinavian student, which will have a dramatic impact in the years

ahead. For software, like hardware, we haven’t seen anything yet compared to

what we are going to see.

If you look further out, say fifty years, the possibilities are mind-boggling. Raj

Reddy, a professor at Carnegie Mellon University in Pittsburgh, discussed the

impact of infinite memory and bandwidth at a presentation in late 2000. He talked

about capabilities such as accident-avoiding cars, universal access to information

and knowledge, entertainment on demand, learning on demand, telemedicine

and geriatric robotics. He even discussed more esoteric capabilities such as

teleportation (“Beam Me up Scotty”), time travel and immortality becoming

possible. Obviously these raise a number of social and ethical questions.

Professor Reddy says that as we find ways to transform atoms to bits, that is,

substitute information for space, time and matter, that many of the constants of

our universe “will assume a new meaning and will change the way we live, work

and govern ourselves. Some of us will have superhuman capabilities, like getting

a month's worth of work done in a day.”

Customer choice is power.

What does the incredible rush of new technology mean for us as people? In

many ways the Internet is about the massive transfer of power from institutions to

people. I am not talking about anarchy, people marching in the streets, or

Tianamen Square in any way. I am talking about the empowerment of people

who now have the ability to click a mouse button or mobile phone button or PDA

button to express their desire to engage in entertainment, e-commerce or

education or to communicate and collaborate globally. It is the power of a click.

Many organizations are missing the point that they no longer have the power

they once had, that the simplicity and the ease of a click make it easier for

customers to simply click somewhere else.

Recently, one of the major stock exchanges announced that they were going to

hold a meeting at which they would take a vote on whether or not to extend the

hours of the day during which people can trade securities. Meanwhile, every

computer in the world is virtually connected to every other computer in the world

in a real time global network with many millions of users. How can there be any

doubt that it is imminent that people will be able to trade stocks whenever they

want?

After hours markets are starting to spring up and new forms of trading are being

introduced on the Internet. In a highly connected world does it make sense that if

you are in Europe or Asia and your stockbroker is sleeping in America that you

can’t trade any securities? The Internet makes it possible and many trading

systems are online and have proven themselves over the past few years. Why

can’t the trading be done anywhere, by anyone, at any time? Rules. Rules set in

a world where the power has been concentrated in large organizations. A small

group of people on a board in New York City think they have the power to decide

what their customers can do and when they can do it. If the rules don’t change

then people will switch to another exchange or financial services provider, or a

new competitor will arise that will deliver what the people want when they want it.

There is no stopping it. Power to the People.

This is just one of the many examples of where organizations will soon realize

that that they have lost power. From a people perspective, it used to be that you

couldn't have much of an impact individually. You had to rely on politicians or

lobbying organizations to influence a large company, a government or a

movement. The Internet changed that. There are many examples of where

individuals using the Internet have been able to have a dramatic impact in

helping change the rules.

The Intel story

When Intel introduced its new Pentium computer chip in 1994 an error was

discovered in how the chip performed certain kinds of arithmetic calculations. It

had to do with how the chip converted “floating point” numbers (e.g. 123.876423)

for use in certain calculations. The result was that the Pentium chip made a math

error on certain calculations. Most people would never see the error and in fact

some engineers said that the error would likely occur only once every 27,000

years. However, the company was less than forthcoming about the problem --

they reasoned that not many people would be affected since the problem

occurred so rarely and only during sophisticated number crunching,

Reports began to appear on the Web and Internet newsgroups began to alert

people about the math bug. Intel seemed indifferent, and did not come forth

quickly with any plans to recall the chips. The flood of negative reaction from

customers, who voiced their dissatisfaction via the Internet, quickly changed

Intel’s mind. In fact, the dissemination of information and open discussions of the

problem on the Internet changed Intel's course of action; they apologized to their

customers, and spent a lot of money to fix the problem. Adam Mayers of the

Toronto Star wrote a column called “People power rules in Intel's hard, expensive

lesson”. He said, "Among the many outcomes is to affirm a power many people

think they've lost." Intel's humbling was about people power, the power of

individuals, not lobby groups."

In the year 2000 Intel began shipments of its Pentium 4 chip. Personal computer

makers received an improper piece of software for use with the new chip. None

of the Pentium 4 chips with the incorrect software reached consumers and

arguably the error was inconsequential. But being sensitive to their previous

experience with the Internet and knowing the incredible power of the people, Intel

was quick to make a full disclosure of what had happened. Lesson learned! Net

Attitude adopted!

People power in Midland, Malaysia, and Kosovo

When the financially distressed district of Midland, Pennsylvania was forced to

close its high school, local people took control and created a cyber school.

Students are learning and taking tests over the Internet. Each student is

assigned to a cyber school staff member who keeps track of the student's

progress and grades his or her exams over the Internet. As parents in many

parts of America consider creation of “charter” schools based on local priorities,

the Internet becomes an incredibly powerful tool to implement their vision.

Many countries around the world have strict rules over the publishing of content.

For example, in Malaysia, newspapers and broadcasters have to abide by the

prohibitive interpretations of the law of defamation, or they risk having their

licenses forfeited. But the Malaysian Prime Minister pledged to have no

censorship on the Internet in order to make Malaysia the center of the cyber

world. As a result, the Internet is providing a channel for the people to voice their

views without having to fear punishment.

In 1999 there was considerable strife in Kosovo. Part of the strategy by the

government was to control information so that the people would not know exactly

what was going on. Journalists were expelled from the country. The independent

radio station, B92, in Belgrade was closed down. Local media was either shut

down or censored. But the radio station set up a web site and began to publish

text, audio and video. They reported when air raid sirens were going off. Up to

the minute news was provided to the population. There was no way to shut down

the Internet site because the government didn’t know where the server was. If

they had known and shut it down another server could have been put back

online. As long as there is information the Internet provides a way to share it.

Power to the People.

The Power to Vote

The Year 2000 presidential election in America shows the potential, if not the

need, to enable “Power to the People” via the Internet. In prior years there was

considerable online campaigning and online fundraising. This has been

supplemented with discussions about the elections being exchanged in chat

rooms and e-mails. There were even “vote-swapping” sites which enabled

supporters of Ralph Nader in battleground states to agree to vote for Al Gore in

exchange for a Nader vote in another state! The practice was upheld in the

courts. The Net allowed people to participate in new and interesting ways

providing them information when they wanted it and how they wanted it. This

included early exit-poll data that has traditionally only been available to the media

elite. The Pew Research Center for the People and the Press and the Pew

Internet and American Life Project, in a report released in December 2000, said

that four times as many Americans used the Internet to keep up with political

news during the 2000 presidential race as did in 1996, and almost half of those

voters said the information they found online affected their choice of candidates.

The logical extension of this is to utilize the new medium (the Internet) for the

actual vote.

It is certainly possible to envision online voting becoming a reality in the near

future. People expect that they are casting a vote for the candidate they want

and that their vote will be accurately counted. Although recounts should not be

needed in an electronic election, if needed they will be done in seconds not

weeks. The issues will not be technical. There is no question that electronic

kiosks could do the job. For those not able to go to a kiosk the Internet can

provide the security and privacy that people expect. Strong encryption and digital

ID’s far surpass the integrity of the manual methods of today that include the

subjective counting and recounting we saw during the 2000 election in Florida.

How would this work? One example is that Voters might have their signature

matched with a voter registration card and then receive a PIN that would activate

their digital signature. This would enable voters to cast their vote online.

Hopefully, electronic voting standards will evolve soon to allow for consistency

that people will trust. America’s experience with the year 2000 election is already

spurring this to happen sooner rather than later.

The more difficult questions will be whether the political leaders of the country

can agree on a national set of standards for how the votes will be counted and

recounted if necessary. There will be many debates about the cost of building a

national online election approach. It will not be inexpensive. But, how much did it

cost for the legions of lawyers and weeks of delay that we witnessed in Florida?

Clear presentation of the ballot will be critical. A confusing e-commerce shopping

cart is one thing but the electronic equivalent of the Florida “butterfly” ballot is

another. Surely, a clear way to display ballots can be devised which people could

trust.

We won’t have to wait long to see things unfold. Companies such as

election.com and votehere.net are already conducting electronic elections. The

early implementations have been for voting by corporate shareholders, unions,

and large organizations of all kinds. The Sierra Club, the Boeing union, and

Cornell University have already used online elections. The International

Corporation for the Assignment of Names and Numbers (ICANN) is a global non-

profit organization that provides certain administrative controls over the operation

of the Internet. In 2000 they practiced what they preach by using a very

sophisticated Internet election to establish the “at large” directors for the board.

People voted from all over the world.

The People and their money

Perhaps one of the best examples of people gaining new power from the Internet

is in the financial services sector. In effect the Net has allowed people to

eliminate the middleman. No longer is investment a "hidden art" that takes place

beyond the view of average investors. People get timely and relevant information

about their investments -- and the actual trading process -- rather than relying on

"tips" from brokers who may have a financial interest in the stocks they tout to

their customers. The Internet has led to the emancipation of the individual

investor and leveled the playing field for all. A new U.K. company called The

Investors Noticeboard is planning to connect individual buyers and sellers of

shares directly on the Net, eliminating the broker completely!

Shopping for cars has seen power returned to the people. Buying a car from a

dealer can be a very unpleasant and uncomfortable experience for many people.

When being told about the “dealer cost” they often wonder if they are getting the

complete story. Or they sometimes feel pressured to buy options, services or

financing they don’t really understand or want. Now, because of the web, things

have changed. People can get access to complete information. They can make

comparisons at home while under no pressure. They can buy directly from a

manufacturer, from a car buying service, from a dealer, or buy their car at an

online auction. Instead of feeling powerless in the showroom many people now

feel empowered. Since many dealers make much of their profit from their service

operations they are more than happy to provide the buyer with after the sale

service and support.

Nicholas Negroponte at MIT told a story during the early days of the Net that

really makes the point. He described a woman who was looking for a very

specific model black Volvo. She went to a dealer and got a price. Then she went

to the Net and did some research and then went back to the dealer. The dealer

assured her that she had the best price possible. Then she posted the details

about the car and the price she had obtained in a discussion forum and asked if

anyone else would be interested in the same exact car at the price she had

negotiated. Then, according to Nicholas’s story, she went back to the dealer.

“Are you sure that is the best price you can give me?”. “Yes madam it is”, said

the dealer. “Well, there is one other piece of information I neglected to give you”,

said the woman, “I would like to buy ten of them.” Story has it that she got a

better price. So, who had the Power? The car manufacturer? The dealer? Or, the

woman buyer?

Power to the People happening everywhere

The emergence of eBay and other auction sites is yet another form of people

getting more control because of the Net. It started out as the world's biggest

garage sale but has evolved into enabling proprietorships of one person each. It

is a form of Power to the People. Job searches are much more in the hands of

individuals now than ever before. Direct access to all of a company's current job

listings, plus recruiting services and employment marketplaces are enabling

people to take their careers into their own hands instead of waiting for their

manager to promote them. Before the Net companies would make an

announcement about some new corporate policy or health care offering and then

say, “For information, see your manager”. Those days are gone. People don’t

need to ask someone else. They take the matter into their own hands, go to the

company intranet, and become informed to the degree they choose.

What is Napster all about?

Perhaps the biggest shift with regard to Power to the People since the Internet

itself is a new kind of technology called “Peer to Peer” (P2P). When Sean

Fanning, the nineteen-year-old wiz kid who created Napster, appeared on the

cover of Time Magazine, it was clear that something big was happening. On the

surface it appears that Napster is a tool for getting digital music over the Internet

without paying for it. The reality is much deeper.

“Peer to Peer” in not a new idea. The Internet has always enabled one computer

to communicate directly with any other computer but not typically as equal

participants or “peers”. The preponderance of communications on the Internet is

more of a “client – server” model. The servers tend to be powerful computers

with very large storage capacity. The “clients” are mostly PC’s (although that is

changing fast – more on that later). The client goes to the server and requests

information. You click on a link at your PC and a web page gets downloaded

from the server to your PC. P2P is a different model. With P2P I connect directly

to your PC over the Internet or you go directly to my PC and we exchange

information. Napster is a program that was written to facilitate P2P. A user can

go to a central directory at a server on the Internet and find out that a certain web

page or document or music file is on someone else’s PC and that person is

making it available to anyone who wants it. The user can then connect directly to

the other person’s PC and download the file. Another P2P program, Gnutella,

has no central directory on a server and instead allows you to search for a file

you are looking for across the whole Internet and then download it from a

person’s PC that has it.

P2P is empowering to people for the same reason that carsdirect.com or eTrade

are. It takes out the middleman. Although, with P2P there doesn’t need to be a

server, servers will continue to play many roles and they certainly are not going

to go away. In fact with the growing number of users and content on the Web, e-

businesses are requiring more and more powerful and scalable servers than ever

(the ability to scale means that these servers can ramp up their processing power

when they need it). At the same time, however, PC’s are getting very powerful

and very large in storage capacity. Today’s PC are one hundred times more

powerful and have one thousand times more storage than they had less than

twenty years ago. This expanded capability plus the advent of very fast Internet

connections now being offered by telephone and cable companies means that

large amounts of information can be stored, searched, and distributed directly

from PC to PC. This is a new and important model. It won’t replace the existing

model but it represents a big complement to it. Over time its significance will

grow and people will be increasingly empowered.

Now, back to Napster. One of the types of files that can be shared from PC to PC

over the Internet is an MP3 file. It is a form of digital music. What is digital

music? It starts with analog music. When you go to Alice Tully Hall in New York

to hear a string quartet you are listening to analog music. If you want to listen to

it later at home you need to have a way to capture it, store it, and replay it. In the

"old" days this was done with vinyl records and later with acetate tape. Today it

is mostly done with CDs (compact discs) but increasingly music will be stored in

the form of computer files such as MP3.

Analog music is captured with recording equipment and then placed on the CD in

CD-DA or digital audio format. This is done by electronically sampling the sound

44.1 thousand times per second and capturing two characters (bytes) of

information about the characteristics of that second. That results in 88.2K bytes

of data for a second of music. Multiply X2 for stereo and you have 176.4K bytes

of data per second. Multiply X60 and you get 10.584 megabytes per minute of

music. A CD holds about 660 megabytes of data so that gives you

approximately 62 minutes of music on a CD. OK, so what is MP3? There is a

group of experts (from IBM and other companies) called the "moving pictures

experts group" which created a standard called MPEG. MPEG has various

"layers" which specify how audio or video can be compressed. Compression

removes bits from the sampling process that are not essential or even

recognized by the human ear. A brief pause in a song, for example, can be

eliminated or compressed and then decompressed later when it is played. The

result of compression is that a much smaller amount of data needs to be stored.

MPEG layer 3 describes a particular standard for achieving high quality sound

with compression. It results in a compression ratio of roughly eleven. In other

words with MP3 you can store roughly 11 hours of music on a CD. It also means

that CD music can be stored on a PC in about one eleventh of the space

required if it were not compressed. It further means that now that it is

compressed it has become practical to send it over the Internet in a reasonable

amount of time. The result is that Napster, which was designed to share PC files,

instantly became a very convenient way to share MP3 music files.

MP3 is changing how people think about digital music whether they are

consumers, artists, producers, or broadcasters. The recording industry,

understandably, has reacted very negatively toward Napster and other music

sharing programs on the Internet. They view it as stealing and have been

aggressively trying to shut down web sites they view as contributing to theft in

any way.

Other people say that intellectual property “wants to be free”. There certainly is

an argument that artists may choose to give away their music over the Internet,

generate a lot of interest in it, and then charge $100 per ticket for their concerts.

That is a valid model but not the only model. If an artist or music company wants

to protect their music they should be able to do that too. IBM recently introduced

a “watermarking” technology that enables music to be encoded with a digital

“watermark” that identifies the owner of the music. Attempts to copy or distribute

the music without proper payment are next to impossible. But the real issue isn’t

just whether and how to protect the music. The real issue is the evolution of new

business models for the distribution of music. Napster has caused a lot more

visibility of this issue.

People are not fundamentally dishonest. There are exceptions of course but

most things in the world get bought not stolen. The Internet has provided a new

distribution channel for music. Music is particularly well suited to digital

distribution because it can be played immediately after being received in

essentially its original fidelity. The PC can be easily connected to good quality

speakers or even connected as an input to your stereo system just like a tape

deck where the playback is as good or better than FM Stereo or original CDs.

Some audiophiles claim they can tell the difference but most of us can’t.

The distribution model has evolved from record to tape to CD but the business

model of the music business has changed very little. I have a collection of Mozart

CDs. Someone has decided how to package them. One CD has Symphonies 40

and 41. Another has String Quartets 17 and 19. Why can’t I buy just the 40th

Symphony and the 17th String Quartet? A rock star CD has ten songs on it. How

about if I only want to buy two of those songs? If a CD costs $15 for 10 songs

why can’t I buy two songs for $3? With MP3 music a person can download more

than ten hours of their favorite tracks of music and then use a CD “burner” to

copy that music onto a CD. The CD the person created is now their personal

selection of a favorite artist or maybe twenty artists.

Would people be willing to pay for a custom CD or a custom “play list” of their

favorite music files? Is it possible the music industry could actually expand by

offering more choices than have previously been available? How about a model

where I get to download ten of my favorite tracks for free if I agree to send them

to ten friends. Each friend receives an email from me with link in it. They click on

the link are taken to a server that allows them to download the music. When they

first try to play the music a small dialogue box appears on their PC that says

“These selections were recommended by your friend John. Click here to enter

your credit card number to purchase them. You will receive a ten percent

discount if you agree to forward the invitation you received to ten of your friends”.

Yes, people have the power to steal music. But the music industry has the power

to create brilliant new business models, subscription services, music tips, and

marketing relationships and if they do so they can take the music industry to new

levels and people will gladly pay for the value created.

Peer-to-peer is not just about music. A new company called Groove Networks

was launched in 2000. They offer a free (for now) download of a PC program

called Groove. It allows P2P communications and includes various tools to

facilitate sharing. For example, the local soccer moms might set up a Groove

“conversation space”. Each soccer mom can see this space on her PC. When

one mom posts a new soccer practice date or schedules a mom’s meeting on the

calendar, the information is distributed to all the other moms who can then see it

on their PCs. The Adams Family might set up a family calendar. I set up a

conversation space for collaboration on this book. My editors and other trusted

advisors have secure access to the space to see any recent writing. There is also

a space for discussion where comments and critiques were, and still are, shared.

The Power to the People aspect comes as workgroups in companies find they

can setup secure spaces to share discussions, files, presentations, calendars,

and contact lists. Previously they may have wanted to set up some new

collaborative area but may have found that they had to get approval from the

corporate Information Systems department first. Central servers provide many

valuable functions that will continue to be important but for some basic sharing

tasks the P2P approach may become quite empowering.

Power to the People does not mean anarchy. It does not mean people marching

in the streets. It does mean that people have the power to press a mouse button

or a cell phone button and expect to be heard and have their expectations met.

Corporations, universities, governments, and other large institutions have power

too -- but they will lose it unless they use it to satisfy the rapidly expanding

expectations of people. Institutions need to listen very hard to what people are

saying and figure out what their needs and wants are. Those enlightened

organizations that listen to the people will be greatly successful and those who

don’t will be imperiled if not extinct.

There is a dark side to Power to the People. The Internet has allowed terrorists

the potential to create “cyber wars” by unleashing crippling computer viruses and

jamming military computer systems through electronic radio-frequency

interference. This could potentially enable terrorists to disrupt anything that

functions electronically. In light of this, the United States Army is actively

participating in the creation of a strategy to protect against potential adversaries

who might abuse their power on the Internet.

The customer is always right

As people have gained newfound power from the Internet their expectations

haven increased significantly. They know the potential exists to greatly simplify

their lives and they expect this to happen. Their patience will be short when it

doesn’t. How good of a job are companies, governments, universities, hospitals,

and other institutions doing at meeting people’s expectations? Unfortunately, I

would have to say, on average, not very well at all. Although there are many

reasons for optimism that the web can and will meet the rising expectations of

people, at this stage most web sites don’t even come close.

Let’s get specific. The American Customer Satisfaction Index for e-commerce

companies was published in late 2000. It resulted from a quarterly survey

conducted by the National Quality Research Center at the University of Michigan

Business School, Ann Arbor, in partnership with the Milwaukee-based American

Society for Quality and the CFI Group, an Ann Arbor management-consulting

firm. The survey showed that consumers found large disparities in quality of

service and, although there were some standout successes, many web sites fell

far behind in keeping their customers happy.

Patrick Barta of the Wall Street Journal reported that satisfaction levels are low

enough “to cast doubt about many sites' ability to survive.” He went on to say that

American consumers “appear to be only marginally more satisfied with e-

commerce sites than they are with the U.S. Postal Service.” The index's director,

Claes Fornell, says E-commerce "companies that don't provide a positive

customer experience will get much less repeat business and therefore be forced

out of the marketplace". It is generally accepted that getting a new customer is at

least five times more costly than keeping an existing one. The survey showed

that more than twenty five percent of consumers were not satisfied. The bright

spot was Amazon.com, which had a satisfaction score of 84, the highest of any

site. Even more alarming than the satisfaction score of this survey is how many

people leave web sites without completing the transaction at all because they

couldn’t find what they were looking for or the site did not work properly. In his

January 2001 issue of the Release 1.0 newsletter, Kevin Werbach described a

survey done by user-experience consultants Creative Good. The consultants ran

a test with over 50 consumers on eight leading online retail sites. Forty-three

percent of the purchasing attempts ended in failure, because the users literally

couldn’t figure out how to complete the transaction. The satisfaction, or lack

thereof, also goes beyond the web. People who become dissatisfied with a

particular brand on the web will translate their feelings to the “bricks and mortar”

part of that brand. They will conclude that if the e-business part of a company

doesn’t know how to satisfy people then their company doesn’t know how to

satisfy people.

Systems that don’t talk to each other

There are several categories where web sites let people down. One of them has

to do with integration of systems. Some recent personal experiences may serve

to illustrate what this is about and why people are frustrated as a result. It was a

Friday night when my wife and I decided to go to New York the following

weekend for an impromptu opportunity that arose. I went to the web site of a

major hotel chain and checked my frequent guest points balance and looked for

an award for a one-night stay. I have plenty of points and, sure enough, I found

an award code for a one-night stay at a very nice property in New York City. I

could have made an online reservation but a prior experience convinced me that

they didn’t have the process streamlined yet so I called the 800 number and

asked the person if a room was available for that following Friday night. “Yes

sir”, she said, “I can confirm that for you”. “Great” I said. “Is there anything else I

can do for you, Mr. Patrick?” “Yes, I would like to pay for the room using Award

code XYZ”.

“Oh”, she said, “I can’t do that”. I asked if I was talking to an answering service

or the hotel chain itself. “This is the hotel chain”, she said, “but this is the

reservations department and I don’t have access to any frequent guest data”. I

explained that I was looking at the coupon in my browser and asked if there

wasn’t some way she could help me use it. “Oh, no problem, Mr. Patrick”, she

said. “Just call us back on Monday morning”. She went on to explain that I

would need to call them by long distance, no 800 number, and that I could call

anytime during their normal business hours of nine to five Monday through

Friday. She said that when I called I could just simply give them my credit card

number and for just $35 they would send me the coupon (which I was looking at

in the browser!) via overnight express mail. Now is that a “stick in the eye” or

what? The problem is lack of application integration. The frequent guest system

and the reservations system don’t talk to each other. They are applications that

were likely built in different decades and which operate on different and

incompatible computer systems. The examples abound.

I ordered three items from an on-line catalog at cdw.com. It was actually a good

shopping experience. The FedEx shipping was a relative bargain at $5.49. The

next day I received a phone message saying that one of the items I had ordered

had been discontinued but that the other two items were shipped. This was quite

disappointing since the discontinued item was the most important of the three

things I ordered. I called the customer service department and asked why the

web site was offering an item that had been discontinued. Lack of real time

inventory or out of stock conditions is one thing but offering discontinued items

for sale seemed like a real process problem. “Oh”, said the customer service

representative, “our web site is two to three months behind on updating for

discontinued items. We are working on that”. The result was I had to order a

substitute item and pay additional shipping. Problem: no integration between the

inventory system and the web e-commerce system.

Recently I went to the United Airlines web site to accept a special offer. It was

very smooth. A few clicks and I was finished. Then I got a message that said,

“You have selected 10,000 Mileage Plus bonus miles. Your miles will be credited

to your Mileage Plus® account in approximately 6 weeks. They are yours to use

as you please. Thank you again for this opportunity to reward you for your

exceptional loyalty. “ Six weeks? The web application that I interacted with

probably can’t talk to (is not integrated with) the application that updates the

mileage credit. Ever land at an airport and the gate was not available for the

plane to park? Happens to all of us. The Gate Scheduling System is not

integrated with the Flight Arrival System.

I had been thinking about getting a cappuccino maker and a friend had one not in

use that he offered to loan to me for a trial. The machine is called a Nespresso

and is made by Nestle. It uses pre-packaged “capsule” of coffee. I stopped in a

local gourmet cooking store that carries the Nespresso line and asked if I could

buy some of the capsules of coffee. “Oh no”, said the proprietor. “They can only

be bought directly from the company. Didn’t you fill out the form to register for the

buying service?” I explained my situation and said I had no form. I was told to call

the 800 number. I went home empty handed and rather than call, I decided to

visit the web site. I was in luck, or so I thought, because I quickly found a “click

here to buy” area of the site. Upon landing at the buying page I was asked to

enter my customer number. I have no customer number and could find no place

on the site to get one. I was really determined to get these “capsules” so I broke

down and called. The good news was that it was not 9-5 M-F and a real person

answered and I didn’t have to wade through a complex call center menu. The

person was very cordial and explained that the only way I could get a customer

number was to buy something from them by phone and then I would be sent a

customer number in the mail!

Attitude problem: These problems are viewed as very complex with fixes that

take a lot of time.

Net Attitude: The long-term fix will take time but in the meantime applications can

be enabled to send messages to each other behind the scenes and give the

customer the effect of a completely integrated solution. Some technology

investments will be involved but it is mostly an attitude of wanting to make

systems talk to each other. Chapter 12 will describe how this is done.

Click here to send us a fax, fill out a form or get our phone number and hours

I went to the web site of a California software company one Sunday afternoon

and I was ready to buy some software they had for sale. In fact I wanted it really

badly and was ready to pay nearly any price. I clicked to buy and up came a

form. No problem, Mr. Patrick. Step one; print this form. Step two; fill it out and

fax it to us! This doesn’t sound like e-business. Unfortunately there are a large

number of web sites that say click here to buy and then present us with a screen

of where to call or a form to be printed out and faxed. More recently I was looking

for a very unique light bulb for an outdoor lamppost. I search around the web and

discovered that I was not alone in having trouble finding unique light bulbs. My

search turned up quite a few postings in the Philips Lighting Forum for Home

Lighting. In reply to a customer asking for the same bulb I was looking for, the

folks at Philips posted a reply which said “Please call 800 555 0050 for the

nearest distributor in your area.”

Many web sites say they have information about their products and services

available but when you click to see it, up comes a web page form which you are

asked to fill out and send to the company so they can mail you a copy of the

instruction manual or other information that you are requesting. In other cases

you can’t even get the information through the web site at all. I bought a new

Motorola mobile phone in Australia during the Sydney Games. I was really

pleased with it but had a question about how some particular feature worked. I

went to the Motorola site and looked around. I found a link to exactly what I

wanted to know. When I clicked it I got, “Motorola can assist you in matching one

of its newer phones with your existing service plan. Please follow these easy

steps: have the name of your service provider handy; call 1-888-647-9988 (Mon.-

Fri., 7:00a.m. – 7:00p.m. CST). Motorola’s customer service representative can

help you select a phone that is supported by your service provider and discuss

the options available to you.”

Contrast this with a visit to the State of Connecticut Department of Motor

Vehicles. I was looking for a particular manual and to my delight I found the

following on the web page: “The DMV provides driver's manuals with all the

graphics and illustrations featured in the print edition. These versions are in

portable document format (pdf) and must be viewed and printed through Adobe

Acrobat. The software is available free from Adobe. To get a free copy of the

software, click the "Get Acrobat" image below.” Adobe’s portable document

format (pdf) is a de facto publishing standard that can be used to create any kind

of printed materials. Adobe Acrobat is free software program that enables a

person to read the pdf file. A pdf file can be printed out and it looks exactly like

the “real” thing; complete with all the graphics, formatting, and fonts that you

would see in printed materials. The United States Internal Revenue Service was

one of the first to use pdf files on the Internet. They offer virtually all IRS forms

and booklets that way. Radio Shack offers owner’s manuals for nearly all their

products as pdf files. Unfortunately, The Connecticut DMV, IRS, and Radio

Shack examples are in the minority.

Fax machines arose to ubiquity for two reasons: the information technology

industry had no standard for the exchange of documents and the Internet had not

yet become ubiquitous. Much of the use of fax machines today is due to habits.

Document formats such as Adobe pdf files can enable the sharing of

sophisticated graphical information without paper. Web pages can be used for

business forms of all kinds. For those who would like to make the plunge and get

rid of their fax machine (like I have) but have friends and colleagues who still

have them (as I do), there is a good answer. eFax (http://www.eFax.com) offers

a fast, free, and easy way to receive faxes — whether you're on the road, at the

office, or working from home. With eFax you receive your faxes and voice mail as

attachments in your email account. No more standing around the fax machine

waiting for your fax to arrive. No more wandering eyes looking at your

confidential documents. For a monthly charge of $9.95 you can also have a

convenient way to send faxes. No need to print and manually fax a document

anymore. No need to be tied to the location of your fax machine. With eFax you

can fax documents right from your computer. The fax machine has served us

well. Let it rest in peace.

I was having a problem getting my Hewlett Packard ScanJet scanner working

and visited their web site to look for a fix. I found a very sophisticated support

structure and searched for my particular problem. I was successful in finding the

exact problem and I clicked to get the fix. Up came a web page that said to call

during their normal business hours and give them my address so they could ship

me a CD. Why not a download I asked? I was told that too many users were

downloading the file for the wrong reason and then the users were complaining

that the download didn’t fix their problem. Rather than work on a better way of

explaining who should download the file and for what purpose, HP decided to

take the file off of their site and offer a CD solution instead.

The next example illustrates that email is not yet accepted as an equal in terms

of communications. I was in Europe on a business trip and realized that there

was a small matter that I needed to take care of with a major financial services

company with whom I do business. It was a small but important administrative

matter that had a deadline for completion that day. It did not involve any

securities trading or movement of money. It was early morning in Europe and

very early in America – customer service would not be open. Since I would be

busy all day and would not be able to call when the American offices opened I

decided to send them an email. I was pleased to find a “mailto” link on their web

site and I sent my simple request. I got back to the hotel late that night and

found an email reply from the firm. I have edited the reply slightly to protect the

guilty.

“Dear Mr. Patrick thanks for your recent inquiry. Unfortunately we can’t do that

by e-mail, you have to speak to a customer service representative at our

customer service department. Call us Monday to Friday, nine to five at 800-999-

1234 during our normal business hours. Of course if you have any other

questions, send us an e-mail.” Duh. By the way, this response is more insensitive

than it may seem on the surface. Call our 800 number? You can’t call 800

numbers from Europe. I later called a manager of the firm and asked why they

couldn’t handle my request by email. He explained to me that email is

considered correspondence by their legal department and any correspondence

has to be reviewed and approved by a manager before it can be sent. Therefore

they prefer the telephone where this extra step is not required. In other words, a

representative on the phone can tell me anything but if they have to send me an

email then it has to be reviewed and approved. This doesn’t make much in a

world of converging media where more and more people would say that email is

their preferred way of communicating.

I sold my five-year-old car on eBay. The buyer was a gentleman in Kentucky. He

had a personal problem and was not able to come get the car in a timely way so

he offered to put the money in an escrow account at my bank as a show of good

faith that he would definitely be taking the car. I said I would check with them on

how this might be done (this was before I knew about escrow.com). My

“relationship manager” said he would have to check with the legal department.

He called back a few hours later and said it would be “very difficult”. “Things are

tough in a big hierarchy like this”. It could possibly be done but the “bank has to

protect itself”. “You would have to fill out a lot of paperwork and the bank will take

no responsibility for the money or to make sure the escrow would actually work”.

This was my own bank!

He said it may not seem very user friendly but they are a very big bank. The two

options he said would be possible were to either use a “Letter of Credit” or get a

“Court Order”. He had no idea how either would work or how much they might

cost. It was obvious that neither of these were appropriate to sell my car to the

gentleman in Kentucky. (I later visited escrow.com and they said “No problem”.

Just go to the website. Either party can fill out the online form. The other party

will be notified by email. When both agree to the terms, the money is deposited.

When both have been to the web site to agree the terms were actually met, the

money is released. Fee: $100. No problem. Expectations met.)

Are these examples of e-business? I don’t think so. I am sure that Motorola’s

customer service representative can help me select a phone that is supported by

my service provider and tell me about the options available to me but I would

think their web site could do this too – and do so whenever I want to not just

during some selected Central Standard Time hours. I know the financial services

firm can help me by phone but why can’t they help me by email? And on and on.

Attitude problem: Many organizations are clinging to the communications

methods of the past and not capitalizing on the tremendous power of the Internet.

Net Attitude: The technology is here to give people the information and services

that they want on the Internet whenever they want it. Information doesn’t need to

be free but it does need to be readily available and 24 x 7. Any artificial inhibitors

that are created will drive customers to a competitor. Expectations are rising fast

and when the Next Generation of the Internet arrives expectations will be even

higher.

Down for maintenance

One of the most significant problems causing user expectations to not be met is

site availability. “Site down for maintenance” at midnight seems reasonable for an

American hosted web site except that it is lunch hour for their Asian customers.

One late night, between midnight and 1 AM I visited American Airlines to check

on a flight. The homepage said, “Due to scheduled maintenance, AA.com is

currently not available”. This was the homepage of one of the largest airlines in

the world that in fact is an “international” leader. Web sites need to be available

all the time. Traditional thinking would tell one that 1 AM is a great time to do

maintenance of a web site. Nobody is using the site. In fact, a lot of people use

the web on their lunch break. It is always lunchtime somewhere in the world. Two

in the morning in New York is three in the afternoon in Tokyo. The old model

doesn’t work anymore.

I received an email one day which said “Dear JOHN R PATRICK, your American

Express Statement of Account for December, 2000 is now available for viewing

at the following secure site. Please review this statement at your earliest

convenience as your payment due date is December 19, 2000.” A URL was

provided in the email and I clicked on it. I got a message that said “We're Sorry...

we are currently upgrading our site to improve American Express Online

Services. During this time you may experience intermittent system delays. If you

wish to review your account, please call 1-800-528-4800 and a Customer Service

Representative will be available to assist you. If you wish to make a payment,

you can pay via telephone by calling 1-800-472-9297“. I know American Express

has great customer service by phone, with no recordings saying they are only

open 9 to 5 Monday to Friday, and I know I could have paid the bill by phone but

I was anxious to use the new capability of paying it online. I waited and tried the

URL again the next day. Same message. After it persisted for more than a week I

called American Express technical support. They said the problem was that my

browser had too much history saved and that to use their site I would have to

delete all the saved locations from my recent browsing. The support technician

was able to step me through correcting the problem but from my point of view he

was asking me to give up something to make the site work for me.

Attitude problem: Some organizations are managing their e-business web sites

the same way they have managed their traditional systems.

Net Attitude: Many people tend to do their shopping, banking, and other web

transactions at “unusual” times; certainly not all during the hours of nine to five,

Monday to Friday. Web sites need to be up and running around the clock.

Guitars and chickens

Another dimension of the dissatisfaction is the difficulty in simply finding

something on the web. My mother was anxious to get an 8 inch electric frying

pan. My wife looked everywhere and couldn't fine one. “No problem”, I said, “I'll

find one on the Internet in no time”. I did some looking around and found a site

that claimed to be all about electric frying pans. There were four featured links.

None of them had anything to do with electric frying pans. There were twelve

featured manufacturers of frying pans. Eight of them were dead links. Four were

good links to great looking frying pans but none were the small size I wanted.

Undaunted I decided to use a more sophisticated search. Search = “Small

electric frying pan”. I got two matches.

Match #1

Lemelson Center Invention Features: Electric Guitars

http://www.si.edu/lemelson/guitars/

This exhibit, presented by The National Museum of American

History features instruments that illustrate how innovative

makers and players combined the guitar with a pickup

(sensor) and amplifier to...

Match #2

FRIED CHICKEN

http://www.wolfenet.com/~mfbaehr/chicken.html

START WITH A WHOLE FRYER WASH WITH WATER CUT BREASTS AND

WINGS IN TWO SHAKE CHICKEN AND FLOUR IN PAPER OR PLASTIC

BAG IN ELECTRIC FRYING PAN, BROWN CHICKEN AT HIGH HEAT

Attitude problem: The web is a great new way to publish information. It is easy to

put very large amounts of information on your web site.

Net Attitude: Having more information on a web site doesn’t mean that it is easier

for people to find that information. Information needs to be carefully organized

and structured so that it can be maintained and so it can be easily searched and

retrieved.

Listen carefully; our menus have changed

“Surfing” the web has become a very natural thing to do for millions of people.

They have also mastered “click here” to buy something or to make a choice. The

simplicity of this has raised expectations, and frustrations, with the Call Center.

There are many fancy technical terms that are used to describe Call Center

technology but the bottom line is that they provide an automated way to interact

with people. Seems like every organization of any kind has one. The reduction in

staff made possible by substituting a recorded voice response for real people is

compelling to the organization. To people, well that is a different story. Simple

menus didn’t seem so bad and in fact reduced your time on the phone. Press

one for sales; press two for service; press three for parts. Nice. Gets you to the

right place in a hurry. But then the success of these simple menus motivated

organizations to get more sophisticated. Do they still save us time and increase

our satisfaction? Let’s listen in on a typical “dialogue”.

I want to change my mailing address on a service contract I have on my home

vacuum system. I call the company’s 800 number. “Welcome to Ajax. Ajax is the

world’s leading provider of home vacuum cleaning systems. Press 1 if you are

using a touch-tone phone. I press 1. Press 1 for English, 2 for Spanish. Presione

1 para el inglés, 2 para español.“ I press 1. “Please listen carefully because our

menus have changed”. Do I really need to hear about the status of their menus?.

I care about what it is I am calling about. When do we get to something relevant

to my problem? “Press 1 to learn more about our exciting new home vacuum

system that is currently being offered at a special introductory price. Press 2 to

order one of our products. Press 3 to learn how to use one of our products. Press

4 for detailed instructions on how to return one of our products”. All I want to do is

change my address! “Press 5 to request shipping materials to return one of our

products. “Press 6 for the locations of our nearest retail centers.” I am ready to

scream. “Press 7 for the locations of our nearest repair centers”. I wonder if

customer service is going to be 8, 9, or zero? I’ll try 0. “Sorry, that option is not

available”. “Press 8 to repeat the menu options.” 8. “Press 1 to learn about our

exciting new home vacuum system that is currently being offered at a special

introductory price. “Press 2 to order one of our products”. “Press 3 to learn how

use one of our products”. “Press 4 for detailed instructions on how to return one

of our products”. “Press 5 to request shipping materials to return one of our

products”. “Press 6 for the locations of our nearest retail centers.” “Press 7 for the

locations of our nearest repair centers”. I’m getting close. I don’t dare press

anything. “Press 8 to repeat the menu options”. “Press 9 to speak to a customer

service representative”. At last. 9. “We are sorry but our customer service

representatives are only available Monday to Friday from 9 AM to 5 PM during

our normal business hours.” I look at my watch. It is 5:01 PM. If only I hadn’t

pressed that 8 earlier!

The call center is controlling you via its menu structure. It was ok for the simple

menu with three choices but the complex labyrinths of today are more than

frustrating. In those instances when you finally get to a person you then discover

that the computer has not only controlled you, it is also controlling the person you

are talking to! “Press 0 to speak to a customer service representative.” “Enter

your eighteen digit customer number followed by the pound sign.” A

representative comes on the line. “May I have your account number please?”

You tell the person you just entered it and the person tells you, “I am sorry but it

didn’t show up on my screen.” You give them the eighteen-digit customer number

and then the person says, “Thank you sir, now, may I help you?” “Yes, thank you.

My name is John Patrick and I would like to change my zip code”. “Ok, sir, I

would be glad to help you. What is your name?” The customer service

representative probably selected an application for “Change zip code” and a

screen came up to “guide” him or her through the steps. Step 1 – what is your

name? As soon as a competitor a simple web page for “add/change/check

status” kinds of things, perhaps integrated with the call center, customers will

switch to that vendor as fast as possible.

Attitude problem: The web is a great new way to offer “click here to buy” and that

is the priority, in some cases the sole priority, of many e-businesses. “Click here”

satisfies many people but when they later have to call customer service and talk

to a call center their satisfaction goes away.

Net Attitude: Call centers and the Internet can be integrated. “Click here” to get

your problem solved and if that doesn’t solve the problem, “click here” to talk to

someone.

For your own protection

Does that stream of wet ink we call a signature really make things better? Our

financial and legal system in most of the world is based on paper and ink. It

hasn’t changed for hundreds of years. It doesn’t matter that we can buy things

with a mouse click. If we want to transfer securities, open a new account, set up

a trust, establish a life insurance policy, or countless other transactions, then a

piece of paper with our signature in ink is required. We are told it is a

requirement, that is the company policy or, that is “for your protection”. Is it

really?

Recently I owed a contractor some money for a project he had completed for me.

I accidentally forgot to make the payment when I said I would and as soon as I

realized my oversight I decided to write a check and take it to the bank and

deposit it directly to the contractor’s account. I knew which bank the builder used

and I had his bank account number from a prior transaction with him. I pulled up

to the teller window in my car and gave the teller my check made out to the

builder and with his account number on it. After she processed the check I

started to put my car window up and then I heard the teller say, “Here is your

receipt”. When I got home and took a look at the receipt I could see the amount

of the deposit and also the builder’s new account balance! By simply knowing the

bank account number of the builder I was able to (unintentionally) invade his

privacy and see his bank balance. If I want to check his balance again in the

future I can just deposit $1 at the drive up window! Maybe the brick, mortar, and

paper world isn’t so secure after all. It could have been much more secure and

private if I could have wired the money to the builder using the Internet.

Digital ID’s are now legal in America and other parts of the world. They provide

authentication, authorization, confidentiality, integrity, and non-repudiation. In fact

they are far more durable and powerful than signatures with ink. Digital ID’s will

empower us and simplify our lives. Much more about what they are and how they

work coming up later.

Attitude problem: Commerce in most of the world has been based on paper and

ink. Nothing much has changed for hundreds of years.

Net Attitude: The technology exists to make Internet-based digital signatures not

only work but make them more secure than paper and ink.

Yes, there are many uses and instances of paper that are just not needed --

because they add no value. But paper is not going to go away and it shouldn’t.

Just like in all introductions of new media types, the electronic media is a

supplement to paper not a wholesale replacement. Sometimes the uses change

though. Newspapers actually serve many purposes. Some people use them to

keep the rain off of their head, others swat flies with them, and some wrap fish in

them. And then there is just plain old writing paper. When you put a fountain pen

to it magical things happen. You have this special feeling when using a fountain

pen. And if your heart is in the right place you can inspire or uplift the hearts of

others with the words you write. Nothing digital has quite the same impact.

Peanuts and Potato chips

Increasingly people expect to have their providers of goods and services think

about customer satisfaction from an end-to-end point of view. Click here to buy is

one small piece of this. The end-to-end concept starts from the moment we

perceive that we have a need or a want for a good or service up to and including

after the sale service and support. There are many aspects to this. Long before a

person is ready to buy something they may want to learn about what is available

and gain assistance in determining exactly what they need. Carpenter

Technology Corporation a leading manufacturer and distributor of specialty alloys

has a web site called carpenterdirect.com where industrial buyers can purchase

stainless steel, aluminum, brass and many other kinds of alloys. The web site

has an online e-commerce catalog but, more important to their business

customers, is a vast amount of technical data to help an engineer determine what

is needed for a particular project. A section of their site, called MyMetallurgist,

provides descriptions of alloys and detailed technical properties so that engineers

can make selections based on corrosion, magnetic, or tooling requirements.

Services such as this can become a technical information resource for Carpenter

customers and if it is valuable enough the customers will become hooked on it

and will find it a very natural step to “click here to buy”.

An example of a step in the cycle after “click here to buy” is packaging. It has to

do with problems in the “last analog mile”; referring to the physical delivery of

things we buy on the Internet. The issue initially struck me when I had received

my very first order from net.grocer (www.netgrocer.com). I ordered an

assortment of salsa, condiments, Tabasco, paper towels, potato chips, pickles,

and other essentials. I was quite pleased and proud of my e-commerce prowess

(e-business hadn't been invented yet) in walking the talk and acquiring all of my

favorite goodies online. I was reveling in my predictions about how everybody

would buy everything on the Net. Then I got a lump in my stomach as I looked at

these two large cardboard boxes on my kitchen floor. And, the piles of white

poly-whatever "peanuts" were all over the place. Some stuck to my hands, arms,

and clothing. What was I to do? My wife would be home soon and she would

have a lot of questions about my plans to clean up the mess I had created in the

kitchen. All the glory I felt about acquiring Tabasco and potato chips would be

nothing compared to the wrath she would unleash about the mess if I didn't get

busy. No problem. I'll just clean it up. All I have to do is separate all the various

packaging materials into their respective categories, burst the cardboard boxes,

put the "peanuts" into a bag so they don't end up decorating our lawn, and then

stow everything away in our recycling center. Shouldn't take me more than a half

hour. Let's see -- how much time did I save with my Net purchase anyway?

Even with the purchase of something really simple, say a small cell phone, the

ratio of the packaging material to the cell phone (on a volume basis) must be 100

to 1 or more.

Even later in the cycle than packaging is fulfillment. Some web sites remember

your prior purchases but soon purchasing agents and consumers will expect

fulfillment models where they can set up a list of things they just want to show up

on a scheduled basis. Industrial chemicals and supplies for the business and

paper towels, printer paper, stockings, and potato chips for the home. More

sophisticated e-businesses will monitor purchases and advise their customers of

ordering levels that will minimize shipping cost. Really sophisticated e-

businesses will provide complete inventory management systems for their

customers. When the customer wants to check what is on hand of a particular

item they won’t go to their inventory system, they will go their e-business

supplier’s web site. This is a great way to tie the customer into a long-term

relationship.

By paying attention to the end-to-end process, looking at possible annoyances

anywhere along the process, successful e-businesses will uncover more and

more ways to satisfy their customers. There is room for leadership here and

breakthroughs are possible. I used to be so frustrated with opening the half-

gallon orange juice cartons. Did I say opening? I meant mutilating. Then along

came International Paper Corporation with a breakthrough idea -- the screw cap

on the carton.

In fact, there are a number of creative and constructive developments going on in

the packaging industry. For example, ECO-FOAM (http://www.eco-foam.com/)

offers packaging material made from a renewable resource – corn. The product

is completely biodegradable and dissolves in water - makes great compost.

Another company, Metabolix (http://www.metabolix.com), is developing

dissolvable plastics made from two of our most easily attainable and renewable

sources: carbon dioxide and water!

Attitude problem: E-commerce for businesses and consumers is here to stay. In

the rush to get catalogs of products on line, many businesses overlook the

complete end-to-end experience.

Net Attitude: Customers are going to expect much more than “click here to buy”.

It isn’t a technology problem.

I began thinking about packaging as something important some years ago when

trying to open a cereal box without destroying it and its subsequent ability to keep

the cereal fresh. It is a nontrivial challenge - maybe an art. If it is a science then

I haven't found the instructions anywhere. One starts by using a sharp knife with

a long blade. You carefully slide the knife under the tab in the center of the top of

the cereal box. Then you slice the material to one side while applying a slight

upward pressure via the tab. Repeat for the other side. I give being able to do

this without damaging the box top about 75% odds. You are now almost a third of

the way through the task at hand. Now that you have freed up one of the flaps

you have to free the other flap by tearing it from the side flaps. Completing this

without damage is also about 75% odds if you are quite careful. You are now two

thirds of the way to the cereal. Last comes opening the bag inside the box that

actually contains the cereal. This is often the hardest part. If you grasp the two

sides of the bag and pull very carefully you have about a 50% chance of opening

the bag without tearing it. After opening the main part of the bag you need to

open the corners of the bag so the cereal can flow smoothly into your cereal bowl

instead of bubbling out onto the floor and between the bag and the cereal box.

Putting the collective probabilities together gives you a 50-50 chance at best of

having an open cereal box that pours the contents smoothly and can be closed to

protect freshness. Some packaging! I could go on about jars that require a

hammer to open, pill bottles that can only be opened by children, fresh fruit

containers that have to be squeezed until they break to open, soap in hotel

rooms that is hermetically sealed in thick saran wrap that defies being opened,

etc. etc. etc. I suspect those who suffer from arthritis of the fingers could make

my examples seem trivial.

It is not all gloom and doom

There are some e-businesses that are doing a great job with end-to-end

satisfaction. Stamps.com is a good example. Stamps.com is the leading provider

of Internet mailing and shipping services. The company was started in 1999 and

has Marvin Runyon, former U.S. Postmaster General, on its board of directors.

The company provides valuable e-services to businesses of all sizes, allowing

companies to control costs and efficiently manage their mailing, shipping and

returns operations. Its business is anchored in key relationships with the U.S.

Postal Service and United Parcel Service (UPS) and other carriers. For

consumers and small businesses stamps.com has eliminated hours of waiting

time at the local post office. They insert a link in your word processor so that after

writing a letter you can select to have an address label printed along with the

postage. They actually have a three-part label that prints the return address, the

addressee address, and the postage. You can even connect your label printer to

a postal scale and weigh a package and automatically print the proper postage.

They have integrated their Internet service with the postal service so that each

address is checked against a national database over the Internet to ensure that

you can’t print an address unless it is deliverable. The nine-digit zip code is

automatically inserted if you don’t know it. USPS packaging materials (no

“peanuts” included) are integrated with the printing choices. When your packages

and letters are ready to go you just put them outside by your mailbox and the

USPS mail carrier picks them up and there are no added charges. The fee to

stamps.com is ten percent of the postage printed with a minimum of $1.99 per

month. This is a bargain considering the convenience it enables. The local

newspaper where I live ran a story recently with a headline that read, “Parking,

lines giving postal patrons a pain”. This is understandable. What is not

understandable is the local cry to build a larger post office to handle the demand.

If people were aware of the great service provided by stamps.com they could

avoid the lines and gridlock parking and print their postage in the comfort of their

homes.

One of the most empowering places on the web has got to be eBay. Buying and

selling on eBay is a great experience. They are constantly adding new services

to make the process – from end to end -- easier for both the buyer and the seller.

They create a community around the auction process and people trust it. In the

beginning making or receiving payment for your basement artifacts or favorite

baseball cards was a real hassle; going to the bank to get a cashier’s check or to

the long line at the Post Office to get a money order. eBay has addressed the

problem through BillPoint, a credit card based approach, that allows a buyer to

pay a seller electronically. It is basically a special purpose electronic funds

transfer. The purchase price gets charged to the buyer’s credit card and then the

money gets deposited directly into the seller’s bank account. It works very well

and charges a modest fee to the seller. EBay empowers people and meets

people’s expectations. They keep getting better and better. As a result it is

making a profit and growing rapidly. In the first quarter of 2001 the market

capitalization of eBay, a relatively brand new company, was identical to that of

Sears Roebuck & Company.

All kinds of web-based services are springing up that do meet people’s needs.

PayPal allows a person to send money to any other person by simply entering

the recipient’s email address at http://www.paypal.com and specifying the

amount of payment. The recipient gets an email asking him or her to enroll in

PayPal, if they are not already a member, and then they get the payment

credited to their PayPal account. Balances earn interest. If they don’t want to use

their credit balance to buy things at eBay or elsewhere they can request a check

or even a direct deposit to their bank account. People use PayPal for auctions,

paying their share of a meal, and sending money to the kids at college. Another

payment option for auctions is BidPay (http://www.bidpay.com), which allows a

buyer to go to a web page and enter the physical name and address of the seller

and for a modest fee BidPay then sends a money order to the seller. An email is

automatically sent to the seller so he or she will know that the money is on the

way. Both of these payment methods are simple and effective. They are not

banks or credit card companies. Perhaps they don’t have the various protections

that those entities have. Who knows if they will be successful? They do work,

however, and large numbers of people are using them. Traditional financial

services companies should pay very close attention to them.

And now to the future

While there are some notable positive exceptions, the bottom line is that most e-

businesses, whether they are serving businesses or consumers, are not meeting

expectations. The Internet has transferred power to people, both those working

inside of businesses and those at home, and each day those expectations are

higher than the day before. We saw an initial burst of excitement about surfing

the web in 1995. Over the next five years the Internet became faster, more

reliable, and reached much larger numbers of people. New Internet startups or

“dot coms” emerged with some great ideas (but not always great business

models) and existing companies “web enabled” many processes. E-commerce

flourished. However, by the end of the millennium many users of the Internet

began to become disillusioned and at times frustrated. They couldn’t find what

they wanted or e-businesses in some way let them down at a time when their

expectations were rising. How does an organization address this widening gap?

The first part of the answer lies in anticipating and exploiting the Next Generation

of the Internet – the NGi. The second part is about Attitude.

Part 2 – The Next Generation of the Internet

The Internet has been around for decades. Until the middle of the 1990s it was a

communications network used mostly by scientific, academic, and government

students and researchers. With the advent of the browser, the spread of

Microsoft Windows, and improved reliability of telephone circuits, using the

Internet became something the rest of us could do. Then with the development of

security technology to protect credit card numbers, things really took off. The

number of users has grown and continues to grow rapidly. Five years from now

there will be three quarters of a billion people using the Net and during that same

time the nature of the Internet, the things it can do and how it does them, is going

to undergo a rapid evolution. In fact the Next Generation of the Internet is already

unfolding and this part of Net Attitude will explore it in depth.

1. Fast

The packets don’t care

The NGi is about new characteristics of the Internet that we will gradually begin

to experience. The obvious one is Fast – more speed.

Bandwidth is a technical term but in essence it means the capacity to transfer

data using an electronic communications system. The term bandwidth has

become the common way to refer to the speed, or responsiveness, we

experience when we are connected to the Internet. Higher bandwidth means

higher speed. Soon we will be awash in bandwidth! If, like me, you have been in

a hotel room recently and got connected at 19,200 bits per second or less and

were relieved to get even that much speed you may wonder how I could make

such an assertion. Bandwidth galore? At times it seems like we are starving for

bandwidth; however, these are short-term limitations that we are experiencing

and that will soon seem like history.

We often hear the term “twenty-eight-eight” or “fifty-six-K”. These terms refer to

the bandwidth or speed. For example, “fifty six K” means 56,000 bits per second.

A bit is a one or a zero. Nine bits make up a “byte”. A single alphabetic character

(e.g. “a”) is represented by a “byte”. The banner across the top of the Yahoo

homepage is represented by 8,000 bytes. So “fifty six K” or 56,000 bits per

second really means approximately 6,222 bytes per second can be sent from or

delivered to your PC. That means it would take a little more than 1 second to

transmit a 1,200 word email or the banner at the top of Yahoo’s homepage.

Pictures and colors and fancy fonts can actually require many thousands of bytes

and that is one of the reasons why it sometimes takes so long for a web page to

fully appear in your browser.

You are probably thinking that maybe where “you” live it is fast or going to get

fast but where I live it doesn’t seem to be in my future to have fast Internet

access. The reasons to be optimistic are two; technology and competition.

First, just a bit of background on how the Internet works. All information that

travels across the Internet is broken into packets. Every email, web page, instant

message, or Internet Protocol (IP) telephony call is broken up into packets that

then traverse the Internet. An average packet contains between five and ten

thousand zeroes and ones. Each packet has a source and destination address

and they traverse the Internet by traveling between specialized computers called

routers. The routers look at each packet and determine where it should go next.

Typically a packet may take ten to fifteen “hops” before it gets to its destination.

Then the packets get reassembled into an email, web page, instant message, or

IP telephony call. The nice thing about the packets is that they don’t care what

media they travel through. They are agnostic. Copper wires of the telephone

network, fiber optic cables under the ocean, coaxial cable of cable companies, in

radio waves through the air from antennas, or from satellites, or even through the

power grid of the electrical system. All of these media — telephone, cable, radio,

and satellite — are competing to become the primary conduit of the Internet.

Given what we know about competition — how it encourages innovation in the

mad scramble to grab market share — this is nothing but good news for

consumers. In some ways each of the medias threaten the others and the result

is that we have Adam Smith’s “invisible hand” at work on bandwidth.

The origin of “packet switching” goes back to the “cold war” during the 1950’s.

American policy and technology thinkers were concerned about the possibility of

an attack that might wipe out American communications systems and negatively

impact the country’s ability to defend itself. The concept of breaking messages

into packets was devised to protect against communications loss. For example a

message from New York to San Francisco could be broken into multiple packets.

The packets then might take a path from New York to San Francisco but rather

than go directly they might go from New York to Kansas City to Dallas to San

Francisco. If that “route” became disabled because Kansas City got wiped out

the packets could be rerouted to flow from say New York to Chicago to Dallas to

San Francisco. Also, if some packets got lost in the process at least the whole

message would not be lost.

Adam Smith’s Invisible Hand

Dozens of players are already placing their bets and investing in the delivery

infrastructure and this will accelerate the role-out of bandwidth galore.

Telephone companies in many parts of the world have now mastered a

technology called digital subscriber line (DSL). It comes in about a dozen

different “flavors”: ADSL, XDSL, HDSL, etc. Most communities in America have a

small red brick building near the center of the town that has no windows in it. This

is the Central Office or CO. If you live within roughly two miles of a CO then the

telephone company can offer you this “digital subscriber line” that in effect

provides a local area network between you and the CO. It can operate at a speed

of up to 1.5 million bits per second. That is today. In the future DSL has the

potential to not only operate at tens of millions of bits per second but also to

reach beyond the two mile or so limit to a range of perhaps five miles or maybe

more. Even the speed offered by DSL today is more than fifty times faster than

the “twenty-eight-eight” (28.8 thousand bits per second which most people still

have). It is being rolled out in communities around the world. A significant

percentage of people live within two miles of a CO in many parts of the world. As

of year-end 2000, 100% of the population in Taiwan is in sufficient proximity to

have DSL service.

DSL enables broadband, a fancy word that means Fast. And once you have

fast, that means you can have video and when telephone companies can deliver

video that provides a threat to cable companies. Cable companies meanwhile

can also deliver fast Internet access through their cable system. Today the cable

companies primarily offer a “one way” system. They broadcast their content from

their “head end” through the cable infrastructure to your home. The “head ends”

can do much more than broadcast though. First of all the “head ends” are being

upgraded to make the cable two way so that Internet access is possible. The

“head ends” can also be connected to the PSTN (public switched telephone

network) and thereby they can deliver telephony over the cable. In fact by using

only a small percentage of the bandwidth available over the cable, they can offer

multiple lines of telephone service to a home or small business. How many lines

would you like one, two, six? With no noticeable degradation to your web access

speed it is possible to have crystal clear digital telephony. This, of course, is a

threat to telephone companies.

And then there are companies like Winstar, Terrabeam, Teligent and others who

are delivering high-speed Internet access through wireless and optical

technologies. A technology called Local Multipoint Distribution Service (LMDS)

can provide two-way Internet access at very high speed using radio waves.

Using LMDS, transmission speeds of several billion bits per second (gigabits) is

possible along line of sight distances of several miles. That means that a

wireless antenna in the parking lot of an apartment complex or a campus will be

able to deliver very high speed Internet access to thousands of users within a

radius of several miles.

Meanwhile there are satellite companies such as DirectPC, Tachyon and Gilat-

To-Home that are aggressively entering the market for high speed Internet

service. I first got Hughes PC Direct in March of 1995. It was what we call

asynchronous. That meant that it was very fast at downloading information from

the Internet but very slow in sending information back through the Internet. This

is ok for many things like “click-here-to-send-a-short-request” to download a

movie or a new software program. But if you want to have an interactive

videoconference with a colleague you need high speed in both directions and

satellite service was ineffective. Worse yet the early satellite Internet services

required that in addition to the satellite dish you still needed to have a “dial-up”

telephone connection for the outbound link. Things have come al long way

recently. Current satellite systems are still asynchronous (not the same speed in

each direction) but the slow speed is hundreds of thousands of bits per second.

This will be a threat to telephone companies, cable companies, and wireless

companies.

So who is the winner?

Many questions involving the Internet beg a binary yes/no answer. Who will be

the winner, cable or DSL? The answer is Yes. Will it be wired or wireless? The

answer is Yes. Ground based wireless or satellite? You guessed it, Yes. We are

at the very beginning and things are going to heat up. At the moment DSL and

cable modems have an edge. But telephone and cable companies are learning

how to quickly replicate the installation process with good customer satisfaction.

The speed that you get is somewhat a function of how fast the local rollout of

service is. If you are the first in your neighborhood to get a cable modem you will

enjoy a higher speed than DSL. As your neighbors join you the total bandwidth

available is shared. As the neighborhood gets more and more users the cable

company will need to upgrade the bulk capacity available to the neighborhood.

Telephone companies seem to be better prepared to rollout even levels of

service. Speaking of service the telephone companies are used to

responsiveness when you have a problem. At least compared to cable

companies. My experience has been that when I call the cable company with a

problem and have to schedule a service call I get asked, “will someone be home

from one to five in the afternoon a week from Tuesday?” Wireless and satellite

companies are even less mature in their service capability. On the other hand the

wireless companies can offer an un-tethered environment and satellite

companies have a significant advantage in the many rural communities where

DSL, cable modems and wireless services are unlikely to be available for quite

some time.

In summary we have Adam Smith’s invisible hand at work on bandwidth. The

battle is just about to heat up. This is a very good thing for consumers and for

businesses. And it is happening now. If you are lucky enough to live in an area

that offers more than one of the competing services you will likely see speeds go

up and cost go down. If you think of a “twenty-eight-eight” connection as a one

inch in diameter garden hose delivering a “stream” of content to your PC, a 1.5

million bits per second (megabit) DSL connection is like a pipe three feet in

diameter! Imagine what that will mean to the content you will be able to receive.

Full screen video for example. More on that later. So, when will broadband be

here? It is here now. Everyone doesn’t have it but each day more and more do.

There are many implications.

I was in the Holiday Inn in Beijing a couple of years ago. There was no jack to

plug into. Everything was “hard wired”. A maintenance man was nice enough to

come to my room with his tool bag (I used to carry my own). He opened up the

wall module, exposed the wires, and installed a temporary jack that I could plug

into. After many attempts I finally connected at 2,400 bits per second. It was so

sloooooow! But at least I could send and receive my email even if it took a very

long time to do so. (There was no way to effectively surf the web at such a slow

speed). It was such a good feeling to be connected from so far away. In this case

the speed didn’t really matter. It was the ability to send and receive my email that

made my day. And while we all complain that even “fifty-six K” is not enough, the

Sojourner rover sat on the planet Mars communicating with the Pathfinder robot

at just 2.4K!

From wired to wireless to optical

The first implication is that now that we have fast access at our home or small

business (large businesses can already have fast access) where will the next

bottleneck be? The current bottleneck is called the “last mile”. This is a term that

originated at telephone companies because your home is part of the “last mile”

from their infrastructure. As more and more people and businesses get DSL,

cable modems, high speed wireless, and satellite service some predict that the

bottleneck will move to the backbones, the arteries or “Super highways” or

“Autobahns” that connect all the various nodes and network access points of the

Internet. The backbones have to carry the aggregate traffic of all the consumer

and business traffic of the Internet.

Why do we call that stretch from the telephone company to our home the “last

mile”? It is a matter of perspective. Many companies think “inside out”. From

them to us. The Internet has transferred the power to us. Why shouldn’t it be the

“first mile”; from us to the Internet?

IBM, MCI, and the Merit System of Michigan built the first transcontinental transit

network for the Internet in 1988 under a contract from the National Science

Foundation. The NSFNet as it was called was able to interconnect the many

regional educational networks and create one large “Internet” in America. It had a

speed of 56,000 bits per second. Amazing that the entire backbone at that time

was only as fast as a single person’s average connection to the Internet is today.

A few years after that It was upgraded to “T1” which was a speed of

approximately one and a half million bits per second. A transoceanic link was

added under a technology grant from IBM. It was the first high-speed data

network to cross the ocean. A few years later It was upgraded to “T3” which is a

speed of 45.3 million bits per second. Subsequent to that major portions of the

backbone have been upgraded to 633 million bits per second and a non-profit

called the University Corporation for Advanced Internet Development (UCAID)

implemented a project called Internet2 which is an academic and research

backbone operating at a speed of 2.5 billion bits per second. That is just the

beginning.

What is enabling the dramatic increase in speed of the backbones is fiber optic

technology. Think of a glass fiber smaller than a human hair and imagine shining

a light through the fiber. Turn it on and you get a “1”. Turn it off and you get a “0”.

In the near term the limit of this will be 10 billion “ons” and “offs” (bits) per second

through a single fiber. That limit will soon be 40 billion bits per second. In addition

to this incredible speed through a fiber, a technology called Dense Wavelength

Division Multiplexing (DWDM) can enable more than one light to be passed

through a fiber at the same time. This is done by using multiple colors of light

called “windows” or Lambdas. Current fiber optic cables are utilizing 160

“windows” but work is underway to upgrade that to 320 “windows”. The state of

the art in research laboratories is currently approximately 1,000 windows and

some startup companies like Avanex are now talking about the possibility of

having 100,000 “windows” per fiber.

Lucent is currently building cables that contain nearly 1,000 fibers. The numbers

are staggering when you add it up. The aggregate capacity of a fiber optic cable

may be 40 billion bits per second per “window” times 100,000 “windows” times

1,000 fibers per cable. That comes out to 4 million terabits per second per cable!

There are hundreds of companies putting fiber in the street alongside water

pipes, in the ground alongside railroad tracks, and under the oceans. There are

already tens of millions of miles of fiber in place. New fiber optics companies like

Qwest, Level 3, Global Crossing, and Williams already have an aggregate

capacity that exceeds what AT&T, MCI, Sprint, and WorldCom combined

currently have in service.

An entire optical infrastructure is emerging causing the Internet to morph itself

from a wired world to an optical world. While the “last mile” is expanding from a

one inch garden hose to a 3 foot in diameter pipe, the backbones are moving

from six foot in diameter pipes to ones which are hundreds of feet in diameter.

Bill Alpert, in a December 2000 story in Barron’s called “Optical switches will be

the next big thing in data transmission” said “The optical Internet is a modern

wonder.” The backbones will not be the bottleneck.

Where does the bottleneck move to?

The bottleneck is going to move away from the “last mile” and away from the

backbones. So where does the bottleneck move to? Part of the bottleneck will

move to getting the bits from the backbone through the last mile to the end user

or business. Part of the bottleneck will be at the server. Servers are specialized

computers that deliver the web pages and video streams and music and e-

commerce applications to millions of users on the Internet through their

browsers. If you have moved to a cable modem or DSL from your former slower

speed Internet service you may not have actually noticed as dramatic an

increase in speed as you had hoped. This is partly because there are servers

that are too busy and don’t have the capacity to deliver more bits. Web sites are

going to need really, really powerful servers. This is a good problem to have for

companies like IBM, Sun, HP, Compaq and others. A lot of progress is being

made to customize the server hardware and software to enable them to serve

web pages more efficiently. (At times a contributing factor is that there may be

delays in the Internet topography between you and the server.)

The other that is going to change is that content will be closer than you think.

Content today is highly centralized in servers. Lets say that 1,000 people in a

large office building all go to cnn.com or yahoo!.com or any popular site today. In

this scenario those 1,000 people actually do go to those web sites and they all

get (download) the same homepage. A page that likely has not changed in the

past day or so. When you think about it, much of the content of the Internet

doesn’t change that often. So why isn’t that “static” content broadcasted from

satellites down into Internet service providers, who in turn move it out to servers

in the basements of large office buildings and to “set top servers” in our homes,

or perhaps even into those little green boxes on telephone poles that in the future

may contain smart disc drives? Already companies like Akamai, Sandpiper,

Inktomi, CachFlow and others are deploying “caches” for content. A cache is a

temporary storage area for content that is frequently accessed. The storage

areas are connected to PC’s that are placed in widely distributed locations at

Internet Service Provider locations. Thousands of them. So when you go to

retrieve a news story that is very much in demand you will likely be retrieving it

from a “cache” in a PC or server somewhere nearby. The content will be much

closer than we think. The result will be that we will receive it with much less

delay.

So what do we do with the speed?

So what’s the big deal with speed? Video. Video on the Internet today appears in

a tiny one-inch or so window. It is often grainy looking and appearing in fits and

starts. It is a novelty the first time you see video on the Internet but then it

becomes not particularly interesting to look at. When you get a million bits per

second bandwidth with a cable modem or DSL, things change. That same video

window becomes larger and much less jittery. When you get to two million or so

bits per second it will begin to look like television. What does it mean when we

get to have high-quality, jitter-free, full-screen video over the Internet?

First it introduces geo-independence. This in turn will have a big impact on

experts and people who use experts. Experts are people who live on airplanes,

traveling the world sharing their expertise. They go to where the problem is. With

geo-independence experts are wherever they are and the problems are wherever

they are. Video over the Internet will be what connects them. Wall size video

screens will make people appear very close. A doctor may be on that video wall

while you are at a local hospital. You get inside of a functional MRI machine and

the doctor, who is an expert in your particular condition, is 5,000 miles away but

on the video wall talking to you, and the doctor says, “please bend your knee”.

You bend your knee and the doctor sees what's happening in your brain! Geo-

independence.

Dr. William Magee is co-founder and chairman of Operation Smile

(http://www.operationsmile.org) in Norfolk, Virginia. Bill and a team of other

plastic surgeons make trips to under developed countries of the world to repair

cleft pallets of children. These incredibly deformed children are often ridiculed

and sometimes even hidden away from society. They have no life. No smiles.

Until Bill and the team arrive. Lives are changed. The impact is amazing.

Unfortunately, most of children who need the assistance are turned away. There

are not enough days, supplies, and surgeons to meet the needs. Bill told me that

one of the reasons that local plastic surgeons can not handle the needs is

training. Lack of modern text books. Lack of knowledge of the latest techniques.

Imagine if a doctor in Thailand could not only receive training from Bill over the

Internet but if Bill could remotely participate in a surgical procedure real time over

the Internet. It will happen and lives will be changed.

College professors will give lectures to students on different continents.

Engineering experts will “arrive” on the scene of complex situations via video

walls. Their time will be leveraged. How many additional situations could experts

handle if they didn’t have to spend so many hours on airplanes?

The next implication has to do with Expectations. Everyone will not have high

bandwidth immediately; it is going to roll out at different rates and paces in

different parts of the world. However, there already are millions who have it and

those who do expect to see very creative content. I remember back in the early

1980’s when color displays were first introduced. This was before the IBM PC.

Displays were used mostly in large companies attached to mainframe computers.

The screens were either green or gray and text appeared as either white or dark

green. There were no pictures or graphics. Just letters and numbers. Then new

displays were introduced which could show up to sixteen colors! Still no pictures

or graphics but you could see negative numbers in red for the first time. They

cost about 20% more than the monochrome displays and many people said,

“who needs it?” It took quite awhile for them to catch on. Can you imagine a

display on your PC not having color today? Of course not; and, soon you will not

be able to imagine a web site that doesn’t have a lot of full screen video. You will

expect to be able to say the word “Help” to a microphone embedded in your

keyboard or display and to have a live person appear full screen with a smile

saying, “Hi, how can I help you?”.

We will also expect to see very creative content. Not just more web pages with

bigger brighter banner advertisements on them. Video will be a norm but we will

also expect to see very high quality graphics. The displays on our PC’s today

typically have 480,000 pixels. Each pixel contains some combination of red,

green, and blue and collectively the pixels make up a “display” that looks like a

single picture or page of text or movie. In late 2000 IBM shipped for the first time

a high resolution computer display that has 200 pixels per inch and more than 9

million pixels in total on a 22-inch screen. The new display is as clear as an

original photograph and 4.5-times sharper than top-of-the-line high-definition

television screens and it will make the viewing of video and digital photos a

completely new kind of experience. It will also significantly reduce eyestrain and

the need for printing hard copies as we all often do.

Displays of this type will make it possible to replace conventional film X-rays.

Physicians will be able to view digitally photographed X-rays immediately on the

display. The X-ray images could also be sent online to specialists around the

world for instant feedback and counsel. Large printed satellite maps and

photographs will be replaced with photo-quality digital images, allowing

meteorologists to quickly interpret weather patterns and instantly share them with

colleagues around the world. Such applications as these will require bandwidth to

be able to deliver all the bits that will be needed to light up all those millions of

pixels on a nearly instant basis. So it is not speed for speed’s sake but rather

speed to enhance our Internet experience and enable us to interact with high

quality media. The Fast Internet represents the evolution of not a new medium

but the new medium. It presents a tremendous opportunity like nothing we've

seen in many decades, maybe ever. It will have a profound impact on our

business and personal lives.

Always on

The second characteristic of the Next Generation of the Internet is that it will be

Always On. Today, for most people, the Internet is not always on. When we are

ready to use the Internet we go to our PC. We “boot” it up if it is not already

running and then we startup a program called a “dialer” which is used to “log on”

to our Internet Service Provider who in turn establishes a connection for us to the

Internet.

The dialer is a program we have all come to love at times and hate at others.

When we click on the “connect” button the dialer places a call to the ISP. There is

a pause and then, unless we have selected the mute option, we hear this

cacophony of screeching, whirring, and then hissing sounds of our modem

“talking” to the ISP’s modem. Sometimes in a matter of fifteen seconds or so we

get some indication that the connection has been established. The modems,

screeching at each other, were music to our ears. We are now ready to get our

email, engage in some Instant Messaging, or surf the web. On other occasions

the process takes a minute or more. The connection is made and then in a

matter of seconds it disconnects and we start over again. Sometimes it doesn’t

connect on the first attempt at all. Sometimes it takes many attempts. Sometimes

we give up.

If you visit an Admiral’s Club or Crown Room at an airport you can go to the

“workstation” area where you will see businessmen and businesswomen dialing,

re-dialing and sometimes cursing. These are men and women who are

desperate to get connected. The quality of the phone lines from the Admiral’s

Club in San Francisco used to be so bad that I have spent entire layover periods

trying to connect and leaving unfulfilled. Some “road warriors” have mastered the

skill of getting connected. They carry toolkits, adaptors, cables, power converters

–and a lot of experience-- to hook up their PC to electrical power and a telephone

jack. They have to remove a plastic cover from the wall and pull out the wires

and then use “alligator clips” to connect to their PC modem.

When visiting a customer office or conference center I have often looked high

and low for a place to connect my ThinkPad to get my email. Over time I have

learned that the simplest way is to just say to someone, “excuse me, could I

borrow your fax machine?” You can be certain that somewhere in nearly every

building on earth there is a fax machine. Fax machines are all the same in that

they have RJ-11 jacks. RJ-11 is short for “Registered jack”. RJ-11 is a particular

standard for a six-conductor plastic jack that typically contains four wires (two for

each phone line). The RJ-11 jack is the most common telephone jack in use

worldwide. Typically a wire from the wall plugs into a jack on the fax machine that

is labeled “line”. Almost always the fax machine has an additional jack that is

vacant. It is labeled “phone”. That is where you plug your PC modem. Then you

just have to find out if it is necessary to dial a “9” to get an outside line and you

are on your way. Ready to get connected and then stand there by the fax

machine like a lurker. It is embarrassing when people come by to fax something

or to pick up an urgent incoming fax they were expecting and there you are, a

complete stranger, hoarding their fax machine. “I’ll be finished in a minute”, you

say hoping that your email program isn’t downloading a huge multimedia file that

will take the next hour. Sometimes it is anything but easy to get connected to the

Internet.

Although we all look forward to more Internet speed, being Always On will soon

be perceived as being even more valuable and important. If you are lucky

enough to be using a cable modem or DSL or even better yet, being a student at

a college or university having an always-on local area network in the dormitory,

you know what I mean. You are Always On. You don’t “log on”. You just “are

on”. Soon the concept of logging on will be as old fashioned as “ring me up an

operator” to make a telephone call like people did in the 1950s’. You don’t “log

on” to the power grid so you can use your toaster. You won’t “log on” to an ISP in

order to use the Internet. When we are Always On things change. It is a different

experience than what most people face today.

By being Always On, not only does the frustration go away but, some very subtle

yet profound things happen. When you don’t have to log on -- you just are on --

your propensities to do things on the Internet change dramatically. If you are

leaving the house in the morning to fly to a city 1,000 miles or so away you don’t

go to your PC, boot up Windows, dial your ISP to get connected, start a browser

and surf to a weather site to check the weather at your destination. In fact the

overhead associated with getting connected is so high that people don’t normally

connect to the Net unless they are planning to make a session of it, perhaps a

half hour at a minimum so you can do other things on line too. The overhead to

connect for a simple weather check is just not worth it. You wait until you get in

the car and hope you hear a forecast for your destination or get a newspaper.

If you are Always On, on the other hand, you just go over to your PC and touch

the mouse. Your energy saving monitor springs to life and you click on the

weather icon. In fact your proclivity to go check the weather, the news, the

sports, the stocks, to shop, to learn, to be entertained, becomes quite different

than today because now you are Always On. We begin to think of the Internet not

as a new medium but as the new medium. Like electricity it is just there when

you need it. And increasingly, it will be.

The other change will be that when we are always on, we will begin to think of

the Internet differently. It is easy to think of the Internet and the Web as the same

thing. For millions of people they are in fact synonymous. The browser is their

sole Internet application. They use it for surfing web sites, email, banking,

shopping, and participating in discussion groups. All with their browser. Actually,

the Internet and the web are two different things. The Internet is a global

communications network. It delivers packets of zeroes and ones from origin to

destination. The web is an application that utilizes the Internet.

The web was born in Europe at CERN, which is the European Organization for

Nuclear Research based in Geneva, Switzerland. Thousands of scientists and

researchers there are engaged in advanced work in physics; specifically the area

of particle research. In the late 1980’s a systems programmer by the name of

Tim Berners-Lee was working at CERN on software for real time data acquisition

from physics experiments. That was his day job. At the same time he had a

skunk works project going on to find a way to cope with the huge growth of

documents from the many research projects. There was great interest in CERN’s

work not only by the thousands of staff and researchers in Geneva but also by

colleagues all over the world. The problem was that everyone had different kinds

of computers; Unix, Apple, IBM, DOS, Windows, Linux, and many others. A

highly centralized hierarchical approach was not meeting the needs of those who

wanted to get connected with all the research that was going on. It would have

been nice to find some way to make all the computers compatible but Tim had a

much better idea; make the data compatible.

Two basic ideas make it work. First is a “protocol” called HTTP or hypertext

transfer protocol. HTTP defines a series of exchanges between a browser and a

server. Using HTTP the browser enables you to request a page of information

from the server. The protocol specifies the address of a server somewhere on

the Internet and a document name. The request goes to www.amazon.com, for

example, and you receive the homepage from their server downloaded to your

PC. The second key part of the web is HTML or hypertext markup language.

HTML utilizes “tags” that define how the content of a document is formatted. For

example, a <b> tag means that the text associated with it should be highlighted

in Bold. Other tags are used to underline, center or enlarge text. The tags

themselves are not visible but they control what a web page looks like. Most

importantly there are tags that specify that certain text is a hyperlink; i.e. a link to

another document in another server. Click on it and the HTTP protocol results in

you “surfing” to the desired page. This all works so smoothly and intuitively that in

a remarkably short period of time more than a hundred million people had

mastered it. Hence, the result that many people think the Internet is the web and

the web is the Internet.

Using a browser to visit web sites, however, is just one of the things that the

Internet makes possible. In addition to delivering web pages the Internet can

deliver other things. For example, a colleague of mine, Andy Stanford-Clark,

purchased roughly $300 of weather monitoring equipment at Radio Shack and

installed it on the roof of his house on the Isle of Wight, which is off the coast of

England. The weather equipment monitors temperature, humidity, barometric

pressure and trend, rainfall, wind direction, and wind speed. The data is sent to

the PC in his house, which in turn delivers it to a server at another location. Andy

(or his friends and family) can utilize a simple application program on the desktop

of his PC called the WeatherBox and can see what the weather is doing at his

house over the Internet from wherever in the world he happens to be. The data is

delivered directly to the WeatherBox not to a browser.

The WeatherBox is an example of a class of applications called SCADA

(supervisory control and data acquisition). SCADA is used for delivering real time

data for monitoring a city water supply, an oil pipeline, or a plant floor automation

system in a factory. With an Always On Internet, data from these applications

and others can be delivered to remote engineers and others who have a need for

the information. No longer will it be necessary for a person to be at the site in

order to monitor what is going on at the site. A practical application of the

technology is Automated Meter Reading. This will mean that no longer will

people have to come to read your electricity/gas/water meter. They will be able to

query it remotely across your Always On home connection!

And the applications are not limited to the industrial arena. Imagine that you are

on the train commuting to work. All of a sudden you realize, oh gee, did I close

the garage door? Did I remember to put down the blinds in the sunroom? I was

supposed to put down the blinds so that the sun doesn’t bleach the fabric of our

furniture. You grab your mobile phone which has a built in Internet capability.

Since your home is Always On you are able to connect to a server on the home

LAN. An application on the server sends status information to your phone that

confirms what you suspected; the blinds are still up. You move the cursor on the

display of the phone to “blinds down” and click. Down go the blinds. While you

are at it you confirm that the garage doors are down. Later that day while en

route to your weekend retreat you connect to its LAN and turn on the heat so

things will be cozy when you arrive. Always on.

My father has a pacemaker installed in his chest. It is a great technology that

regulates the rhythm of his heart. Periodically, my mother helps him place some

sensors on his chest, which are connected to electrical leads, which in turn

connect to a modem. They dial the hospital and the modem transfers data about

how Dad’s pacemaker is working. If there is an irregularity of some kind, a visit

to the hospital may be needed. I look forward to the day when Dad’s pacemaker

will emit an RF signal that can be picked up by a device in the house, which in

turn is connected to the home Local Area Network. If there is any irregularity

going on a message gets sent to my brother and me and to the doctor. No need

to wait for the next scheduled test. Real time. Always on.

Most Internet access today is via telephone companies. The telephone was not

designed for the usage requirements of the Internet but the telephone companies

have adapted well. Generally speaking the telephone network is extremely

reliable in most parts of the world. However, much of the wired infrastructure of

the world has been in place for a very long time. In some hotels you get

connected but then the bits have to go from your room to the network closet of

the hotel and then under the streets via some ancient wiring that has been in

place for decades. Some hotel telephone systems can only accommodate a

fraction of their guests being connected to the Internet simultaneously. The result

is often slow connections, broken connections, and sometimes no connection.

Many parts of the wired world are just not prepared to handle the Always On

environment that more and more people are coming to expect.

A new standard introduced by the Institute for Electric and Electronic Engineers

(IEEE) called 802.11b is gaining a lot of momentum and is about to change the

game for Always On. 802.11b utilizes a PCMCIA card that you plug into the side

or back of your notebook computer. A tiny antenna on the end of the card can

then communicate with another antenna that may be in the ceiling or in a closet.

The antennas can communicate with each other within a range of roughly three

hundred feet. For most homes this will cover the entire home plus the patio!

Although the priority for this new wireless capability has been notebook

computers there are now devices being introduced to outfit desktop PC’s as well.

This is going to become extraordinarily popular for use in homes where putting

Local Area Network cable in the walls is often difficult and expensive. The

biggest impact of 802.11b is for the “road warriors”. Having a Notebook computer

with an 802.11b wireless capability means being able to connect to the Internet

while in airports, train stations, hotels, hospitals, building lobbies, and other

public places. Starbucks coffee is starting to install this wireless technology in all

of their locations. Your next coffee order may not be a “to-go” order, especially

when you can relax with your coffee and be connected to the Internet.

No longer will people have to look for the fax machine to get connected.

Companies such as Wayport and MobileStar are rolling out services now. Not

only does this new wireless standard allow you to connect your PC to the Internet

at a speed of up to eleven million bits per second but also does so with no wires.

American Airlines has installed the MobileStar service in their Admirals Club

lounges. For a modest fee you can have high-speed access, no hassles with

dialing, and sit anywhere in the lounge that you want. The multi-megabit speed is

between your Notebook and the “gateway” in the hotel or airport lounge. The

actual speed you experience will depend on how many users you are sharing

with and the speed of the connection between the hotel or lounge and their

Internet Service Provider. But it is almost always far better than the old way of

using a dial-up connection. It also eliminates the wires and provides encryption

so that another user or hacker is not able to eavesdrop on your activity. A new

version of the wireless technology, called 802.11a, will be launched in 2001 that

will be approximately 1,000 times faster than the 56K speed that comes with

PC’s today. This will put wireless in clear contention to be an alternative to the

high speed networking cables that are being put into virtually all new office

buildings and upscale new homes.

But then there is the power receptacle. Battery life is going to improve for our

Notebook computers and cell phones, but until it does we still need to charge our

batteries when we stop by the airport lounge between flights. It is great that we

can connect to the Internet in a simple wireless manner and enjoy the high speed

but where is the power receptacle to plug in and charge the battery? Sometimes I

think that hotel and airline executives don’t travel. I have been in lounges in the

workstation area, the place for PC users, which have no power receptacles.

Some hotels have gotten more with the program and now have an RJ-11 and a

power receptacle right on the desk in the room. That is progress but now that I

have my PC plugged in where do I plug my cell phone charger?

There is another wireless technology, called Bluetooth™, which will also have a

big impact and potentially revolutionize our personal connectivity beyond just our

PC and provide wireless operation for virtually any kind of device. Bluetooth is a

technical specification for small form factor, low-cost communication between

mobile computers, mobile phones, telephone headsets and other portable

handheld devices, plus connectivity to the Internet, all using radio waves. The

initial version of Bluetooth will have a range of operation is approximately 30 feet

but a later version will take it to 300 feet. Bluetooth is being driven by leaders in

the telecommunications, computing, and network industries, including 3Com,

Ericsson, IBM, Intel, Lucent, Microsoft, Motorola, Nokia, Toshiba, and over 2000

associate and adopter companies.

Bluetooth will eventually help us all perform everyday tasks in extraordinary ways

using wireless technology. You will be able to walk into a room where your PC is

and your Palm Pilot or other PDA in your pocket will detect the PC and then

automatically unlock the PC, log you in with your password, decrypt your files,

open up your applications, and automatically synchronize data between the PC

and the PDA. When you step away from the PC it will automatically be secured,

preventing unauthorized access.

Imagine that it is Monday morning at home and you are headed out to the airport

to attend an important customer meeting. You come down to breakfast in the

kitchen. While eating your cereal, you use your "InfoPad", an 8.5” x 11” paper-

sized wireless information appliance, to log on to the Internet (using Bluetooth to

dial out through the PC in your basement home office). You check on your flight

schedule and the weather at the destination city, so you know if you have to bring

a jacket or a raincoat. While online you quickly check some stock prices and put

in an order to buy one that you have been following.

Your mobile phone, which utilizes Bluetooth wireless technology, will enable you

to purchase gas and coffee at the gas station. While the gas is pumping, a

Bluetooth server in the pump sends ads to your mobile phone and allows you to

browse gifts from the gas vendor's Intranet. Your mobile phone may also allow

you to control various devices in your home environment such as turning lamps

or appliances on and off. Some research analysts claim the Bluetooth Headset

will become the most popular product that utilizes Bluetooth wireless technology.

The Bluetooth Headset will be connected to a compatible mobile phone and then

the user can either receive or make phone calls. Voice dialing will also possible.

Another idea that is likely to become quite popular with Bluetooth will be to

control home entertainment units such as CD-players, MP3 players, televisions,

and home theatre systems. Instead of today’s remote control units we will be

using our Palm Pilot or Handspring PDA. Having a single interface will be quite

desirable. We will also be able to download programs from the Internet that will

enable us to personalize our PDA to handle new devices and also to tailor the

way in which we want our entertainment to work. At 6 PM turn on the news from

a satellite station and then at 8 PM capture a movie and store it on the home

music and video server in the basement. At the touch of a button on the PDA

bring the news to the kitchen on a wall mounted flat panel monitor. With another

touch of a button the monitor becomes a PC monitor and the PDA becomes our

keyboard and mouse for surfing the web.

Being Always On will change our lives. It will enable us to have access to

information when we need it not just when we happen to be at a place that is

“wired”. It will allow us to receive real time data from a variety of sources and

even use the Internet more like an intercom to reach colleagues or family

members on a timely basis. Even though we can be Always On that doesn’t

mean we will have to be Always On all the time; just when we want to be.

Everywhere

The third characteristic of the NGi is that the Internet is going to be everywhere.

Today the Internet is not everywhere. The Internet is where our PC is. If you are

out for a ride in the car, walking down the street, visiting some friends, or

wherever, and you get the idea that you want to do something simple on the

Internet like check the weather or a sports score, your first step is to go to where

your PC is. It would be great if the Internet was everywhere when we need it. In

fact we are already seeing dramatic changes along these lines – a huge shift is

underway.

The evolution of the universal browser has had a huge impact on making Internet

content available Everywhere. Before Mosaic, the first widely used browser;

there was no expectation of a uniform interface and way to interact. Today we

take it for granted that we can walk up to any computer connected to the Internet

and expect to find a browser there. Not only that but we automatically know how

to use it! The world went from zero to tens of millions of users in a very short

time. In effect, the largest focus group ever validated that “browsing” was a

fundamental human trait. No training required.

The vast majority of web pages are viewed through a browser on a PC. Two

years from now it may be less than 50%. Might be a lot less. Is the PC going

away? No. It is not a decline in PC’s causing this drop in the percentage of web

accesses. In fact PC’s are growing. I cannot imagine giving up my PC. However,

the era of the PC as the center of innovation and activity on the Internet is over. It

has shifted from personal computing to pervasive computing. Pervasive

computing, as it’s name implies, refers to computing devices which are

Everywhere. This would include personal digital assistants (PDA’s), mobile

phones, pagers, public kiosks, and a new generation of devices we haven’t heard

of yet. A vast assortment of devices that fit our every need or whim and they will

all be connected to the Internet.

When people go to weather.com to check out the conditions for the weekend the

vast majority go to their PC and view the weather forecast through their browser.

But some people may want to see that same information using an Internet

connected television. For those people their television is a television 85% of the

time, but 15% of the time the television serves as their browser. Other people

would like to see that same weather.com information on their pager. According to

Richard Shim at Ziff-Davis, “The once-ubiquitous pager is fast being squeezed

out of the market by ever-cheaper cell phones and more-capable handheld

devices”. True enough, but many people swear by their pager. They wear it on

their belt morning, noon, and night. Pager users will expect to be able to view the

weather information on their pager screen. They won’t need to see the different

sun and cloud icons, the banner advertisements, or the various graphic “trim”

from the web page. They primarily want to know if it is going to rain and what the

temperature is or is going to be. Transcoding technology – see below -- will be

utilized to look at a page, figure out what the real content is, what makes sense,

what’s important on this page and to deliver that particular content in a clever

compact way to for the small screen size of the pager.

Internet Transcoding for Universal Access

More and more pervasive devices, such as personal digital assistants (PDAs),

hand-held computers, smart phones, TV browsers, wearable computers, and

other mobile devices are gaining access to the Internet and other multimedia-rich

information sources. However, the capabilities of these devices to receive,

process, store and display Internet content vary widely. Given the large variety of

devices that people will be using, it will be difficult for Internet content publishers

to tailor the content to individual devices.

Enabling universal access of multimedia content has become increasingly

important. Universal access describes the mechanism for adapting multimedia

content to the constraints of the client devices. As an example, a smart phone

can access a text document through the use of text-to-speech synthesis.

To enable universal access in the coming age of pervasive computing, IBM has

developed a system that tailors the content of web pages for pervasive

computing devices. This tailoring process is called transcoding. The transcoding

system adapts video, images, audio and text to the individual pervasive devices

using a framework that allows the content to be summarized, translated and

converted, on the fly. It isn’t perfect by any means but until the world’s content

developers produce device independent content it is a often a good alternative.

Other people will choose to get their weather.com page on their wireless

personal digital assistant. For many people, perhaps for quite a few million

people, the PDA will be their only computer. For them it has everything they

could want. PDA’s such as the Palm Pilot, Handspring Visor and the RIM

BlackBerry are gaining capability and popularity. Already they are available with

a color display, more than enough capacity to store your address book, calendar,

to do list, memo pad, a portfolio of useful software applications, and of course a

wireless connection to the Internet. What more could you want? For millions,

nothing. For others, plenty. I love my IBM WorkPad PDA but I still want my

ThinkPad and desktop PC.

And yet millions of other people are beginning to prefer the cell phone (mobile

phone) as their web access device. Although the growth is significant in America

it is not as dramatic as in other parts of the world. People in Europe are using

their Internet enabled mobile phones on trains, checking the weather and also

paying their bills, trading stocks, and shopping. We will be hearing a lot about

WAP phones. This refers to the wireless application protocol, which is catching

on strongly in Europe. WAP includes a wireless markup language (WML), which

is well suited for building Internet applications for use on mobile telephones.

Handelsbanken, one of the largest banks in Sweden, is working with IBM to use

WAP to enable its mainframe banking applications to become available on their

customers cell phones.

The popularity of cell phones in Europe is in part due to the fact that there is a

single standard called GSM. During the early 1980s, cellular telephone systems

began to become popular in Scandinavia, the United Kingdom, France and

Germany. Unfortunately, each country developed its own system and none of

them were compatible. People could not use their phones across national

boundaries at a time when Europe was beginning to unify. A related problem was

that each country’s system was limited in scale and therefore expensive. In 1982

the Conference of European Posts and Telegraphs (CEPT) formed a study group

called the Groupe Spécial Mobile (GSM) to recommend a system that could

provide attractive cost and quality and also support international roaming. By

1993 there were 36 GSM networks in 22 countries and it has since spread to

hundreds of networks in over a hundred countries around the world. The

acronym GSM now stands for Global System for Mobile communications.

Deutsche Telekom acquired an American GSM company called Voicestream in

2000 further building momentum toward enabling a person to buy one cell phone

and have one cell phone number that can work anywhere in the world.

Profound things are likely to happen with the use of mobile phones in Europe.

The GSM standard used throughout Europe includes a computer chip called the

Subscriber Identity Module (SIM). The SIM chip is about half the size of a

postage stamp and it fits inside the phone. If you take your SIM chip out of the

phone and put it into another phone you can then use that phone because the

chip contains information about your identity and even your phone number list.

Access to the chip (and operation of the phone) is password protected. I am sure

it was not planned back when GSM was first devised but by having this

password-protected chip it becomes feasible to put a digital ID in it for use in e-

commerce applications. This opens up a lot of interesting possibilities.

For example at some point you may be able to walk up to a vending machine,

grab your cell phone and press a button that prompts you for your name. You say

“this is John” and the phone recognizes that it is you because your voiceprint is

stored in the chip. You then press another button and the vending machine gives

you a soda with the charge being sent to your credit card or bank account.

Another exciting possibility is to walk into a hotel and dial a number that is on the

marquis. You say “this is John” and you get a reply that says, “Room number

1045 is ready for you”. You go to the tenth floor and point your infrared enabled

phone at the door lock. A light flashes. You say to your phone “this is John” and

the door unlocks.

Meanwhile the idea of Everywhere in Japan is taking an additional approach and

the result is explosive. In early 2000 the Asian edition of BusinessWeek ran a

cover story called DoCoMo. It refers to the subsidiary of NTT, Japan’s former

telephone monopoly. Since the company was partly spun off from NTT in 1992,

DoCoMo has become the world's most valuable cell-phone company -- with a

market value of over $300 billion as of early 2000. DoCoMo is the largest single-

country cell-phone operator in the world, with more than 25 million Japanese

subscribers.

According to BusinessWeek, “There are a few things a Japanese teenage girl

doesn't leave home without: her six-inch platform shoes, some touch-up toner for

her hair color of the day, and her i-mode phone. Teenagers in Japan are sending

black and white pictures of themselves back and forth to each other using their I-

mode Internet phones. The pictures are stored on servers at DoCoMo. There are

also thousands of web sites that have custom content to fit nicely on the I-mode’s

small display.

When the next generation of wireless Internet service, called 3G, arrives for cell

phones over the next few years the teenagers will be playing music and watching

video on their phones. Many DoCoMo users probably don’t own a PC. For them

the phone has become the way they get the Internet Everywhere. We may find

the DoCoMo phenomenon in America soon. In late 2000 an alliance was struck

between NTT DoCoMo and AT&T Wireless whereby DoCoMo has taken a

sixteen percent equity stake in the AT&T Wireless tracking stock. The partners

believe that the alliance will facilitate the rapid development of next-generation

mobile communications system and related mobile services in the U.S. market.

DoCoMo has set up an advisory board of top American thought leaders to get

advice on how to best integrate DoCoMo into the American market. The impact

could be significant. In May of 2000 Japan became the first country in the world

where more than half of the web page accesses were not from a PC browser.

The application possibilities are endless. News, weather, sports, stocks and

email are the obvious ones. Transaction oriented applications will ultimately

prove more useful however. Have you ever risked your life speeding to an airport

to catch a flight only to find out when you arrive exhausted at the gate that the

flight has been delayed by an hour? Worse yet, it is on time but had a last minute

gate change and the new gate is a mile away! Using a mobile phone to check the

very latest status, or better yet, having your phone ring with a message about the

schedule or gate change is a valuable service.

Location based services are already emerging and they will get very

sophisticated. Suppose you are walking down the street in Winchester, England

at 4 PM in the afternoon. Your phone vibrates or rings and you observe that a

message has arrived for you. The message says, “Please stop at the King James

Pub for an early bird special. Corner of Chestnut and Main. Less than two

blocks.” An application service provider has worked with the wireless provider

and various merchants to make offerings like this possible. The service, of

course, knows what time it is, and based on either a Global Positioning System

chip in your phone or triangulation to your phone from nearby cellular towers, it is

able to determine where you are. Anyone within so many blocks during a certain

timeframe will receive the special offer.

The good news is that mobile phones are becoming ubiquitous and using them

for Internet access, while still nascent, is beginning to take off. Service providers

are moving from just putting the same content that is on a web page on the

wireless device, to more sophisticated approaches that will reduce the size of

messages or email by more than half through the use of clever abbreviations.

They are also customizing tailored to make them more modular so that screen

menus can be based specifically on the nature of the applications. The bad news

is that there are multiple cell phone standards around the world and Internet

standards are not being consistently used for Internet applications on cell

phones. WAP phones are being deployed in Europe. In Japan DoCoMo is using

a different approach and the American market is taking yet a different approach.

Actually, in America there are multiple standards and multiple Internet application

approaches. In total, things could be described as a mess but there is hope on

the horizon. The World Wide Web Consortium (W3C) at MIT has recommended

a new standard called xHTML. It is device independent. That means it will be

possible to create Internet applications and publish content in such a way that

deployment can be on a PC or a cell phone or a PDA or other devices.

As Internet standards become integral to cell phones we will see deeper

integration of the cell phone into all forms of Internet communication. One

example is the integration of the cell phone, corporate directories, and Instant

Messaging. IBM has made its entire employee directory accessible via cell

phones over the Internet. An employee can login in to a web site using any cell

phone that has a micro-browser. Many cell phones now have these and soon

most will. The employee enters a few characters of the person’s name he or she

is looking for and the person’s phone number appears on the phone display. The

number can then be called with the touch of a button. In addition, if (and only if)

the person is currently connected to the company intranet, the employee doing

the search will see an additional choice on the phone display. That choice says

IM, which means instant messaging. If that choice is made another menu

appears on the phone display giving the employee the choice to send an instant

message that says “Call me ASAP” or “Call me in 5 minutes” or “I’ll be there in

10minutes”, etc. At the touch of the button the instant message is sent to the PC

desktop of the person. The person can then send a reply from the PC and it will

appear on the phone display of the “caller”. On many occasions it is a waste of

time to call a person. They are most likely on the phone or out or just busy. But, if

they are connected and you know they are connected and have the ability to

send them a quick message from your cell phone it opens up a whole new

method of communication.

And then there’s a whole new range of devices. Internet radio receivers are

emerging that plug into a high speed Internet connection. The tuning knob won’t

be limited to radio stations within 30 or 40 miles like “normal” radios. More than

5,000 radio stations already broadcast over the Net. The Netpliance i-opener is a

non-PC device that offers one-button Web access and e-mail. The Handspring

Visor uses a technology platform called Springboard that allows a myriad of

devices to be plugged into the PDA-like device and change what it does. It can

be a plain PDA like the Palm Pilot or it can turn into a cell phone, a TV remote,

camera or virtually anything. The list of net appliances or Internet gadgets goes

on and on.

AOL in your kitchen?

Online services giant AOL is partnering with PC maker Gateway on a family of

Internet appliances -- including a wireless keyboard with flat-panel monitor that

can be mounted under a kitchen cupboard like a microwave. The PC blends into

the environment and becomes an “appliance”; download a recipe, check on

inventories of food and supplies, or check food.com to see some cooking in

action.

Becoming mainstream?

Some people call them Internet appliances; some call them wireless gadgets.

Whatever you all them they are small, inexpensive, lightweight, instant-on

devices that connect to the Internet. It is still very early in the evolution of them

and there are many variations on the theme. The early examples are a bit

primitive and awkward to use but they will get better and better as consumers

vote in the marketplace with their dollars. According to IDC Corporation 18.5

million Internet appliances will ship in the U.S. by 2001 compared to 15.7 home

PCs. The numbers are expected to continue very rapid growth. Sega, Nintendo

and Sony are adding modems, processors and memory chips to their game

systems. Pervasive computing. Everywhere.

There are many implications to the onslaught of these many devices. Some

people believe that there is going to be one device that will do everything; PDA,

cell phone, pager, music player, global positioning system, and more. I don’t

believe it for one second. People are all different. Sure, in theory one device

could do everything but people will want to optimize in different ways. Some

people want the phone capability to be optimal. Others want the PDA to be

optimal. Some people like a tiny keyboard and light weight. Other people will opt

for more weigh but a more significant keyboard. And so on. The common

element of all the devices is that they will all have either wired or wireless Internet

connectivity and therefore mean that for each of us the Internet will in fact be

Everywhere.

One additional characteristic about the many devices is that they offer the hope

of making Internet connectivity much simpler. If you want to shut down your PC

for the day, you have to go to the “start” button and select “shut down” but you

have to be careful that you have first stopped all the applications you may have

been using. Sometimes you get a message that says something like, “Do you

really want to shut down?” At other times you may get an irreverent message that

says something like, “Halt, you failed to properly shut down!” The implication is

that you are an idiot. With a mobile phone or PDA, when you want to “shut

down”, you push the “off” button and you have completed the task. Turning things

on presents an even bigger contrast. Consumer devices will increasingly come

from consumer companies rather than computer or telecommunications

companies and the result will be that they will be simpler to use.

Many people will have multiple devices, depending on who they are and where

they are and when they are ready to do certain things. However, there are many

people in the world who don’t have access to a personal device no matter how

small or inexpensive they may be. In some cases it may be people who can’t

afford a device and in other cases it will be people who just don’t want a device.

No PC. No PDA. No cell phone.

Enter the public Internet kiosk. We are beginning to see these at airports. Public

kiosks where you can get your email, check on your stocks, or buy something.

The compelling low cost of communications will cause institutions of all kinds to

drive their transactions to the Internet. The United States Social Security

Administration requires a person to show a hardship case for why they can’t

afford to have a bank account where the SSA can deposit their monthly payment

electronically. This approach will eventually spread to the Internet. The kiosk will

be the way in which many people will gain access to the transactions; ordering

something or paying a bill, doing some quick research, checking the status of a

bank account or an insurance policy, or getting directions. When I was growing

up, I remember going out to a vending machine to get a quart of milk. Some

people will similarly go out to an Internet kiosk to run an “errand”. The kiosk will

address, in part, the question of the digital divide. They will be ubiquitous; on the

street corner, in the jungle, churches, schools, government buildings, and on the

plant floor. Manufacturing employees will be able to take a “web break” instead

of a smoke break. The kiosks will play a key role in enabling the Internet to be

Everywhere.

The large number of devices connecting to the Internet will place a lot of strain on

the infrastructure. Today’s Internet is not prepared to handle the billions of

devices that will be connected over the next few years. The capacity has been

steadily growing and the advent of pervasive optical fiber will likely meet the

demand. However, we will soon run out of addresses for all the devices. When

you connect to the Internet you are assigned a temporary Internet Protocol (IP)

address. The Internet Protocol is the basic building block on which the Internet is

built. The current version of the IP, called IP version 4, uses a four part address

for each device; 64.252.14.121 for example. Each part of the address can be

between 0 and 256. 256 times 256 times 256 times yields more than 4 billion

globally unique addresses. Sounds like a lot, but in practice, the number is

considerably smaller because of the inefficient way in which the addresses are

allocated. Even at four billion it is not enough. Cell phones alone are projected to

in the billions. IPv4 has lasted twenty years but it is time to move on.

A new version of the IP standard has been approved called IPv6 or IP “Next

generation”. (No, there was never a version 5 – lots of engineers and

committees. It is a long story.) IPv6 has 2 to the 128th power addresses. That

means

340,282,366,920,938,463,463,374,607,431,768,211,456

different IP addresses can be assigned. Based on a world population of six

billion, that means there would be more than

50,000,000,000,000,000,000,000,000,000

addresses per person! If you look at it by land mass it would be an average of

slightly more than

200,000,000,000,000,000,000

addresses per square centimeter of the planet!

That should be enough!

IPv6 includes other benefits and simplifies end-to-end security. This will become

very important for conducting e-commerce transactions via our many different

devices. The initial deployment of IPv6 will take place in specialized markets

such as in third generation wireless deployments in Europe and Asia during the

next 2-3 years. Once IPv6 gains a foothold in new markets, pressure to upgrade

other systems will begin to build. The transition to IPv6 will take many years,

with a period of coexistence between IPv4 and IPv6 lasting a decade or longer.

Natural

The Internet needs to become more natural. Arguably it is not really that natural

today. In fact, it is almost a contrived activity; you have to really want to be on the

Net. As we move forward from a couple of hundred million people to a couple of

billion people on the Net this has to change. One ingredient to things becoming

more natural is instant messaging. Like so many things teenagers provide some

clues to what things are going to be like. They get home from school, they get off

the bus, they dash into the house to the PC, and they get on the Internet. Unlike

a few years ago when using the browser was a big thing, they now focus on

using instant messaging programs such as AOL instant messenger, ICQ, or

Yahoo. Instead of surfing the web they send instant messages to their buddies –

many of them the same ones with whom they were riding on the bus! To them

this is just a natural way to communicate.

It isn’t just for kids anymore

Instant messaging is much more than meets the eye and it is not a social

phenomenon limited to kids. There are bigger things afoot here. Instant

messaging is becoming the “back channel” in corporations around the world. In

late 1997 a group of software engineers at IBM’s Internet Technology Laboratory

in Southbury, Connecticut met with Ehud Shapiro to discuss instant messaging.

Udi is a member of the Faculty of Mathematics and Computer Science at The

Weizmann Institute of Science but at the time he was on leave of absence and

had just formed a company called Ubique. Ubique had developed a technology

called Virtual Places that enabled a user connected to the Internet to create a list

of their “buddies”. The program utilized a technology that could sense the

“presence” of another user. This feature became known as “awareness”. If any of

their “buddies” were also connected to the Internet then his or her name would

be highlighted in bold. By clicking on that name the user could then send an

“instant message” to their “buddy”. The program became known as VP Buddy.

The IBM engineers asked Udi for a copy of the software in order to experiment

with it in a corporate environment and he happily complied. At first VP Buddy was

a novelty among just a few of the engineers and myself. It rapidly evolved from

being “cool” to becoming a useful tool to becoming a way of life. It became the

“back channel” for communications.

I first realized how profound it was when I was in a hotel room somewhere

working on my email. I was replicating email from the company server and while

that was happening I was browsing some web sites reading news. I was also

connected to VP Buddy. When you installed VP Buddy it automatically became

part of your PC. All of a sudden a message, an instant message, popped up on

my PC screen. It was from Ronda, my assistant. Someone had called the office

with an important matter and she wasn’t sure what to tell the person so she

thought she would try VP Buddy to reach me. I answered her question and went

back to my email and news. I knew we were on to something big and important.

If you were connected you could be reached and reach others who were

connected. It didn’t matter if you were at home, at the office, in a hotel with only a

single phone line, at a customer’s office, an airline lounge, or even on a train or

plane with a wireless connection.

Email is great. We live and die by it. Some days we can’t live without it. Other

days we would rather die than open that inbox! It isn’t going to go away but it

needs to be supplemented. Email is asynchronous. You send an email to a

person to ask them a question. They are traveling and don’t get the email for a

day or two. They answer you and meanwhile you are traveling for a day or two.

By the time you get the answer the question has lost its relevance. In many

cases the question you have is a simple one. You need to know right now. With

instant messaging, you take a look at your buddy list to see if a colleague who

likely has the answer is online. If they are you send them a quick instant

message. They answer you and the communication is over. You are finished.

You have what you need. This is called synchronous or “instant” messaging.

Assistants and secretaries at IBM found VP Buddy a very useful tool. Now they

could reach their principal even if he or she was in a hotel room with a single

phone line replicating their email. The engineers at IBM put the VP Buddy

program on their intranet site so others could download and install it. It grew by

leaps and bounds. There was no announcement of VP Buddy, no training

program, no help desk, and no official support – just people helping each other

with tips and techniques. By 1999 there were more than a quarter of a million

users in the company! At any point in time there were tens of thousands of

people connected at any one time and more than a million instant messages

were being sent and received per day. The “back channel” was working.

A company attorney in New York and a company attorney in Chicago having a

conference call with a vendor attorney found they could pass a note “under the

table” to each other from thousands of miles away. Executives having press

interviews over the telephone could receive instant messages from their media

relations managers who were also on line. Questions and answers can be flying

around in the background enabling the executive to be responsive to a reporter’s

line of questioning. Sales and services professionals could have chat sessions to

solve problems for customers. At one point some middle managers in the CIO’s

office questioned whether allowing this unsupported application to continue to

grow in such an experimental way was a good thing. Just before the end of 1999

the CIO himself declared the VP Buddy prototype application “mission critical” for

the migration to Year 2000. At the stroke of midnight there were eighty software

engineers in a single chat session discussing technical details of Y2K. If a

customer disaster of some kind had arisen the experts from around the world

were all connected and ready to solve the problem.

What about privacy when using instant messaging? Yes, there is a dark side of

IM – it can be abused like any good tool can. Most instant messaging systems on

the market have privacy options to help with this. For example, you can select

who can see you when you are online. Options include anyone and everyone,

only a specified list of people, everybody except a specified list of people, or

nobody. You can also set modes of operation such as “I am away” or “Do not

disturb”. It is mostly self-regulating. People are generally sensitive and follow the

golden rule of instant messaging -- do unto others as you would have them do

unto you.

Ubique was acquired by IBM in 1998 and was branded by its Lotus subsidiary as

Sametime. Sametime evolved into a family of real-time collaboration products

providing instant awareness, communication, and document sharing capabilities

for the business world. Numerous other companies offer similar technology.

Awareness is the cornerstone of these offerings. With the selected awareness of

coworkers, partners, or customers online, users can communicate in a variety of

ways -- from one-on-one instant messages to launching virtual meetings. Not

only can instant messages be sent but live documents and applications can be

shared. Whether presenting a new program to a field sales force or to offering

live assistance to web customers, real-time collaboration is emerging as a major

new area of Information Technology.

Once you see that your buddy is indeed online you may want to have a short e-

meeting. Perhaps you have a spreadsheet with next year’s budget that you want

to review with her. You click on her name but instead of sending an instant

message you select an option to “invite to an instant meeting”. Your colleague

gets the invitation instantly and then clicks on a button to accept the invitation.

This opens her browser and takes her to the e-meeting page. The e-meeting

page is a “virtual conference room” where the two of you (you could have

multiple colleagues if you chose to) can review the spreadsheet. Suppose you

use Microsoft Excel as your spreadsheet and your colleague uses Lotus 1-2-3. It

doesn’t matter. Whatever spreadsheet software you have appearing on your PC

is what your colleague will see in the e-meeting “space” in the browser. This is

called application sharing. Your colleague may say “what would happen to the

budget if you change the growth rate assumption”? You change the percentage

in your spreadsheet and your colleague sees the change in her view of the

spreadsheet. You can even turn control of the e-meeting over to your colleague

and she can make a change which you will then see. No longer do you have to

say “fax me a copy of the budget”. No longer do you have to ask, “Does anybody

have the current version of the budget”?

The instant messaging buddy list typically includes your colleagues; people you

work for and people you work with. The buddy list crosses organizational

boundaries. People around the globe in different departments and even different

companies, all of who are working on a project for a common customer can be

part of the list. When the project is over the list may go away to be replaced by a

new one. The buddy list doesn’t have to be all business either. A good instant

messaging system includes encryption so that the wrong people cannot read

confidential information, but a more public part of the buddy list might include

family members, the school nurse, and your stockbroker. Have you ever been

interrupted in a conference room when a secretary brings you a phone

message? You go to a private phone to call home to find out your spouse wants

to know the name of a plumber to fix a leaky sink. Perhaps that ten-minute

interruption could have been a ten second instant message instead.

Many companies are focusing on development of tools that expand on instant

messaging and e-meetings to provide comprehensive collaborative environments.

Among the leading collaborative tools are Notes/Sametime from Lotus, Conference

Center 2000 from PlaceWare, TeamFlow from CFM, Centra eMeeting/Centra

Conference from Centra, and Caucus Virtual Teams from Caucus Systems. They

are building tools in six key areas.

1. Chat and instant messaging applications. These are the basic communication

element and where collaboration usually starts. Groups of colleagues or business

partners can see who is online and send text messages to each other.

2. Real-time conferencing tools with application sharing. These can be used in

conjunction with a conference call and let participants view presentations through

a web browser or sketch a diagram or annotate a slide in a “whiteboard”. There

are many applications in customer service where a remote technician can push a

web page to you with instructions on how to change that printer ribbon or unclog

your garbage disposal.

3. Asynchronous web-based conferencing. This includes discussion groups or

message boards that are not dependent on real-time interaction.

4. Document and knowledge management tools. This category includes a variety

of web based and other groupware applications that enable colleagues to jointly

work on documents and keep track of who made what changes.

5. Group calendars. These tools let users coordinate meetings, schedule chat

sessions and track other events using a browser or e-mail notification.

6. Web-based project management. These tools show lists of projects and team

members as well as the status of their assigned tasks and related

documentation.

Tools such as this will become very important in the NGi. The obvious benefit is

reduced travel cost but there are equally important but more subtle benefits. E-

meetings start on time and end on time. The participants can all be in different

locations; some at home, some at the office, some at the airport, and some at a

client’s office. People tend to be prepared. Everyone, by definition, has access to

the latest subject matter. And while the e-meeting is going on, colleagues can be

sharing information via the instant messaging “back channel”.

The most important benefit of e-meetings is that you can actually have the

meeting when it needs to be held. How often have you experienced the following

problem? You urgently need to have a meeting with someone but that person is

“not available”. You talk to their assistant and find they are traveling. They’ll be

back week after next. Meanwhile, you have an urgent matter and you need the

meeting tomorrow at the latest. Chances are that the person who is traveling has

some slack time at their hotel or at an airline lounge. With e-meeting technology,

as long as the participants have access to a PC and a connection to the Internet,

the meeting can happen.

The irony of e-meetings is that now you can travel more! In the past you were

sometimes tethered to your office. You couldn’t take that needed trip to Europe

because of an important meeting to take place during that week. Now you can

take the trip and still be able to attend the meeting. For the last seven years or so

I have been traveling around the world telling people why they won’t have to

travel so much anymore because of the Internet. That is about to change!

The teenagers will likely continue to make instant messaging an important new

social phenomenon but in parallel with that evolution corporate enterprises are

beginning to see the potential for profound impact from real time collaboration.

Ian Lamont wrote a story in Network World (11/13/00) called “The Coolest Kind

of Collaboration” which focused on how accounting firm Ernst & Young, a

longtime groupware advocate, is taking collaboration to the next level. John

Whyte, E&Y’s CIO, believes that using telephones and e-mail should be viewed

as the old-fashioned way for employees to get things done. E&Y is well along on

the NGi curve.

Virtual teaming expert Jessica Lipnack goes even further. She believes we are at

the brink of a workplace revolution. Improved Internet-enabled features of

collaboration applications, combined with the frustrations of more traditional

communication tools, will provide the fuel, says Lipnack, co-author of Virtual

Teams: People Working Across Boundaries With Technology and co-founder of

virtualteams.com, a management technology consultancy in Newton,

Massachusetts. Lipnack says that people need to be able to make decisions and

resolve conflicts online, as well as provide leadership, assign tasks, exact

accountability and facilitate meetings. "All the stuff we do naturally face to face,

we have to be able to do online," she says.

Learning on-line

Another area that is benefiting from the evolution of instant messaging and e-

meetings is e-learning. In practical terms, e-learning is the ability to learn outside

a physical classroom. "Distributed learning" such as correspondence courses

have been around for a long time but Internet technology is now providing the

means for an advanced and wide-ranging e-learning infrastructure. E-learning

allows companies to deliver effective, specifically targeted training in a cost-

effective way. It can deliver training on a global basis, while tailoring content to

suit the needs of individuals. It also allows an organization to regularly assess

skills gaps that may exist and make the appropriate investments to close the

gaps. A number of the world's leading companies including GE, Cisco, IBM and

Procter & Gamble have embraced e-learning and are reaping significant benefits.

John Chambers, CEO of Cisco, has described e-learning as "the third wave of

the internet." Laura Sanders, Vice President for IBM Mindspan Solutions says,

“Having delivery infrastructure to provide e-learning will be as important in the

next few years as an e-mail system is today. It will simply be part of what's

needed to run a business. E-learning will move from the classroom to the

boardroom as a strategic tool to for competitive advantage.”

According to International Data Corporation, e-learning will have a significant

impact. They expect corporate business skills training in the U.S. to go from 72%

in the classroom in 1999 down to 35% by year-end 2004. The technology can be

split into three groups. Self-paced or asynchronous learning allows a learner to

choose a course independently and learn online, usually alone, like reading a

book. Collaborative or synchronous learning makes use of instant messaging

technology, which allows a remote learner to interact with others in the group,

asking questions and discussing points. The virtual classroom or real-time

learning, using video over the Internet, allows a learner to see the teacher and

talk to others in the class through instant messaging or an audio link.

E-learning is particularly effective on a large scale – a multinational corporation,

for instance, is able to use e-learning techniques to train its entire workforce

around the world simultaneously on the introduction of a new product or

innovation, with immediate and consistent results.

Smaller companies can also benefit by training employees quickly and efficiently

in new skills, creating a flexible and multi-talented workforce. Unipart, a company

in the UK, for instance, has introduced a comprehensive e-learning system that

allows its employees to handle different parts on its distribution line. Theirs is an

e-learning system based on "just-in-time" education – where the workers learn

something in the morning and apply it to the distribution line in the after-noon. In

Unipart's case the innovation has allowed it to widen its product base using

existing staff.

Universities go online too

The Internet was born in the university environment and there are many

advanced Internet research projects happening there. Probably all universities in

the world have web sites and many have impressive intranet sites for class

scheduling and interactive studies. Some universities such as The Open

University in England and the University of Phoenix do most of their teaching

online. At The Open University more than 150 courses use Information

Technology to enhance learning in various ways including virtual tutorials and

discussion groups, electronic submission and marking of assignments,

multimedia teaching materials and computer mediated conferencing. OU

students read more than 170,000 email and computer conference messages

every day. OU researchers have developed new applications of Information

Technology for learning from “virtual field trips” and have even created an

Internet stadium capable of hosting mass audience events with up to 100,000

students.

The University of Phoenix Online claims to offer “the unparalleled convenience

and flexibility of attending classes from your personal computer. In small groups

of eight to thirteen, or working one-on-one with an instructor, students are

discussing issues, sharing ideas, testing theories, essentially enjoying all of the

advantages of an on-campus degree program, with one important exception.”

And, they also remind us that there is “No commute!”

At some point I envision that degrees will be granted based on the "learning

space" in which the learning occurred more so than on the educational institution

that was attended. For example, a person might say that he or she got their PhD

and if you want to see their degree you can go to http://janeqdoe.com/degree

Upon visiting there one would see an e-diploma that might say something like

Jane Q. Doe was granted this degree based on the unanimous vote of the

following professors. Then there would be a list of professors and their digital

signatures that would authenticate that the professors are legitimate. The

relevance of the e-diploma I envision is not that of the university but rather of the

status and reputation of the individual professors. Suppose a person has gotten

a degree in Customer Relationship Management. Even more impressive than a

degree from the world’s leading university for CRM education might be an e-

diploma which is signed by the top ten CRM professors in the world with whom

the person studied.

A lot of education will be done on-line but some will remain physical for a long

time. Maybe forever. Professor Stanley Birkin of the University of South Florida

reminds me that most advanced college degrees today require total immersion.

Students operate in an apprenticeship mode and are available at all times for

research seminars and presentations. It is this total immersion that has worked

so well in developing the research skills necessary to fill or occupy a future role

as a professor or a key researcher. Although this archaic approach goes back to

the old days of Oxford and Cambridge, it does work, and has resulted in great

researchers and faculty members the world over. Online or physical, students

can still get together in person to turn the tassel on their mortar boards!

Sprechen Sie Deutsch

Instant messaging, as a technology, is at the very beginning. Much more is

possible. Lotus has introduced language translation so that messages can be

translated on the fly. For example I might see that my colleague Frank in

Heidelberg, Germany is online and send him an instant message. “Frank how is

the weather in Heidelberg?” I ask. The message is translated on the fly to

German and up on Frank’s screen appears a message, “Frank, wie ist das

Wetter in Heidelberg”? Frank answers me in German, “John, ist es kalt und

regnerisch” and up on my screen appears, “John it is cold and rainy”.

Language translation is performed using some very sophisticated mathematics.

It isn’t perfect. A real person doing translation of what you say as you say it,

watching your facial expressions, understanding the various innuendos and body

movements is far superior – for now. Machine translation will be good enough

for many web applications in the realm of e-business. It is good for conversation

but not yet good enough to interpret contracts or provide instructions during a

surgical procedure. You could think of it like riding in a taxi cab in New York. The

instructions you are able to provide are not in the driver’s native language but it is

usually good enough to get you where you want to go.

The potential here is enormous. By adding text-to-speech technology both Frank

and I could have heard a simulated voice that would speak the translated words

through the speaker of our PC. Taking this even a step further, if you combine

instant messaging, voice recognition, language translation and text to speech

technologies You get a real time multi-lingual intercom! Think about customer

service applications. Think about a person asking a question in Spanish and

then that question is routed to the most knowledgeable person in that subject

matter, who answers the question in Chinese and the questioner hears the

answer in Spanish.

There used to be 30,000 dialects in the world. Today there are about 5,000.

Some people say that soon there will be just one. I don't think so. In fact I think

the Internet may actually bring back some of those formerly or nearly extinct

dialects. People have grown up on a mountain somewhere with a unique dialect.

Then they graduated from school and went their separate ways. The dialect

dies. Now, with Internet email, these school friends can remain in contact and in

fact can maintain their dialect and bring in former graduates to build a community

around their common culture.

An agent at your service

Another emerging technology in the instant messaging arena is software agents.

Software agents are not new but using them in conjunction with instant

messaging is. The software engineers at IBM’s Southbury Internet lab began to

experiment in 2000 with what they call Buddy Bots. Bot is an abbreviation for

robot. The Buddy Bots are software robots. They do things for you. For example

your buddy list may have an entry in it called Blue Pages. It isn’t a person – it is a

software agent. Blue Pages is the name of the corporate directory at IBM. It

contains more than 300,000 entries. If an employee clicks on Blue Pages (which

is always connected) and types, “who is Michael Nelson?”, the buddy bot goes to

the Blue Pages directory, looks up Michael Nelson and sends back an instant

message that includes his name, email address, phone number, and office

location.

There are, of course, other ways that an employee could get that same

information including various intranet applications. However, there is a certain

appeal to using the instant messaging program to do it. The IM program is

always there; right on the desktop ready for use. Yes, a browser could do the job

but sometimes the browser is not a desirable solution. For example, you may be

browsing a news story and then your phone rings. You answer the phone and

colleague asks you a question. You don’t have the answer but you are sure

another colleague does and you offer to look up the office location. You go to

your favorites list in your browser and look up the information and, your caller

being appreciative, you hang up the phone. Back to that interesting news story

you were reading. Oops, how do I get back to that page I was on? Sometimes

you can go back with a browser – sometimes you can’t for various reasons. You

could have started a second browser for the inquiry but sometimes having

multiple browsers running on your PC gets confusing. Using a simple “who is”

command in your instant messaging program could have done the job very

efficiently.

I believe this will be an emerging NGi trend; i.e. using an instant messaging

program for simple queries and tasks. It is just simpler and faster. How about a

weather forecast? Enter “Weather Boston” and back comes “Boston – cloudy

with snow showers”. How about a stock quote? Enter “stock quote XOM” and

back comes “Exxon-Mobil $88.75”. The Southbury engineers have prototype

buddy bots that bring you your portfolio of stock quotes, allow you to look up the

definition of company terms from a reference database, and alert you to your

daily calendar and pending to-do items when you first connect in the morning.

Buddy bots will make the next generation of the Internet more Natural.

One of the Southbury engineers, Karl Gonzalez, took the concept of awareness a

step further. He built a “digital video water cooler” to allow colleagues who work

at multiple locations to come together in a virtual space. A video camera and

microphone at each of eight locations provides a live stream over the intranet to

a single web page that displays all eight video windows. Colleagues can go over

to the camera, wave to another colleague, have a brief chat or just a friendly

wave. The result was to increase team camaraderie and a sense of presence

and belonging to the same team even though they were physically separated by

large distances.

Music makes the world go ‘round

Part of the NGi becoming more Natural will come from better integration of media

including audio, video, animation, and virtual reality. As more bandwidth arrives

for more people we will find that a lot of video content will be available. We will

move toward having full-screen, jitter-free, high quality video on the Internet.

Over time we will be able to watch video on mobile phones and PDAs. The most

significant and practical introduction of media will be music. The reason that

digital music (MP3 in particular) has become so popular is that it is possible to

transport it in digital form and then play it with no perceptible loss in fidelity. You

can convert your CD collection to MP3 format and store it on your PC. A

collection of one hundred CDs would require about 5 billion byes (gigabytes) of

storage. This is just a fraction of the storage that comes with any PC you buy

today. You can then establish “playlists” to organize your collection by genre or

composer. You can then connect the output of your PC to the input of your stereo

system and the result is high quality stereo music. The quality is not the same as

the original CD but most people cannot tell the difference.

That same music collection will be able to be played on your PDA or on any

number of different MP3 music players thus achieving excellent portability. Some

handheld devices have the ability to store tens of hours of MP3 music and this

capacity will continue to rise and the cost will continue to decline as solid state

and micro-miniature disk drives continue on the technology curve. The result is

that we will be able to carry our entire music collection with us wherever we go.

Specialized MP3 servers are emerging for the home at the same time as the

handheld devices gain popularity outside the home. These new products enable

you to combine your personal music collection with music services on the

Internet. Escient Convergence Corporation, for example, is offering products that

offer consumers simple ways to manage and access large music CD and/or

movie DVD collections without requiring any knowledge of computers or the

Internet. Working hand-in-hand with popular name-brand CD changers and hard-

disc music products that store large numbers of discs or music files, Escient’s

TuneBase products have a set-top box that instantly identifies and finds a

particular disc, transforming the user's existing TV set or touch-screen display

into a "mega-jukebox." With a colorful interface that displays album covers,

artists, songs and styles of music, this kind of product will give users instant

access to thousands of songs.

For years I have been planning to build a database of my CDs including the

composer, orchestra, track titles, etc. and in fact I made several attempts at it but

never got too far. Much too tedious. Then along came MP3 and the CDDB.

CDDB (compact disc data base) is a service with a database of CD text

information. When you put a music CD in you computer's CD-ROM drive, your

CDDB-enabled player will access CDDB servers over the Internet to identify the

CD and download information about it to your MP3 player. Disc title, artist, track

title, and related information is not actually on the CD itself – it is in the database

at CDDB. The best part is that now you don't have to type this information in. I

am grateful that I didn’t waste the hours it would have taken to do it manually!

CDDB² is the next generation of the CDDB database and disc recognition

service. The new service offers significantly extended information for each CD

title in the database. Examples include searchable credits for production,

songwriting, and musicians (including instruments) at both disc and track-by-

track level; over 250 genres; related web links and associated content; and

segments (portions of music that can be smaller or larger than a single track).

MP3 is changing how people think about digital music whether they are

consumers, artists, producers, broadcasters, or web casters. Meanwhile there is

still a physical/analog aspect to music I don't see going away. Did you know

there is a site on the Web where you can commission the creation of your own

violin or cello? See http://www.msen.com/~violins/

Watch what is going on with music on the Internet. The issue isn’t whether the

RIAA wins a lawsuit against Napster or whether mp3.com fulfills its business

plans. The issue is that the Internet has enabled every computer in the world to

be connected to every other computer in the world. As a result people can

exchange information very easily. That includes music. What is needed is not

more law suits. What is needed is new models for the distribution of music and

other media. The explosion of digital music is just the tip of the iceberg. How

about creating music on the Internet? A five-piece band may soon have a live

jam session with each instrumentalist on a different continent and thousands of

listeners who paid to listen in.

Radio goes digital too

Digital radio will be the sound of the future. It will be the best sound on the

airwaves in the near future, because digital-radio has the potential to deliver CD-

quality, interference-free sound. Digital radio is the transmission and reception of

sound that has been processed using technology comparable to that used in CD

players. A digital radio transmitter converts its content into ones and zeroes and

then broadcasts them. At the listening end, digital radio receivers, containing

microprocessors, convert the stream of ones and zeroes back into music or voice

with a sound quality that is significantly better than today’s radios, just as CDs

sound better than vinyl records.

Today’s radio, which is analog, can never achieve consistent high quality

because of the technology used and the transmission environment in which it is

broadcast. Digital radio reception is virtually immune to interference, unlike AM

and FM, which means there is no static nor echoes. The microprocessor sorts

out the noise from the music.

Because the digital radio has software capabilities it can offer other features too.

For example, you can select the station you want from the call letters; e.g.

WQXR. There will be no need to select 96.3. In addition, your digital radio will be

capable of monitoring signal strengths and then switching you from a fading

signal you are driving away from to a stronger signal you are approaching, much

like your mobile phone system switches you from cell to cell. It may be possible

to drive from coast to coast and listen to your favorite station with no interference

or disruption.

Many other features will be possible such as tuning to specific song titles or

artists, listening to very localized traffic and weather information, and utilizing

paging services or stock market quotations. Whereas today we have two

separate bands for AM and FM, we will see the emergence of a single band for

digital radio. There may even be a single band globally and both terrestrial and

satellite transmission capabilities so we will literally be able to listen to high

quality music anywhere anytime.

Digital radio has the potential to revitalize radio as a cost-effective and powerful

medium. It is being embraced in the U.K. and Canada. In the United States

digital radio may be viewed as a potential threat to existing radio stations, just as

MP3 is viewed by some as a threat to the music industry. In the end better-

sounding stations will win out.

On March 18, 2001, "XM Rock" was successfully launched from the Sea

Launch's Odyssey platform in the Pacific Ocean. This is a precursor to making

satellite radio a reality during summer 2001. A second satellite, "XM Roll," is

scheduled to launch in early May. XM-ready radios will hit retail shelves across

the country. A state of the art broadcast center using IBM’s eServers and high

capacity disk storage is near completion. Both "Rock" and "Roll" will operate in

geostationary orbit above the United States transmitting up to 100 channels of

digital quality programming from coast to coast. You will be able to drive from

Maine to San Diego listening to the same station!

Pictures too!

Everybody’s got a shoebox of pictures somewhere. Buried in a closet. A drawer.

Or stuffed in an album. Now and then, they get taken down, passed around and

enjoyed by family and friends. But by and large, the moments that make up life

aren’t shared nearly as often as they could be. So says Ceiva Logic, Inc. maker

of the first Internet-connected digital picture frame. The Ceiva digital picture

frame looks like an ordinary 12-inch frame with a LCD screen that displays up to

10 digital images cycling continuously. Plug the Ceiva into a phone jack and it

logs onto the Ceiva Web site to download any new images posted to your

account. It doesn’t even require a computer. And anyone you authorize can send

pictures to your Ceiva account. Your friends and family can take pictures with a

digital camera and upload them to ceiva.com. The Ceiva frame can automatically

update and display your new photos everyday. Just sit back and enjoy the show.

And of course there will be video

I remember in the 1970’s when the first color display was introduced for use with

IBM mainframe computers. A lot of people said “who needs it”? CFO’s were

intrigued that it would be possible to see negative numbers in red but many were

not intrigued enough to want to spend the extra money they cost. Adoption of

color monitors was slow but then they became standard. Can you imagine having

a PC today which had only black and white?

Similar to the introduction of color decades ago the introduction of video on the

web is greeted by many with “who needs it”? The video available on the web

today is in a very small window, it is often grainy looking, and sometimes jittery.

After the novelty wears off many have decided to just stick with the web the way

it was. That will change with the introduction of Fast as previously discussed.

Video will be expected. In fact in the NGi the time will come when you are on a

web page and you will literally say “help” and you will expect a full screen video

session to instantly appear on your screen with a live person who smiles and

says “how can I can help you”? Full screen, jitter-free, dazzling clarity video. It

will help make the Internet more Natural.

Speech says it all

Imagine a time when you will be able to issue simple verbal commands to run all

of the appliances, machines, and systems you use in your home, office, or on the

road. In the current decade of the NGi your voice will be all you'll need to

prepare meals, shop and bank by phone, invest in the stock market, handle e-

mail and even drive your car--without having to turn a key in the ignition or touch

the steering wheel. Even security systems will rely on people's voices for

computer passwords, access to office buildings, restricted areas, the home, and

bank accounts.

Scientists at IBM Research, have already developed a number of voice

recognition systems and are now building prototypes for others-which will give a

new meaning to the term, "freedom of expression." For example, a test system

has been developed that allows travelers to order airline tickets with simple voice

commands. Not only does the system understand your spoken words but it also

understands the context of what you say. “I’d like the next flight to Austin from

New York” and you get exactly that. “Least expensive return flight next Thursday”

and you get exactly that. The system not only understands the words “least

expensive”, “return”, and “next Thursday”, but also is able to translate them into

specific requests that retrieve the data you are looking for. Your spoken words

are the system input and the output back to you can be either spoken by a

simulated voice or given to you on your cell phone or PDA display where you can

more easily recall it.

The next generation of speech recognition

Significant progress has been made in speech recognition even for large

vocabularies of tens of thousands of words. The speech can be continuous – you

don’t need to have any pause between words. However, the technology to date

is most effective only under controlled conditions such as low noise, speaker

dependent recognition and speech that is read or dictated as opposed to

conversational speech.

That may change with a new approach called audio-visual-based speech

recognition. Psychophysical experiments have demonstrated that the shape of

your mouth as you say something adds important intelligence to enabling a

computer to recognize certain speech utterances. The information is known as

visual phonemes or ``visemes''. Visemes provide information that complements

the phonetic stream from the point of view of confusability. For example, ``mi''

and ``ni'' which are confusable acoustically, especially in noisy environments, are

easy to distinguish visually: in ``mi'' lips close at onset, where as in ``ni'' they do

not. Similarly, ``f'' and ``s'' which are difficult to recognize acoustically belong to

two different viseme groups. Experiments are underway and in the not too distant

future it may be possible to use face detection combined with voice recognition to

take things to the next level.

I can still remember the first time I witnessed speech recognition. It was in 1981

and at the time I was assistant to the CFO of IBM. One day he was invited to visit

Yorktown Heights, home of the Thomas J. Watson Research Center where

hundreds of researchers have created many of the world’s great inventions. The

main purpose of that particular day’s visit was to get an update on the state of

speech recognition. A group of us entered a huge room that was full of

computers. I had never seen such a large computing center. It was enormous.

We all huddled around the console of this “supercomputer” while several PhD’s

prepared the demonstration. One of them sat at the console in front of a large

microphone – looked not unlike a radio station. We were all asked to please be

silent. You could have heard a pin drop on the floor. The researcher got very

close to the microphone and with a perfect articulation he said the word “nine”.

We waited and waited and waited. Seemed like forever. Like waiting for a pan of

water to boil. Finally, a response came. We all crowded up to see the video

console where it displayed a 9. Our mouths dropped open in awe.

Accessible to all

The NGI offers great hope to those who have speech, language or hearing

impairments. New therapeutic technologies are being developed too. A

computerized language tool called SpeechViewer transforms spoken words and

sounds into imaginative graphics. The result is greatly increased effectiveness of

speech therapy and speech modification for people who need it. They can select

from over a dozen language exercises. Each exercise responds to your voice

input with immediate, clear and meaningful feedback that helps you “see how to

speak.” In addition, the speaker receives animated rewards that reinforce

successful responses. This kind of technology can be of great help to help

people of all ages who have a variety of disabilities, such as speech or language

impairments, cerebral palsy, developmental delay, traumatic brain injury, and

speech disorders resulting from a stroke. The technology provides a real boost in

effectiveness for professional speech language pathologists, special education

teachers, teachers of the deaf, English as a second language instructors, and

professionals working with accent reduction.

A browser that talks to you

A lot of people take access to the World Wide Web for granted. For the blind,

however, accessing the Web is a tough task. Chieko Asakawa, a blind

researcher at the IBM Tokyo Research Lab, used screen reader technology --

which speaks aloud each item on the computer screen to surf the Web. Initially,

she used the reader only for specific research tasks because it was not as fast as

point-and-click, but then a team of researchers at the lab created a talking Web

browser called the "Home Page Reader". It has been released as a commercial

product in Japan and is changing the lives of visually impaired people who want

to use the web.

The Home Page Reader reads plain text in a male voice and hyperlinks in a

female voice, making it easy for users to find the information they need –

different voices for different duties. To speed up the slower text-to-speech

process, the system includes a quick reading method of text-to-speech. One is a

fast-forward function. When the "0" key is held down, the voice goes much faster,

like on a cassette tape recorder. But it slows down again for the first few

characters after certain types of stops, such as periods, commas, tabs, and

hyperlinks, so that users can hear the beginning of each sentence.

The Home Page Reader system also incorporates a method for converting HTML

tags into voice data. This is extremely important because there is a lot of “text” on

web pages which isn’t really text at all – it is a graphic images that looks like text

but which was done graphically instead of normal text input. The program even

gives users control over answering questions in online forms, which allows them

to interact easily with and provide information to all kinds of Web sites, from

search engines to online shopping malls. I have witnessed blind people using

the Home Page Reader and it brings tears to your eyes to see how swiftly and

effectively they can breeze through web sites gaining the information they want

with virtually no limitations.

Limitations in today's computing interaction

Imagine a world where using your computer is as easy as talking with your best

friend. Speak, gesture, walk around, point at something that interests you -- the

computer hears you and sees and responds to your every wish. Such capability

is called "natural computing" and it will surely make the NGi more Natural.

Today we interact with computers in awkward and unnatural ways. We sift

through countless instructions, press buttons, and fumble with gadgets, when

what we really want to do is create, communicate, entertain, and understand.

What we don't want is all the laborious typing, clicking, and memorizing arcane

commands. The concept of natural computing is simple: it provides information

where we want it, how we want it, and with practically invisible interfaces that

adapt to natural human interaction skills. A multi-modal user interface is

considered to be one of the core elements necessary in order to reach the level

of truly natural computing. Quite simply, the computer responds to humans using

the time-honored traditions of human interaction: voice and gesture.

The technology behind natural computing basically gives the computer eyes and

ears. For example, IBM's Via Voice speech recognition software can interpret our

vocal commands. An embedded camera can send visual information to a

machine-vision system that tracks our movement and gestures. Special

algorithms developed by IBM Research are capable of then combining and

interpreting natural computing environment around us. Someday -- sooner than

you think -- natural computing technology could be integrated into offices,

furniture, household appliances, cars, classrooms and operating rooms. In the

areas of science, medicine, and business, users may be able to collaborate

remotely with one another in virtual labs, operating rooms, and factories with both

their words and their gestures being naturally interpreted.

Convergence at last

Pundits have been predicting digital convergence for many years. It was to be a

merging of audio, video, images, radio, television, all forms of media and

communications with their digital representations. It didn’t happen as much or as

soon as predicted. However, the tremendous growth in capability and decline in

price of digital technology during the end of the last millennium has vindicated the

predictors. It is happening. We are on our way to experiencing the NGi and it will

be a more and more Natural experience.

Is our media wearing out?

Ever think about media wearing out? I was cleaning out the basement the other

day and I came across a box of 5.25" diskettes. Lots of them. They date back to

1979 when I had a Radio Shack TRS-80 Model III. The diskettes stored 80,000

bytes! Seemed like a lot at the time. Are these diskettes worn out? Well, who

knows? Probably not but they are "effectively" worn out because I can't imagine

where I would find a diskette *drive* that could read them. I also found a box of

cassette tapes that I had used as data storage on my Radio Shack TRS-80

Model 1. Fat chance of retrieving any data from them. How about 3.5"

diskettes? Sure they are ubiquitous today but how about ten years from now?

How about 35 mm slides? I don't know the life of the slides themselves but like

the Radio Shack diskettes, I suspect the limiting factor will be the life of the

devices with which to retrieve the "data". There will likely come a day when the

slides will be fine but there will be nobody who knows how to repair the carousel

or obtain parts for the projector.

There are countless other scenarios of similar ilk. So, what's the answer? Let our

children and grandchildren worry about it? No, I think we can do better than that.

In fact I have been thinking a lot lately about an Annual Plan for Information

Archiving. The idea is simple. It starts with an inventory of all media types in our

possession: photographs, movies, slides, audio tapes, and CD's. It also includes

data which is already digital and stored on various media types: big diskettes,

little diskettes, zip drives, tapes of various formats, writeable CD's, and of course

our system hard disks. Each year convert some of your "old" media to new

media. I plan to start this myself with 35 mm slides that my mom and dad took in

the 1940's. I'll move them to jpegs and store them on disk and tape. I'll also

scan some very old family pictures we have that go back into the prior century.

Each year review the inventory of media and make a projection of what is

"exposed" from a technical point of view. Look at new formats and media types

which are emerging. It may also be a good idea to keep an eye on scanning and

conversion technologies. It may pay to re-scan or convert files as compression

gets better and scanning densities improve. If the oldest media gets moved to

contemporary media in bite-sized chunks on a regular basis the effort should be

manageable. Admittedly, committing to the discipline suggested here is not

easy. Like tax and estate planning, writing a will and reviewing it periodically, and

other thankless tasks. If we pass the idea on to succeeding generations it will

hopefully get easier and easier (maybe automatic) to preserve our media and our

very culture.

Technical footnote (thanks to my colleague David Singer )

There is also a distinction to be drawn between lossy and lossless conversions.

Making a digital-to-digital copy is lossless (assuming you take precautions to

avoid errors in the process), and so there is no reason to preserve the original

medium. On the other hand, analog-to-digital conversions are potentially lossy

(witness the debates about the virtues of vinyl versus CD, since CDs do lose any

information above 22kHz), and so it is best to continue to preserve the original

and use it as the source for later copies. And on still another hand, some digital

formats are inherently lossy (JPEG) and should never be used as the source for

a later copy unless there's no other choice.

There is also the issue of preserving more than the bits -- even if you could

recover the data on the Radio Shack cassettes, you wouldn't be able to do

anything with it, because you wouldn't know how to interpret it. It has been said

that NASA has this problem -- they have huge amounts of data to which they've

lost the format, so they can't use it.

Intelligent

The Internet has come a long way since its inception, but the links don’t always

work and it is sometimes hard to find what you want. The Internet needs to work

in a more Intelligent manner. The Internet today is a collection of billions of web

pages that are more or less randomly organized. Linkages between pages that

should be linked seem to be created with “tape and string” or not linked at all –

like the hotel’s reservations system that is not linked to their frequent guest

system or the airline’s flight arrival system that is not linked to their gate

scheduling system. Searching for information is challenging to put it mildly. The

good news is you can find anything and everything. The bad news is you can find

anything and everything. Sometimes you are looking for something that seems

like it would be easy to find but your search finds ten million matches and you

can spend hours trying to narrow it down. When you search on “William

Shakespeare” you find things he wrote, books about him, things written about

him in discussion groups, personal pages where people list their favorite

playwrights, and numerous companies that have adopted Shakespeare’s name

for their products. The basic reason for both the poor linkages and the difficulty in

finding things is that web pages have great format but no context. The result is

that it is often hard to cope with the overwhelming amount of information.

A bold new standard

Solutions to broad problems such as this are often benefited by standards.

TCP/IP (the transmission control and Internet protocols) enabled global networks

to become interoperable. HTML enabled universal sharing of documents. A new

standard from the World Wide Web Consortium called XML will enable us to

cope with information overload – in effect to add intelligence to the web. XML, the

Extensible Markup Language, provides a way to add context to a web page and

structure to the web – it is arguably the most important standard for the web

since the web was developed. Virtually all new developments going on for the

web are based on XML. Just as TCP/IP provided the base on which the web

could be built, XML is providing the base on which the web can evolve to a

higher order medium – one which is intelligible and useful.

Web pages are constructed using HTML (described in chapter 5) and XML

“tags”. The tags do not appear to anyone other than the author who created them

but they play an important role. Just like tags on pieces of merchandise describe

what that merchandise is and how much it costs, HTML tags on a web page

define the format of the page’s text; causing it to be blue or red, Helvetica or

Courier font, aligned to the left, right, or center, arranged in a table, separated by

a horizontal line, made larger or smaller, etc. XML tags on a web page define

what the page is about thereby adding context and enabling systems to tell what

certain things mean.

For example a tag may indicate that the word “screwdriver” on a web page is a

“tool”. The tag doesn’t tell how the word is formatted but rather what it means –

its context. It also tells us indirectly that this particular instance of the word

screwdriver is not related to a cocktail. By utilizing XML tags a web page can

contain very deep context including relationships to other things. For example,

different types of screwdrivers could be defined such as large, small, Phillips

head, straight head, etc. By consistently applying XML tags to all web content the

web will begin to evolve. Once information is properly tagged you will be able to

find exactly what you are looking for with much greater speed and precision. It

will also be possible to find that small electric frying pan when you can say

category=appliance, item=frying-pan, type=electric, size=small. No more electric

guitars and fried chicken.

How is your vocabulary?

XML becomes even more powerful when the various tags for defining context get

aggregated into higher levels, forming a vocabulary. The carpenter’s union might

form a vocabulary that defines all the valid tool categories, tools, tool dimensions,

etc. that all members and constituencies of the union could understand. Not only

could people searching web pages take advantage of this but so could web

applications. This would enable the ordering of tools and the inventory taking of

tools to be automated. Servers could communicate with other servers, checking

inventory levels or order status of tools with no human interaction. The tool tags

would be supplemented with tags that describe things like customer number, last

name, organization name, postal code, quantity on order, invoice date, and job

location. Now the web pages become enabled for e-business and things start to

come together in a way that eliminates faxes, manual procedures, computer

applications that convert one set of data to another set of data and other

redundant low-value operations that add unnecessary lead times.

Contracts talking to each other

Common vocabularies, based on XML, will enable businesses to start taking

advantage of the Internet in an expanded way. A new vocabulary called the trading

partner agreement markup language (tpaML) will make this possible. The Trading

Partner Agreement (TPA) is an electronic contract that uses XML to define the

general contract terms and conditions and the valid business processes to be used.

Sophisticated software will be able to ensure that all transactions that are conducted

over the Internet between the trading partners' business systems are conducted

error free. The potential to speed up the pace of business will be greatly enhanced.

For example, consider a small auto parts manufacturer that wants to sell to a major

automaker. The automaker would create a contract using tpaML and then send it to

the parts manufacturer. It would contain all the necessary information about the

automaker. The parts manufacturer would then add the essential information about

itself to the template and return the completed TPA over the Internet to the

automaker. The contract is then processed by each trading partner's systems so that

they will be able to transact business. The automaker could issue purchase orders in

the form of documents transferred to the parts manufacturer under control of the

tpaML document. The whole e-commerce exchange would take place without further

human intervention because the buyer and seller previously defined all the

parameters.

Taking the high road

Rolling it up to an even higher level is Oasis, the world's largest independent,

nonprofit organization dedicated to the standardization of XML applications.

OASIS has several independent initiatives underway including ebXML, which is a

joint effort of the United Nations and OASIS to establish a global framework that

will enable XML to be used in a consistent manner for the exchange of all

electronic business data. "XML standards developed over the next few years will

form an essential part of the IT infrastructure for decades to come," commented

Laura Walker, executive director of OASIS. "OASIS is widely recognized as the

open forum where industry leaders put aside competitive differences and come

together to solve business problems with XML. We have the critical mass to

insure standards developed within OASIS will be adopted by industries around

the world."

e-marketplaces will change how business is conducted

e-marketplaces will change the very notion of business itself. Corporate

partnerships will give way to virtual enterprises. Vertical markets will become a

web of supply-demand relationships. And collaborative commerce will blur the

line between competition and cooperation. Business as usual will not be

sufficient to survive as the new models evolve. So far, e-marketplaces have been

mostly press releases. The technology and business guys from an industry – like

chemicals, autos, air travel, retail, pharmaceuticals, etc.-- got together and

announced that the top handful of players in their industry are going to get

together and create an e-marketplace. Some months later the CEO’s got

together and said to each other, “What exactly is it we are going to do with this

thing?” In spite of the early hype and confusion, the real potential of e-

marketplaces is very significant.

An e-marketplace is a many-to-many, web-based trading and collaboration

model that enables companies to more efficiently buy, sell and collaborate on a

global scale and across a whole industry or at least a major piece of an industry.

For example, the Worldwide Retail Exchange (WWRE) consists of more than 50

retailers from around the world with combined annual revenue of over $722

billion. The WWRE utilizes the most sophisticated Internet technology available

and their goal is to enable retailers and suppliers to substantially reduce costs

across product development, procurement and supply chain processes.

The approach to achieving these benefits is to provide a shared Internet-based

infrastructure that enables commerce transactions that automate and streamline

the entire requisition-to-payment process online, including procurement,

customer management and selling; a collaborative network for product design,

supply-chain planning, optimization and fulfillment processes; an industry-wide

product information database; an environment where sourcing, negotiations, and

other trading processes such as auctions can take place; and an online

community for publishing and exchanging industry news, information and events.

As a result, buyers and suppliers enjoy greater economies of scale and liquidity --

and can buy or sell anything -- easily, quickly and cost effectively. In addition, e-

marketplaces will enable companies to eliminate geographical barriers, and

expand globally to reap profits in new markets that were once out of reach.

XML provides the lingua franca to make e-marketplaces possible. What remains

to be done is the tough job of integrating the many incompatible systems among

companies around the world. Major projects are underway in the major

industries. The biggest limitation in getting to the ultimate vision is the limited

availability of technical skills to do the work. An interesting new company,

CommerceQuest, is providing an outsourcing service that may fill the gap for

many companies. CommerceQuest created a b-to-b software gateway called

enableNet. It is not specific to any industry but rather is a generic kind of

capability that can allow transactions from one company to be able to go through

the enableNet gateway over the Internet and then be executed on a different

company’s system even though the participating companies may have totally

incompatible information technology systems.

XML will also enable us to easily attach new forms of data to things we do. For

example, the advent of small and inexpensive Global Positioning System devices

will bring latitude and longitude into our lives. Today we tend to label events with

time. We put the day, month, and year on the back of a photograph. GPS greatly

expands the possibilities. When a digital picture is taken with a camera that also

contains a GPS capability it will be possible to capture the latitude and longitude

of where the photographer was standing when the picture was taken. The

photographer can also add voice notes describing the picture and digitally sign

the picture to establish its authenticity. All of this can be encrypted to ensure that

nothing is altered. Intelligence has been added to the art of picture taking.

We all remember exactly where we were when something memorable and

significant took place. For example, if you are more than forty-five years old you

undoubtedly remember where you were when John F. Kennedy was

assassinated -- exactly where. GPS will cause us to think of location as an

important dimension. Not just day, week, and month but also latitude and

longitude.

P.S. Here is exactly where I was on that fateful day in 1963…

http://ibm.com/patrick/pages/jfk.html

Portals for our every need

A physical portal is an entrance to a home or building and a web portal is an

entrance to the web or some subset of the web. Portals like Excite, Lycos, MSN,

and Yahoo! provide categorized directories of links to vast amounts of web

content. Much of the categorization is done by hand – real people at these

companies read web page content and then decide what the context is and

determine which category of the directory it should be placed in. Adding new

links to the directories sometimes takes months because of this manual process.

As more and more content for the web is produced using XML tags, the

categorization process can become automated – computers will read the web

pages, determine the content and properly categorize them. The “general

purpose” portals mentioned will continue to be important around the world for

“newbies” -- for people who just aren’t sure what they want to browse through or

who want to make some general searches for things. They will use these portals

as a hub or communication center for many aspects of their lives. These portals

will get better and better because of the intelligence XML is adding to the web.

The average person has become more and more web savvy. If they want to learn

about a new Ford automobile they heard about somewhere, they will go to

www.ford.com. They don’t need to go to a portal, and step through a series of

menus to eventually get to Ford. They will just go direct.

Specialized portals

More and more people will be interested in portals that specialize in particular

areas of interest; either on a business or personal basis. VerticalNet is a portal

for industry professionals. The site has dozens of specialized portals – beverage

online, ElectricNet, nurses.com, meat and poultry online, and dozens of others.

Each of them provides a community for professionals where they can learn,

discuss, look for jobs, issue purchase orders, buy, sell, and find resources to

make their jobs easier. Real money changes hands in these specialized portals.

They automate the buying and selling processes, save on ordering time, enable

people to shop for the best pricing, allow them to secure delivery schedules,

track shipments, and gain wider access to the industry in which they work.

Similar portals are popping up in almost every industry facilitating a way for

people with common interests to be able to have a very intelligent approach to

what they’re doing.

Community portals – hanging out

There are also community portals. Places that are very people oriented. Mary

Furlong, founder of ThirdAge Media calls them “Lifestyle destinations”. These are

places where people “hang out” on the Internet. Hanging out has emerged as a

key Internet technology term. If you have any teenagers at home you will know

exactly what I am talking about. Teenagers tend to leave the house late at night

at about the time that you are ready to go to bed. As they are leaving you ask

them, “Where are you going?” The answer is “Nowhere”. “What are you going to

do?”. “Nothing.” And then later, much later, sometimes the next day, they come

back. You say, “Where have you been?” “Nowhere.” “What were you doing?”

“Nothing.” “You have been gone for thirty one hours, you must have been doing

something!” “I was just hanging out.”

People hang out at physical places and they also hang out in the virtual world.

More and more, people hang out at life style destinations; places like Blackberry

Creek and Nick.com are of great interest to young children. Tripod.com or

classmates.com may be very interesting to people who are 18 to 30 years old.

MyFamily.com may be of interest to those a bit older. People who are 45 or so

may hang out at HarleyDavidson.com or other motorcycle sites. ThirdAge.com is

of great interest to those who are 45 to 102! ThirdAge is where 70 year olds go to

find a date or configure a fragrance to match the way a person wants to project

their self.

Some organizations have a grand e-business plan to build a portal for their own

organization; not any old portal but one that is so great that everyone will come to

visit it. With the billions of web pages and large numbers of general and industry-

specific portals to choose from, the “we will build it and they will come” approach

is unlikely to succeed. An alternate strategy is to reach out and build

relationships with the places and portals where the people you would like to

reach are hanging out. Where your constituency hangs out is where you want to

be hanging out; and by creating marketing relationships with those places, you

can provide links to bring them back to your site for what you have to offer. If you

build it, will they come? Not necessarily, but if you are hanging out in the right

places you will connect to them.

Knowing what you know

One of the major challenges of organizations of all sizes today, whether it is

made up of ten people or tens of thousands of people, is being able to “know

what you know”. If the 5% most knowledgeable people in the organization could

transfer what they know to the 5% least knowledgeable people in the

organization, what a tremendous impact that would have on the effectiveness

and the profitability of the company. In fact it has been estimated that there is a

knowledge deficit of between five and six thousand dollars per employee

because of information in the organization that is not known by others. Even is a

very large company this is a significant amount of money. For example, a

marketing specialist in a company is working on the introduction of a new product

and is having difficulty figuring out the optimum distribution strategy for the

product. It turns out that a colleague in a sister division of the company in

another country had the exact same problem and developed a brilliant solution

for it. The real problem is that the first colleague doesn’t know about the second

colleague. As a result the company may engage a consultant and pay to get a

solution they already have!

Companies such as Lotus are developing very sophisticated tools to facilitate

knowledge sharing to enable organizations to more effectively leverage the

knowledge they have. By combining collaborative, messaging, database, and

data mining technologies they are able to create knowledge portals. The idea is

to create a window into all the relevant content that a person working on a project

may be interested in, not only in all the databases that the organization has but

also from the Internet. That person can then find out who else might have worked

on or currently is working on some similar project. The project database can be

shared and the person with the need can establish an electronic linkage with the

other person and collaborate. Company portals built for the employees won’t

suffer the failings of the “if you build it will they come” syndrome of the web -- in

these cases there is a captive audience.

Content isn’t what it used to be

Content is a word that became commonplace with the birth and growth of the

World Wide Web. It refers to the text, graphics and multi-media that appear on

web pages. In the last decade virtually all web content was created using the

HTML standard and was designed and published as pages for the browser on a

PC. Content on the Next Generation Internet needs to be highly adaptive; i.e.

Intelligent. New interfaces and devices are emerging, the diversity of users is

increasing, machines are acting more and more on users' behalf, and web

activities are reaching a wide range of business, leisure, education, and research

activities. Web pages that are “one size (for the PC) fits all” will no longer be

adequate. We need to be thinking of web content in a much different way.

To achieve maximum flexibility and reuse, web pages need to be decomposed

into the components that make up the pages or “fragments”. Fragments may

include banners at the top of a web page, navigation menus, “boilerplate” legal

notices, graphical buttons, images, and pieces of text that collectively represent

the page. The fragments can then be recombined and rendered appropriately for

the user, task, or context. For example when I go to weather.com to check

today’s forecast I see a beautifully formatted page that contains a weather map

of the entire country plus colorful icons representing clouds, rain, snow, and

thunderbolts. If I happen to be receiving weather forecast on a mobile phone or

Palm Pilot I don’t have the “real estate” to display all of this content. What I really

want to see are fewer content fragments - just the temperature and the odds of

rain or snow - laid out appropriately for my small display.

A prototype content management system developed at IBM, Franklin, makes the

management of fragments possible. It provides an end-to-end process; from

content creation and reuse to quality assurance and publishing to multiple

devices. Content is broken down to fragments, and the responsibility for

managing the fragments is assigned to different experts. The graphic designer

produces the buttons, icons and images. The product manager maintains the

product descriptions and pricing. The legal department is responsible for the

terms and conditions. When creating a product promotion, the web editor only

writes any new text and simply points to the fragments already created by the

experts.

An important aspect of content management is the separation of content and

style. The XML standard enables this: each fragment of a web page is an XML

document tagged with descriptors. A descriptor might tell whether the fragment is

a banner, price table or product description, or state its target audience or

expiration time. The content management software then uses “style sheets” that

lay out the right content for each device. As a result, the end user sees the

appropriate content and layout for the device they are using, be it a huge video

wall or a tiny display on a mobile phone or pager. In addition, using XML to

describe the fragments results in information that is in a format that can be

processed by applications as well as presented to end-users. Instead of having

to keep the same information in two different formats suitable for automated

processing and human consumption, it can be stored just once.

Another critical aspect of content management is detecting change. For example,

if a company adopts a new logo or updates a product specification, the change

intelligently and automatically ripples through the thousands of pages that may

make up the web site. Only final pages that include the changed fragment are

republished. The efficiency of this approach is huge compared to the old method

that relied on people editing each and every web page manually. Thinking about

content in this new way results in a more intelligent approach. Creating and

managing web sites is easier, more cost-efficient and more automatic for the

owner. The content on the resulting web sites is consistent, timely to view and

appropriate for the user and the new devices.

Life sciences – the next frontier

An often-asked question at technology conferences and in journalistic

publications is, “What is the next big thing?” Surely, the many information

technologies talked about in this book will continue to amaze us but an even

bigger arena may turn out to be the marriage of information technology with Life

Sciences. Most of us studied biology, a branch of knowledge that deals with

living organisms and vital processes, in high school. It was a relatively broad

subject – seems like an overview -- compared to the broader collection of related

subjects that are part of the exploding area called Life Sciences. As more has

been learned about life, whole new areas of study have emerged – genomics,

the study of the genetic material of an organism; proteomics, the study of the

incredibly complex proteins that we are made of; bioinformatics, the joining of

biology and computer science; and the emerging field of metabalomics, which is

the study of substances essential to metabolism. Not only have the topics

become more complex but also the very way in which they are studied has

changed. Biology has matured from "in-vivo" (observations of real life), to "in-

vitro" (test tube experimentation), to "in silico" (experimentation by computer

simulation). This transition from "wet" biology to "in silico" biology is inevitable as

more and more information becomes available and large scale computing

infrastructure becomes available. It is this migration to "in silico" research that

promises to enable the greatest advances of our time - the launch of molecular

based medicine and the first true understanding of the molecular basis of life.

Proteins control all processes in the cells of the human body. Comprising strings

of amino acids that are joined like links of a chain, a protein folds into a highly

complex, three-dimensional shape that determines its function. Any change in

shape dramatically alters the function of a protein, and even the slightest change

in the folding process can turn a desirable protein into a disease. The study of

how proteins fold is extraordinarily complex. The simplest investigation with the

most advanced tools takes months. The scientific community considers protein

folding one of the most significant "grand challenges" -- a fundamental problem in

science or engineering that has broad economic and scientific impact and whose

solution can be advanced only by applying high-performance computing

technologies.

At the beginning of the new millennium IBM announced a $100 million

exploratory research initiative to build a supercomputer 500 times more powerful

than the world’s fastest computers of today. The new computer -- nicknamed

"Blue Gene" by IBM researchers -- will be capable of more than one quadrillion

operations per second (one petaflop). This level of performance will make Blue

Gene 1,000 times more powerful than the Deep Blue supercomputer that beat

world chess champion Garry Kasparov in 1997, and about 2 million times more

powerful than today's top desktop PCs. Blue Gene's massive computing power

will initially be used to model the folding of human proteins. Learning more about

how proteins fold is expected to give medical researchers better understanding of

diseases, as well as potential cures. Dr. Paul M. Horn, senior vice president of

IBM Research said, "In many ways, Deep Blue got a better job today -- if this

computer unlocks the mystery of how proteins fold, it will be an important

milestone in the future of medicine and healthcare."

Better understanding of how proteins fold can potentially lead to pharmaceutical

companies being able to design high-tech prescription drugs customized to the

specific needs of individual people. And doctors may be able to respond more

rapidly to changes in bacteria and viruses that cause them to become drug-

resistant. "Breakthroughs in computers and information technology are now

creating new frontiers in biology," said IBM’s Horn. "One day, you're going to be

able to walk into a doctor's office and have a computer analyze a tissue sample,

identify the pathogen that ails you, and then instantly prescribe a treatment best

suited to your specific illness and individual genetic makeup."

What we are seeing is a technology revolution in one industry being enabled by

advances in another -- information technology has become the driver of

experimental biology. The new Life Sciences disciplines are being built on

powerful computer systems, massive storage, the Internet and an infrastructure

that enables the distribution and sharing of content. Using new algorithms for

searching, matching, and aligning information, the basic steps of identifying,

purifying, and cloning a gene followed by purification and characterization of the

proteins associated with that gene, have been automated and streamlined to a

degree that no one could have predicted ten years ago.

To see why information technology has become so fundamental to Life Sciences

we only need to contemplate the amount of data involved. The human genome

database consists of approximately three trillion bytes of information - equivalent

to approximately 3,000 compact discs. Unraveling the interactions and functions

of proteins (the products of the genome) will be one of the most computationally

intensive problems ever faced and will require orders of magnitude more data

and computing power than being used today.

One of the long-standing goals for information technology has been to maximize

productivity through enhanced collaboration. That same goal is now fundamental

to continued advances in Life Sciences. Researchers now share data, both

public and private, and collaborate in virtual environments to meet the increasing

pressure to reduce the cost of drug development while also decreasing the time

to market. New drugs often cost upwards of $500 million to develop and test. On

average, the process from discovery through approval takes between ten and

fifteen years to complete. The application of information technology will allow

companies to reduce costs associated with creating new drugs, and shorten the

development cycle.

Managing Life Sciences data is not just a corporate mandate, but also will

become a significant issue for individuals whose genetic information could

become available (anonymously or not) through these sources. Protecting

individuals’ rights by requiring informed consent for any use of their identifiable

genetic information is a challenge that information technology must help

overcome -- for example, by helping to implement access controls that ensure

that only those that should have access to such data, actually have such access.

Autonomic computing

In this decade there will be billions of devices used by people and there will be

trillions of intelligent chips built into or attached to almost everything we buy. The

combination of all these devices will generate enormous amounts of data. The

passage of the data through the Internet will place enormous strain on the

network infrastructure and on the systems used by all kinds of organizations.

Operators of e-businesses will find their time being deflected away from finding

better ways to leverage their systems for the benefit of their customers, to

instead spending their energy on keeping the systems and networks operating

properly. The tremendous amount of complexity will lead to more and more

human intervention, both at the user interface, at the servers, and at all points in

the network. We need precisely the opposite – to hide the complexity, and

require less human intervention.

Solving the problem will require a new kind of intelligence. The stakes are big. In

a speech to the National Academy of Engineers in early 2001, Paul Horn, IBM

Senior Vice President and Director of Research said, ``The future of our

increasingly technology-driven society depends on making computer networks

fast, reliable, always available, flexible and self-managing. “ IBM is working on a

broad solution to the problem which they call “autonomic computing”.

The basic approach is to create an intelligent network and system infrastructure

which acts more like our own bodies. Think about controlling your heart rate,

breathing rate, constriction or relaxation of your blood vessels, dilation of your

pupils, movement of food through your alimentary canal, the regulation of your

body’s core temperature -- actually, the beauty is you don’t have to think about

any of them. They’re all regulated and controlled by your body’s autonomic

nervous system.

This allows you to use information pouring in from the world around you for

higher level functions like thinking, deciding, then acting on those decisions.

Simply put, you can concentrate on what you want to do, and leave the running

of your incredibly complex biological systems to your autonomic system. An

autonomic computing network possesses three essential qualities. First, it is

responsive -- able to respond to unpredictable events in “intelligent” ways, not

just sudden surges in web traffic, but all types of disasters such as fires, storms,

earthquakes, etc that can wreck havoc with networks and systems. Next, it is

self-managing and self-healing – able to be adaptive and look after itself, and

when something fails or goes awry, correct the problem or get the help or

resources needed to do so. Last, it is always accessible -- customers,

employees, partners, and suppliers -- anyone that needs to can always get to it

easily.

If the network and systems are to have these qualities, all kinds of detection,

decision-making and directing functions will be required throughout the network.

The information technology industry will need to turn its attention to embedding

more “smarts” and functionality in a new array of microprocessors including

monitoring chips that detect errors, failures and things about to fail, and network

processor chips that can do something about the detected problems. Computers

will be built using a new architecture – one that is more cellular and distributed ---

just like the human nervous system. The systems and networks will be built from

microprocessor “cells” that integrate the functions of computers -- processors,

memory and communication.

These cellular architectures will allow the computer to get the computing power

out to where the data is – widely distributed to wherever the data is stored. It is

likely that in the current decade it will be possible to take dozens or even

hundreds of servers in a data center and fit that computing capability into a

closet. Software will enable the computing capability to be self-managing and

self-healing when something goes wrong. This will enable intelligent computing

“utilities” that will allow organizations to tap in and pay as they use it just like they

do for electricity and water.

Easy

Sometimes I say to myself, “Why is this so hard?” In many cases things actually

do work exactly the way they were designed to work but that isn’t the way I want

them to work! The truth is that when you consider the underlying complexity of

many aspects of information technology, including the Internet, it is nothing short

of amazing that things work at all. The Internet has been cobbled together, and

so have the efforts of businesses to employ and exploit it, resulting in a crazy

quilt. We expect it to work as reliably and predictably as the telephone system in

America that took decades of planning and building. When we enter information

in our PC or at a web site we expect the PC or the server to figure out exactly

what we meant by what we entered. The fact is that computers are not humans

and the programming to enable computers to figure out what we mean is not

easy to create. In spite of today’s shortcomings, there are reasons to be

optimistic about things getting easier. The Internet and the World Wide Web are

continuing to evolve based on new standards. In parallel, new software

communities, including Linux, are gaining momentum – devising creative new

ways to share ideas about software and approaches to creating software

applications. The combination of more standards and better software approaches

offer the potential to make things much easier.

The browsing experience itself needs to become easier and in fact progress is

being made. In the early days of the web you had to be a computer scientist to

be able to install a browser on your PC. Today, every PC sold comes with a

browser pre-installed and ready to use. Plug your PC into electrical power and a

network connection or phone line and you are ready to surf the web. As more

and more Internet usage shifts to consumer devices such as mobile phones and

Personal Digital Assistants things will get even easier – much more like

consumer appliances. Consumer companies know how to make appliances easy

to use. Although many people still say that a VCR is impossible to program, most

consumer appliances are intuitive and require little or no training. If you want to

turn your handheld personal stereo off you simply turn the switch to off. Contrast

this with your PC where to turn your computer off you must first go to the “Start”

button. Then you select “Shutdown” and then various programs running on your

PC ask you “Do you really want to shutdown?” If you want to print something with

your PC, you must go to a menu that is labeled “File”. Computers were designed

by very technical people in computer companies who think such approaches are

logical. The good news is that things are getting easier. It used to take years for

consumers to get feedback to the design engineers that a product was unusable.

With the Internet – power to the people -- feedback on products gets back in

hours from the introduction of a new product. Not only will things get easier but it

will happen more quickly too.

While we can look forward to great progress in PCs and other devices becoming

easier to use, a big part of making the total experience easier has to happen at

the server – the e-businesses themselves have to be easier. In the 1990s it was

not easy to build an e-business, run an e-business or use an e-business.

However, just as the Internet is evolving as a medium, the tools for building e-

businesses are getting better and better. While we continue to read about major

web sites that have multi-hour outages, technology is now becoming available to

make web sites as reliable as the airline reservation and banking systems we

have used for many years.

Who builds web sites, anyway?

E-businesses, in response to rising customer expectations, are trying to make

their web sites more sophisticated. Not only do many sites look impressive but

they also have some amazing capabilities. “Click here” to do almost anything --

check the inventory level of an item, calculate shipping costs, or initiate a live

chat session with a customer support representative. The bar keeps rising as

competition ramps up to win over consumers and business professionals. There

are two challenges that this presents. First is a shortage of software developers

who know how to do the sophisticated things and second is the challenge of

using the browser as the exclusive interface for e-business transactions.

The high priests et al

Software developers fall into roughly three categories. First are the “high priests”.

These technical giants are not only experts in writing very sophisticated computer

programs in the more difficult programming languages such as C and C++ but

they can also reach into the “operating system” software provided by Microsoft,

IBM or Sun et al and modify and extend the basic capabilities that those

companies provided. These hard-core experts design, build, and fix large,

complex systems, environments, and applications. The really good ones aren't

bound to any specific programming language; they use whatever tools fit the task

at hand. Some of the “high priests” don’t do much programming at all but are

experts at diagnosing complex problems and making systems and computing

networks do what they are supposed to do. These “high priests” of programming

are relatively few in number and in many cases command extraordinary

compensation – if you can even find them.

The second category of programmer is much larger in number and typically

specializes in developing applications. They are very competent in building

programs for specific application areas like business (e.g., payroll),

manufacturing (e.g., inventory control) or science (e.g., molecular analysis), but

will turn to the “high priests” for assistance in some of the “hard core” problems.

Finally, in the third category there are millions of web page designers, often

called web page developers, who don’t really consider themselves programmers

at all. In fact some members of this group refer to themselves as “web monkeys”.

Software developers in the first and second categories are sometimes called

software engineers but are typically called programmers. Whatever you call

them, finding good ones is not easy. It is part of a bigger problem. There is a

shortage of hundreds of thousands of skilled information technology people in

America alone. Europe also has a shortage. There are good skills available in

parts of Asia but immigration limits have kept many from being employed. In the

year 2000 some progress was made in the United States via the passing of

legislation that allowed higher immigration limits but the shortage still remains.

Although the first half of 2001 saw many layoffs in the technology industry, the

cutbacks were concentrated in manufacturing, marketing, and various indirect

support areas – not the skilled programming area.

The key to generating enough skilled people over the longer term lies in a quality

education system that can meet the needs of the information economy.

The web was built by programmers -- people who, typically, spend a lot of time

thinking about making their programs faster and more capable, but not

necessarily easy to use. The users of the web typically don't know (or want to

know) the gory details of how the programmers made things work -- they just

want to perform certain tasks, like buying an airline ticket or enrolling in an e-

learning course. This is where the web page developers, the third category,

come in; putting a simple face on the riches of the Internet, and making it easy

for almost anyone to take advantage of it. Web page developers not only build

great looking web pages but increasingly have found ways to make web pages

act in dynamic ways to interact with users. However, there are two limitations

inhibiting the web page developers’ efforts. One is a lack of programming skills,

and the other is a set of limitations imposed by the browser.

Many of the things that web page developers want their web pages to do require

programming. While the web page developer often has excellent graphic design

skills, they generally do not have programming skills. Programming is not visual.

It involves thousands of lines of instructions (referred to as code) that then have

to be “debugged” -- programming is intellectually intensive. To meet their needs

without having to turn to programmers, web page developers have turned to a

form of programming called scripting. Just like there are many different

programming languages there are many different scripting languages including

JavaScript, Perl, REXX, Tcl, and others.

Web page developers are flocking to JavaScript and it has emerged as the most

popular scripting language. It was developed by Netscape as a tool to enable the

browser to have more capability than just browsing. JavaScript is incorporated

into web pages just like the HTML or XML tags are. When the browser

downloads a web page, the JavaScript commands are executed. This is very

powerful. With JavaScript, a Web page can react to what the person who is

browsing the page is doing: images can swap when you move a mouse over

them, menus can appear and disappear dynamically, calculations can be made,

or zip codes can be used to automatically look up a city and state.

JavaScript sample programs are readily and freely available on many web sites

and web page developers are able to copy these samples and use them without

actually having to know the details of how they were created or how they work.

The visual aspect of a web page and the ability to try something and instantly see

how it is going to work has enabled some very sophisticated web pages to be

developed. By combining JavaScript with various web page development tools

such as NetObjects Fusion or Macromedia’s Dreamweaver web page developers

are able to create web pages that can do almost anything you can imagine.

Large numbers of web page developers are becoming empowered with

JavaScript – becoming highly productive and able to gain much of the power of

programming without having to become a programmer.

Contrary to popular belief, JavaScript has nothing to do with Java. Java was

initially developed by Sun Microsystems and was subsequently contributed to by

IBM and others. Java is a programming language. Netscape wanted to introduce

a scripting language to help web page developers be able to add more

capabilities and at the time Java was very new and becoming popular rapidly.

Netscape decided to name their scripting language JavaScript. Some would say

this was done to capitalize on the popularity of Java. At this point Javascript has

become extraordinarily popular on its own merits. The fact that JavaScript works

in both the Netscape browser and Microsoft’s Internet Explorer has made

JavaScript ubiquitous. No matter what its name, it is having a positive impact in

the world of e-business.

Browsers are great for browsing

There is a remaining problem – JavaScript in web pages is limited by the

capabilities of the browser – and the limitations of the browser are significant. Let

us start with the positive aspects. The browser has become ubiquitous, it

requires no training, and has become second nature to millions of people. In fact

it seems that browsing has emerged as a fundamental human trait; one that, until

recently, we didn’t even know we had. People just click here or click there to do

something. Even though the browser was intended for browsing, it is amazing

what else they get used for today. Businesses are rushing to “web enable” their

entire inventory of computer applications; enabling the applications to be

accessible from a web browser instead of the traditional and proprietary

interfaces. Corporate CIOs find the browser especially attractive because it

reduces the complexity for users and the cost to the organization for distribution

of the software (it can be downloaded; no diskettes or CDs) and the resulting

support. There is also the advantage that a person can go to any browser

anywhere and get access to the company systems and data.

The flip side of this is that the browser is not really well suited for many

applications. Millions of people have software programs loaded on their PCs --

Quicken, TurboTax, Microsoft Money and similar programs -- that help them to

manage their financial affairs. These PC programs work with Microsoft Windows

and have the familiar Windows menus and functions. Just as the browser has

become familiar to millions so have these easy to use applications and the

Windows desktop.

There are also web-based applications that can enable you to manage your

money or taxes using a browser and a web site, but the web applications don’t

look or feel quite the same as a comparable Windows application on the PC.

They don’t have edit/copy/paste and other desktop functions or don’t have them

in the familiar way. They don’t have “local” data. That means you can’t pay your

bills or review your budgets while you are on an airplane or if you are at a

location that doesn’t have good connectivity (unfortunately there are still quite a

few of them). They will be only as responsive as the server and the network

bandwidth are at the moment.

Applications on your PC feel different. You can click here to pay a bill with the

Windows application and the response time is limited only by the speed of your

PC and your disk drive. This is typically so fast that it seems instant. Click on a

web page to pay a bill online in your browser and the response time can be a few

seconds or, in some cases, much longer as you wait for the server or the network

to allow you to go to the next step. Same thing with email; you can use Eudora,

Lotus Notes, or Microsoft Outlook and get instant response when you delete an

email from your inbox or you can use web based email and spend time waiting

for the network or the server. The bottom line is that the browser interface

doesn’t feel as natural and responsive as native desktop applications and is not

adequate to handle all of our needs and expectations

Freedom from the browser

Fortunately, there are alternatives to the browser interface – and the alternative

is the desktop itself. We will soon start to see an explosion of new applications

that have the look, feel and accessibility of the desktop but also have access to

the web behind the scenes. For example, imagine tracking all your frequent flyer

points in a single application that automatically goes to each of the airlines'

websites, logs in with your account number and password and downloads your

balances. And, if you are offline, still allows you to access and manipulate the

data. All this with an application sitting on your desktop, looking and feeling like a

windows -- or Linux or Mac -- application, not like a browser. They will be

integrated with the desktop. For example, you may have a small text window in

the “system tray” at the bottom of your Windows desktop. You type a stock

symbol into it and an application goes to the Wall Street Journal for latest stories,

to Edgar Online for the latest SEC filings, to your Quicken portfolio for your

current holdings, etc. and pulls it all together in one nicely formatted report on

your desktop – no browser. This new kind of application will also operate offline

when needed and then update things the next time you are online. We are

already beginning to see Internet applications that don’t require the browser

interface; instant messaging programs, the RealJukeBox and Windows Media

Player are examples. Individuals will no longer be shackled to the traditional

browser model of the past.

New tools are emerging that are going to trigger yet another wave of Internet

applications based on the new “browser free” model. Next generation scripting

tools will keep the simplicity of the first generation -- building applications with an

easy to use interface but with the power to access the whole range of native

desktop capabilities plus all that the Internet has to offer. Using JavaScript, the

web developers will create useful applications while the “high priests” will build a

scalable, manageable, available, reliable, and secure infrastructure to support

the applications at the server. The browser will not disappear -- features in

browsers will get better and better for viewing content and surfing the web -- but

we may see it return to what it was originally intended for - browsing.

An innovative approach for building these “browser free” applications, called

Sash (http://sash.alphaworks.ibm.com), was developed at an IBM skunk works in

Cambridge, Massachusetts. Sash enables web developers to use JavaScript to

create windows desktop applications that can do all the things web applications

can do but which can also take advantage of the start bar, the file explorer

metaphor, and other basic windows capabilities. The Sash “weblications” look

and feel just like native windows applications while at the same time having the

Internet connectivity capabilities of the browser. Weblications can operate online

or offline. They “live” on the desktop just like a traditional application but when

connected they get live data and interact with the web. When disconnected the

weblications can use the data locally. It is a new paradigm for web applications.

In the summer of 2000 a group of summer interns at IBM in Cambridge,

Massachusetts developed a Linux version of Sash called SashXB. It was made

available to the Linux open source community in August 2000.

The next generation of e-business

Easy is about to take on a new dimension as the web continues to evolve. In the

early stages the web allowed for browsing of documents with hyperlinks to other

documents. Then with the advent of XML it gained context so that documents

could be more easily found and, more importantly, integrated with information

technology systems. A new set of standards gained prominence in early 2001

that will allow the web to move to yet a higher level – from a web of documents to

a web of documents and applications. The “application web” is now in its infancy

but it will expand dramatically and provide a new way for application software to

be developed, published, searched, and utilized. Relatively inexperienced

software developers will be able to assemble new e-business applications as

easily as they do spreadsheets today. They will be able to locate modules of

software that were written by others and placed in a global directory organized

according to the specific capability of the software. They will then be able to link

multiple software modules together to perform the desired tasks. The user will

see a web page at an e-business that simply meets their needs but behind the

scenes the e-business server is not interacting with a single web site but rather

with multiple servers in a network of applications. To understand this important

new development, we need to start with some historical perspective on how

computer applications get created.

The early days

In the 1950s and 1960s computer programming required that the programmer be

an expert with the particular computer that his or her employer had. It was like

learning to drive a car. Not any car – one specific make and model of car. Being

an expert driver of that car gave you no credentials or even capability to drive

any other kind of car. If the organization got a new kind of computer, all the

programming had to be redone. Users of the system had to make a request by

fax, form, or phone and the request would be entered into the application

program by someone else and then, at the end of the day, a “batch” of the day’s

inputs was processed and the user would get the results the next day by

receiving a printed report of some kind.

During the 1970s and 1980s the online world simplified things quite a bit. Inputs

could be made “real time” while a customer or user was on the phone. A

customer service representative could take the information over the phone, enter

it directly into a system, get the results immediately and report back to the person

on the phone. Some progress was made in making things more compatible from

system to system by the establishment of common languages and protocols for

databases and communications. However, the programming to do this was still

very specific to the particular kind of computing system. In fact things got even

more complicated to program because of the real-time nature of the applications

and the need to integrate across numerous processes.

The web

The web took things a big leap forward. At last there was a common way (the

browser) for accessing and displaying information, even though the applications

that run on the server -- that do the pricing, inventory lookups, shipping

estimates, invoicing, etc. -- are still created with various languages which are

specific to the vendor or system. The web server applications have also become

very monolithic; i.e. in order to fulfill the expectations of customers on the web

the application has to do the whole job. Soup to nuts; present the right price,

confirm if the item is in stock, calculate shipping, and confirm the status of the

order. Increasingly, customers want to get access directly into the supply chain

and see exactly where things stand. In short, applications are getting larger and

more complicated -- harder, not easier.

The application web

The application web (web services is the technical name) will possibly be the

biggest change in information technology in decades. Today companies build all

of the functions that their web site needs. If they are selling their goods and

services via the web they have to develop software that can take the order, do

credit checks, check inventory, look through the supply chain, arrange for

payment, charge the customer, clear credit card transactions, etc. Adding all of

this functionality into a web site takes a huge amount of time, effort and skills. If

they choose to buy the software instead of making it they typically acquire what

they need from a single vendor even though that vendor’s software may not be

the best at all of the individual functions needed. Wouldn’t it be nice if there were

companies on the web which offered many of the web application functions (web

services) needed and you could just link your web site into those services and

use them instead of creating them yourself or buying them from one source? Just

like in the real world, I don’t cut my own hair, I look in the yellow pages to find a

barbershop and then go have a barber perform that service for me.

For example, suppose that a company called American Specialties Inc. (ASI)

specializes in selling American goods for delivery mostly outside of America.

They want to create an application to sell their products on the web. The trickiest

part of the application is determining the best way to ship the product to ensure it

gets there when the customer wants it and at the lowest cost. ASI doesn’t have

the skills to write this particular part of the application and they haven’t bee able

to find a vendor with a software package that can do it and which is compatible

with the rest of ASI’s software.

There is another company called Rates and Costs Inc. (RCI), which specializes

in the calculation of optimum routes and the associated costs for shipment to

places anywhere in the world. RCI offers the calculation as a service on the web

and it is the exact function ASI needs to incorporate into their web application. In

yesterday’s world ASI and RCI would not be aware of each other. In the new

(NGi) world, ASI could discover RCI in a universal directory (the application web)

that is accessible to anyone on the web. It is like a Yahoo! for applications (the

barber in the Yellow Pages offering hair cuts). Since RCI “published” their

application using the new (web services) standards, ASI was able to not only find

RCI’s service but can also easily see the specifications for RCI’s service – what

inputs are required and what output does it produce. RCI could have created the

calculation service using whatever programming language they want since the

standards assure that things can work together.

The programmer at ASI likes RCI’s program because it performs exactly the right

function that ASI needs and the software has already been written and tested!

ASI follows the web services standards to incorporate RCI’s service into their

web application. Whenever a user goes to ASI’s web page and needs shipment

route and cost information, a link is made behind the scenes to RCI’s web server

to get the information. ASI’s customers don’t know, nor will they care, that part of

the job is being done by RCI’s server; not ASI’s server. ASI makes an

arrangement to pay RCI each time one of ASI’s customers uses the RCI web

service.

Creating programs by linking to programs written by others – without regard to

what programming language was used to create the others’ programs --

represents a whole new paradigm. It is one of the information technology

industry’s holy grails. Standards organizations have been attempting for years to

create a “neutral” programming environment. The UNIX vendors – HP, DEC,

Sun, IBM, Data General, and others – formed various organizations, councils and

consortia over the years attempting to bring things together. Progress was made

but none of these initiatives achieved real openness and true compatibility across

the information technology industry for several reasons.

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Microsoft was out there with a dominant market share on the desktop and

promises that they would bring forward the “ultimate” operating system for the

server. As long as that threat was there the industry didn’t believe that there

would be an industry-wide standard. There was also certain distrust that even the

handful of UNIX vendors might not stay unified in their own commitment to open

standards.

The other reason is that none of the prior attempts were based on a language-

neutral approach. Java was a strong attempt at universal compatibility. In the

early years of Java it was positioned as the single programming language for all

platforms, desktop or server. The promise of Java for the desktop, however,

could not stand up against Microsoft and has essentially died as far as a

standard for the desktop. On the server, however, it has gained significant

traction and is believed by many vendors to be the best programming language

for connecting heterogeneous backend processes in a secure and productive

way. Still, Java is a programming language and it is not the only programming

language even if it is a very good one.

Standards for web services have attracted a large and diverse backing. Just as

the web has standards that make it easy for people to create web content

(HTML), find web pages (DNS – Domain Naming system) and connect to web

sites (HTTP); the key standards for web services bring this same ease of use to

developers for the publishing, finding, and utilizing web applications. The web

services standards were driven by Ariba, IBM, and Microsoft and more than two

hundred other companies have endorsed them. The basic protocols to publish,

find, and utilize application services are WSDL, UDDI, and SOAP.

The next generation of scripting languages, such as Sash, will be able to utilize

“connectors” that call upon web services using these standards. This will result in

web page developers being able to invoke sophisticated programming – things

which formerly could only be done by the “high priests”.

More detail on web services can be found at

http://www.uddi.org/

and

http://www.ibm.com/developerworks/webservices/

An even faster evolution of e-business

The web services model is the first language-neutral and vendor-neutral

programming model to be developed. It allows applications to be more modular.

The new web services standards give complete independence to the

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programmers who create applications. Applications can now be broken down into

“Legoes” and each “Lego” of an application can be written in a different language

and can be running on a different server. Application developers can create

applications that combine core competencies the developer may have but allow

the e-sourcing (web services version of out-sourcing) of functions that someone

else may be better at. The web services standards enable the web to evolve from

a web of content to a web of content and applications. Web services can enable

server-to-server interaction in addition to browser to server interactions. Servers

will negotiate with other servers via web services and even complete transactions

by themselves with no direct human intervention. These interactions will replace

the paper forms and faxes that flow back and forth from company to company

today.

E-business has evolved rapidly but web services will speed e-business

development and finally create the interoperability between businesses that has

been a decades long dream. History has shown that adoption of standards leads

to an explosion of usage and that will surely be the case with web services. With

the standards in place for web services, the e-business functions for entire

industries will be able to be brought together in central directories. These

application webs will facilitate the formation of e-marketplaces and enable them

to build useful portals. Users of all kinds, business and consumer, will be able to

establish interaction with marketplaces more efficiently. The e-marketplaces will

be able to deliver business functions to a broader set of customers and partners

and pursue new business models by combining applications in new ways. Small

companies will be able to e-source to dozens of other companies for public

relations, legal, payroll, and other functions they would rather not perform

themselves. Large companies will have a much greater range of choice over

what they build and what they e-source. Virtual corporations comprised of a

federation of smaller ones will form and enable “hyper competition” on a global

scale.

Penguin to the rescue

One last factor that may play a huge role in making things easier is Linux. It is

hard to miss mention of Linux in the media – it has gotten a lot of attention and

for good reason. It has the potential to radically impact how information

technology gets created and used. A student in Finland named Linus Torvalds

started Linux in August 1991. His goal was to create a Unix-like operating system

which would work on a PC. Almost all PC’s at the time used an operating system

called DOS and only larger more sophisticated computers used Unix. Unix was

appealing to many students because of its sophistication – in particular its

networking capability. What started as a hobby for Linus Torvalds turned out to

become appealing to many more than just the students as major information

technology companies including IBM, Hewlett Packard, and Compaq have put

their full support behind the software with the Penguin mascot.

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Linus Torvalds picked the penguin as the Linux logo. He once took a trip to

Australia and was captivated by a ten-inch high penguin. Linus said it was, “love

at first sight”. A few years later people were discussing what kind of logo people

wanted for Linux. Many wanted a boring, commercial one. Linux decided on the

penguin. “I'm much happier being associated with a fun and slightly irreverent

logo than with something static and boring."

Three shifts

I’ve seen three major shifts during my more than three decades in the information

technology industry. In the early 1980s it was the introduction of the PC. In the

early 1990s it was the emergence of the Internet as a serious communications

network. In the late 1990s it was Linux. All three existed before those particular

timeframes but those are when, from my perspective, the big shift started. Each

had some things in common with the others. In all three cases smart people left

their jobs at companies and universities to get involved with these new

technologies -- and venture capital followed them. In all three areas there was a

lot of grass roots activity and the formation of a genuine community. They were

not tops down initiatives of major companies or organizations. (Even the PC

effort at IBM was led by an independent business unit that was a sort of skunk

works.) All three areas were very standards oriented. They were either built on

standards or actually created new standards. And one last thing that all three

shifts had in common -- some people in the information technology industry said,

“Who needs it”? There is a lesson to be learned in this reaction.

Who needs it?

In 1980, Digital Equipment Corporation had a number of "personal computer"

projects underway (some may remember the Rainbow) but there was not a real

commitment. Their first PC-like product was called an "applications terminal and

small system". In effect the company said, “PC? Who needs it”? Although IBM

introduced the first standards based PC there were those in the company that,

when it came to serious computing needs, in effect said, “PC? Who needs it”?

In the mid nineties it was clear that the Internet was going to take over the world

as far as a networking standard. I was at an Internet Society meeting in Prague

in June 1994 and a gentleman from Chrysler Corporation gave a presentation on

how his company was going to standardize on TCP/IP for all networking. I am

sure there were some at Chrysler that thought this was radical and even some

attendees of the Internet Society meeting thought so. At that time there were

many networking standards out there – arguably many of them were superior to

the Internet standards. But, it didn’t matter. The shift was underway and the

Internet standards are used by virtually all companies in the world (often

coexisting and interoperating with other prior networking standards). Meanwhile,

a number of companies that owned those other standards said in effect,

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“TCP/IP? Who needs it”? And then came Linux. 1999 was the year that Linux

began to look serious in spite of a number of shortcomings in scalability,

reliability, security, and manageability. Sun Microsystems in effect said, “Who

needs Linux, we have Solaris and it is better than Linux. Microsoft in effect said,

“Who needs Linux, we have Windows 2000 and it is better than Linux”. Along

came IBM, which had questioned the need for both PC’s and TCP/IP for serious

business computing, and said in effect, “Everybody needs Linux”. Perhaps it

goes to show that only the greatest sinners know how to repent!

The community

The real power of Linux is not derived from IBM or any other company or

organization; it is the power of the community. Linux, just like the PC and the

Internet, is built in an open fashion so that all can see how it was done. The

communities that emerged to support them added value to what was developed

by the grass roots efforts and then a whole industry grew up around them. That

may be what some of the companies that did not embrace those shifts in the

early days did not realize. They thought it was all about comparing whether the

PC, the Internet and Linux were better than the proprietary approaches. In the

early days, PC's were much inferior to minicomputers and mainframes; the

Internet was much inferior to IBM’s Systems Network Architecture or Digital’s

DecNet; and today Linux is inferior in many ways to Windows and Solaris. But it

doesn’t matter for two key reasons. First, when a major e-business or an e-

marketplace has a choice between proprietary offerings, or offerings built around

communities, communities will almost always win. You could say it is the power

of democracy. Irving Wladawsky-Berger, of the Presidential Information

Technology Advisory Committee, says, “In proprietary offerings, it is ‘every man

for himself’. In community based offerings, it is the community collaborating in

setting standards and building common technologies which will be available to

all, and then it is ‘every man for himself’ in building on top of that, or leveraging

the community base”.

The second reason that proprietary offerings ultimately lose out is that there is no

way that a single vendor can compete against a well-organized community. In

the early stages, when the community is not yet well organized, it cannot make

progress, and individual vendors can step in and do very well, even establishing

natural monopolies as they bring order to chaos. In fact, people have argued

that this is the only model that works in information technology, namely the

economy of scale and setting of de facto standards that always results in

monopolies. But, once the community gets organized, and can start making

progress, the game is over. Darwinian evolution takes over; the best ideas

survive and the weak ones fall by the wayside. There is just no way a single

vendor, no matter how powerful, can have access to as talented and as many

skills as the community can bring to the effort all over the world.

Is it real?

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If you still have doubts about how real Linux may be, there are two tests that are

easy to apply. First is to visit a bookstore or the web and see what is available

about Linux. The 200 books on Java seemed like a lot but for Linux there are

more than 500 books! The second test is to visit the campus of any college or

university that teaches computer science and ask the students. You will find that

they virtually all know about Linux and are comfortable using it. There is a myth

that Linux and other open source software is a cult; that it is 90% about culture,

10% serious. It is just the opposite; it is 90% discipline and high quality, 10%

culture. Developers who make high quality contributions to the community rise in

the unofficial hierarchy; those that contribute poor quality get sent to

“programmer’s Hell” never to be heard from again. Very high quality software is

produced as a result of this self-managing process. That’s why people are

interested in Linux – it is a community. Linux has become a “movement”.

Although there is no central management structure for Linux it has evolved

rapidly because almost anyone can contribute to it. This might include a large

software sub-system contributed by IBM or some software to enable a new

gadget that a student in Eastern Europe contributed. A system administrator at

XYZ Company may be looking for a certain kind of software and makes the need

known on the Internet. Meanwhile, someone in another part of the world had just

written such software and was happy to give it away to anyone who needs it. In

theory such global collaboration shouldn’t work so well but it does. Developers

like the fact that if they find a bug in the software they can either fix it or report it

to others in the community. In the end they know, since the software is open for

all to see, that it will be fixed and it can be inspected. There’s a community

behind it that is committed to it.

The other myth about Linux is that it is popular because it is free. There are free

versions of Linux available and this makes it easy for students to learn it, but any

organization that is going to use Linux for serious purposes will buy Linux from a

company that specializes in distributing and supporting Linux. In addition,

companies like IBM and others will enable all of their own software to run on

Linux platforms, and these companies will not be giving that software away for

free.

The ultimate test

The ultimate test of course is not what an information technology company or

information technology user says about Linux but rather how they vote with real

money and contributions of software into the Linux community. In late 1999 the

24th largest super computer in the world was being installed at the University of

New Mexico. It is being built using 256 Intel servers from IBM, linked together in

what is called a “cluster”, running Linux. In early 2001 The National Center for

Supercomputing Applications (NCSA) at University of Illinois at Urbana-

Champaign announced that they would be installing the largest and fastest Linux

cluster in academia. Their two IBM Linux clusters will be able to perform two

trillion operations per second and will be used by researchers to study some of

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the most fundamental questions of science, such as the nature of gravitational

waves first predicted by Albert Einstein in his Theory of Relativity.

Linux is also beginning to move into the commercial environment – for real

production applications. At the end of 2000 Shell International Exploration and

Production announced that they would be installing the largest Linux

supercomputer in the world. Linux clusters will become more and more common

in e-business applications as the demand from large numbers of users and

transactions expands. Telia, the largest telecommunications company in

Scandinavia, announced that it would be replacing dozens of Unix computers

with a single mainframe computer running Linux! The mainframe has an

operating system that in turn can enable tens of thousands of virtual Linux

operating systems – thousands of systems all running on one computer. Just

these few examples show that Linux is no longer just for students – it is coming

into the mainstream.

When we think of information appliances we may think of small things like MP3

players, personal digital assistants, and various wireless devices. There is

another kind of appliance that is more significant in size and scope – server

appliances. These specialized boxes do a subset of what normal information

technology systems do. They provide printing services, manage large amounts of

storage capacity, handle network security functions, etc. These are all things that

information technology systems can do generally but, by making server

appliances that do only these certain functions, the result is much greater

reliability. Server appliances using Linux will have extraordinary stability and

reliability and that translates into making things easier to manage.

Embedded computing

At the other end of the spectrum, Linux is finding its way into very small

computing devices. TiVo is a personal TV service that transforms your

television-watching experience. It allows you to automatically record your favorite

shows every time they air—without setting a timer or using videotape. Then you

can control your TV watching by pausing, rewinding or instantly replay any

program, anytime. TiVo is an easy to use consumer device. Under the covers is

a PowerPC microprocessor running Linux. In Taiwan there is a flurry of activity

going on in what is called “embedded Linux”. Embedded means that Linux is

embedded “under the covers” so that the user doesn’t even know it is there.

Taiwan has developed prominence based on manufacturing efficiency for

industry standard products in the information technology industry. They now plan

to duplicate that prominence by putting their own designs into products using

Linux. I attended a Linux seminar at National Taiwan University in Taipei in June

2000. The seminar was focused on embedded Linux for all kinds of handheld

and Internet attached appliances. The opening keynote speaker was very bullish

about Linux. He said that existing industry standard operating systems for PCs

are “big, expensive, and unreliable” but that Linux was “small, inexpensive, and

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reliable”. Since no one company controls Linux, it is available to all companies in

the world to use, contribute to, and exploit. We can expect to see Asian countries

approach this opportunity very aggressively.

At the extreme end of the spectrum, IBM researchers have built a “smart watch”,

running Linux, that can communicate wirelessly with PCs, cell phones and other

wireless-enabled devices, view condensed email messages, provide users with

calendar, address book and to-do list functions. Future enhancements will

include a high-resolution screen and applications that will allow the watch to be

used as an access device for various Internet-based services such as up-to-the-

minute information about weather, traffic conditions, the stock market, sports

results and so on. Dick Tracy’s watch is finally here!

Making things easier

The industry commitment to Linux is growing rapidly. IBM is betting its future on

Linux and has said publicly it will invest nearly $1 billion in Linux in 2001. Fifteen

hundred engineers at IBM are working on adding Linux capability to the

company’s products and services. HP, IBM, and NEC are setting up an Open

Source Development Lab in Portland, Oregon. This independent, non-profit

center will provide the open source community a place to test enterprise-class

Linux software. This will help ensure that Linux will be “hardened” and ready for

serious e-business. Over time Linux will do for operating systems what the

Internet did for networking and communications – make them truly open and

interoperable.

A lot of effort is expended in organizations today on an activity called “porting”.

Porting means moving an application from one software “platform” to another:

from a mainframe to Windows, from Windows to Linux, from Unix to the Mac,

from the Mac to the mainframe, etc. This activity does nothing for the user and

yet it requires scarce skills to get it done. As Linux becomes more and more

prevalent the porting can decline and those scarce resources can add more

value for users.

In addition, many information technology services companies, including IBM, see

a big opportunity in making things easier for companies wanting to exploit Linux

and they are opening new services practices to capitalize on it. The combination

of mainstream acceptance, continued contributions of software from many

organizations around the world, the widening availability of skills and services,

and the high quality of Linux software will all contribute toward making the next

generation of the Internet easier.

So is Linux going to replace all the other operating systems anytime soon? No,

but is Linux a disruptive (in the positive sense) technology? There’s no question

about it. In the market for server operating systems, Linux is growing the fastest

and steadily gaining share. Windows still dominates the desktop operating

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system market but Linux is even making some inroads there with several open

source initiatives including Gnome, KDE, and Eazel that are creating personal

productivity applications and making the Linux desktop easier to install and use.

Trusted

Of all the issues which will affect the future of the Internet, the safeguarding of

our personal information when it travels on or over the Net is likely the most

important because it is at the heart of Trust -- and without Trust the Net will not

be able to realize its full potential. This means that information about an

individual needs to be handled in a way that is consistent with the privacy and

security expectations of the individual -- if not, there will be no trust.

Privacy

MyFamily.com is a very useful site for families to share information, calendars,

photos, and to learn about genealogy. As part of the registration people are

providing the site with their registration information and also the name, email

address, and (optionally) the birthdays of their children. This represents some

very serious information that a person is entrusting to this web site. The

management of MyFamily.com is committed to their privacy policy but what

happens if MyFamily.com gets acquired? What assurance do we have that the

policy will survive? How do we know that the site is safe from hackers? How do

we know we can trust the I/T staff not to look at our personal family information?

There are numerous questions of this nature that are not Privacy Policy per se --

they are actually more about security in many cases -- but questions about which

people will eventually get worried when they begin to think about the fact that

they have placed potentially their entire family history and photo gallery on a web

site.

One element of privacy on the Net is Opt in versus Opt out. When you register at

a web site you will often see a small box to be checked giving you the “option” to

be included or not included in subsequent emails making offers to you. Opt in

means you proactively choose to be included. Opt out means you are included

by default and you have to take action to be removed from the list of those who

will automatically receive the emails. In some cases you have to read the words

very carefully to determine which case is the default. This is part of Trust. Is the

site really opening up to you and making it very clear what your options are, or

are they making the words a bit fuzzy and hoping you won’t figure out what the

default actually is?

Citibank recently introduced a new service called c2it that enables the sending

and receiving of cash via e-mail. You simply visit the c2it site, specify which of

your checking, savings, or credit card accounts you want the money to come

from, and enter an email address for someone you want to send the money to.

That person then receives an email, is asked to enroll in c2it, and then can

accept the money from you directly into their checking, savings, or credit card

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account. This seemed like a potentially useful service to me when I learned about

and so I enrolled. Only after I enrolled did I find out that there were fees involved.

Then I discovered that incoming amounts are not credited to your account for five

to six days, which is longer than if I had received a check and deposited it myself.

Then I discovered that there is no fee to receive into a Citibank credit card but

there is a fee if it is another bank’s credit card. I am not saying the fees are

unreasonable – the competition from PayPal and other services will determine

that.

The issue is trust. It would be easy to get the feeling that Citibank was not being

forthcoming about their offering. Now comes the good part – Affiliate Sharing.

The enrollment page on the web site said “Citibank FSB is allowed by law to

share with its affiliates any information about its transactions or experiences with

you. Please check this box if you do not want Citibank to share among its

affiliates any other information you provide to us or that we get from third parties”.

We are talking about a sweeping allowance to provide a broad and undefined

amount of information about you with a broad and undefined audience. Should

the default be “check this box if you do not want” this? Seemed to me that this

was an obvious case where it should have been opt in not opt out. Trust might

wane a bit further.

Then comes the Marketing Offers. “Citigroup may still send you marketing offers

by telephone, mail and e-mail. If you do not want to receive such marketing

offers, please write to the address below and include you name, address, social

security number and tell us you don’t want offers by mail and/or phone and/or e-

mail”. Write to us? This highly automated web site that can transfer money in

and out of any account can’t have one more check box; preferably with “check

here if you would like us to make offers to you”? I sent the letter and am not sure

how long it will take to get “processed”. In the meantime, I am already receiving

unsolicited marketing offers. Citigroup is a superb marketing oriented company

but the approach with this new Internet offering may not build trust with new

enrollees even though the company is a highly trustworthy organization.

A world where everything is connected

When every computer is connected to every computer a lot of things are

possible. Some of them are not pretty. Trust will become critical. Brands will

become more important than ever because they will signal to us what level of

trust we can expect. How will we know whether we can really trust a web site?

Trust goes hand in hand with good security and privacy. Offering good security

and a solid privacy policy will be the bare minimum but we will also follow how an

e-business acts over time. What is their commitment? Do they listen to their

constituencies? Do they respond to concerns about privacy and make things

better? These actions will separate the good guys and the bad guys.

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Brand used to be a feeling conjured up by how a company's product was

physically packaged or how you imagined yourself using it. Increasingly brand is

a feeling conjured up by your experience on that company's web site. It ties

directly to Trust. Companies that have a web site that provides an end-to-end

positive experience and which enhances people’s quality of life by saving them

time will gain enhanced brand equity. The converse will become obvious.

Privacy, confidence, and trust all go together

In a December 2000 speech in New York, Lou Gerstner, chairman of IBM

Corporation said, “We know that trust is a fundamental element of every positive

brand experience. It is fundamental to all consumer behavior, to the willingness

to buy and to brand loyalty. All of it is based on trust.” Web sites already have a

repository of huge amounts of personal data that represent the byproduct of not

just our registrations but also our surfing habits and our purchases. In the near

future our medical records will be on a web site somewhere and beyond that will

come real time data streamed from pacemakers and other medical instruments

that are attached to our bodies. All of this data can bring significant benefits to us

but only if we are able to trust the holders of the data and have confidence that

they will protect it and respect our preferences about how and when it can be

used. Lou Gerstner summarized it well when he said, “The answer here must

begin with a responsible marketplace. Through our policies and our practices,

industry has to send an unambiguous message that tells people: ‘You can trust

us. You have choices. They will be respected. And you'll know in advance how

any information that you give us will be used.’"

The cookie monster

When you click on a link to a web page, a request is made to retrieve a

document from a server and the server sends the document to your browser. If

you then come right back to that server for another document it is an

independent request – the server has no knowledge that it was you that had just

requested the document. This is fine for surfing but for e-business there are

numerous reasons why the server does need to know that you were the one that

had just made the request. Some of the early web pioneers had realized the

need to be able to retain information about who had made requests of the server

and they also saw the need to maintain the “state” of things going on at the

server so that if there were multiple steps to an e-business process or if a user

became disconnected from the Internet, they would be able to return to the site

and pick up where they left off. The technical invention to make this possible was

called the “cookie”.

When you visit a site the server sends a cookie to your PC. The cookie is a small

data file that can contain information about you and the transaction you are

participating in. When you come back that second time the server reads the

cookie, looks up some data about you in a database if needed and then allows

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you to continue. The cookie was a great idea and most web sites use them. In

fact, cookies have facilitated e-business. However, in some cases the use of

cookies has become an invasion of our privacy – a tool to be able to track our

every mouse click. Cookies have been used by some companies to analyze

your web visits and then target advertising at you based on what sites you have

recently visited. Some people like this and others find it a large invasion of their

privacy.

From time to time I see an editorial or story suggesting that anonymity should not

be allowed on the Internet. The motivation is usually associated with concerns

over pedophilia. This is certainly an important concern but so are the concerns of

those who feel they need to be anonymous. A battered wife or an alcoholic that

are seeking help and finding it in discussion groups on the Internet have a very

valid reason to be anonymous. We have to be careful that we don’t react to “bad

things” that happen on the Internet with a cry for regulation. There are laws that

address many “bad things” and law enforcement agencies need to use the

Internet more effectively as a tool to enforce the laws that already exist. This is

happening but more needs to be done.

Platform for privacy preferences

A new standard has been developed called P3P, the platform for privacy

preferences, which provides a simple, automated way for users to gain more

control over the use of personal information on Web sites they visit. At its most

basic level, P3P is a standardized set of multiple-choice questions, covering all

the major aspects of a web site's privacy policies. Taken together, they present a

clear snapshot of how a site handles personal information about its users. P3P-

enabled web sites make this information available in a standard, machine-

readable format. P3P enabled browsers can then "read" this snapshot

automatically so that the user can compare it to their privacy preferences. P3P

enhances user control by putting privacy policies where users can find them, in a

form users can understand, and, most importantly, enables users to act on what

they see. P3P will allow you to establish the degree of privacy you want to have.

Some of us may want to be anonymous. That’s okay. Some may conclude that

they really like the idea of getting e-mails and personalized web pages. Some

may even like the idea of an e-business which sorts through past web purchases

and then makes buying recommendations based on the history. They may be

very busy and don’t have time to shop so if somebody can make suggestions for

them it may be a valuable service. That’s okay too. P3P will enable us all to

express our preferences in the browser and then help us to find those services

that meet our individual privacy requirements. If a web site doesn’t meet our

privacy requirements, we will be advised and have the choice to move on to a

different site.

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Part of Trust comes from seeing people up close and personal. Looking into their

eyes. Observing whether they look back into yours. Body language. I often get

asked whether the Internet as a new medium will reduce people's desire to get

together in person or whether people will just sit in front of their PC and never go

anywhere. I don't think so. Perhaps the ultimate proof point is web sites for

seniors like SeniorNet (http://www.seniornet.org) and ThirdAge

(http://www.thirdage.com) that have been responsible, at least in part, for

numerous marriages. People will have a lot of e-meetings but I don't think people

will give up on meeting in person as a result. There is too much that would be

missed.

Internet Security – the glass is half full not half empty

Mention the word Trust and many people immediately think of security. We hear

so many negative questions about Internet security. Is it strong enough? What

will happen to my credit card number? What about hackers? We would like to

implement this or that application but we can’t because of “security”. The list

goes on. This is one area where some “old fashioned” attitudes are actually

healthy. Security is critical and needs to be taken very seriously -- but not in a

restrictive sense. In fact the question that business and government leaders

should be asking is about how security on the Internet can become the enabler of

global commerce, the enabler for meeting peoples’ expectations, and the enabler

for Trust.

In one sense, the Internet is actually completely insecure. It is similar to a “party”

telephone line (for those old enough to remember them) where multiple parties

are actually sharing the same network. You might pick up a “party” phone line

and find out your neighbor is already using it. The Internet is a shared network

also. Our emails, web pages, and IP telephony calls are broken up into

“packets”, containing 5,000-10,000 zeroes and ones each, and the packets travel

over phone lines hopping between specialized computers called routers to get

from their origin to their destination. A clever “snoop” could use various “sniffers”

to “listen” to the packets and if they are very clever assemble them back into the

email, web page, or IP telephony call.

Enter encryption technology; one of the most powerful technologies on earth.

Using very sophisticated mathematics, the contents of packets can be scrambled

(encrypted) in such a way that only the intended recipient is able to unscramble

(decrypt) the packets. Millions of people have discovered that this technique has

enabled them to put their credit card number into a secure web transaction in a

way that only the server at the other end is able to read it. In fact more and more

people are realizing that their credit card number may be safer on the Internet

than it is when they give it to a total stranger over a toll free number or to a waiter

in a restaurant. The “strength” of encryption is incredible. There is no known

case of anyone “breaking” full strength encryption or even a practical theory for

how to do so. At some point in the future there may be some combination of

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people, networked computers, and schemes that will enable information

encrypted with today’s technology to be decoded but by then the strength of the

encryption technology will have advanced even further. The bottom line is that

using encryption enables us to do things very securely using an insecure

network.

It’s not the technology

The real issue with regard to Internet security has to do more with policy and

procedures and these in turn have to do with attitude. I spoke with a group of

CEO’s recently and one of them asked me what a firewall is? I said, well that’s a

specialized computer that stands between your company and the Internet, and it

allows your employees to be able to go out to the Internet and see what’s out

there. It also allows the other 200 million people out there to come into parts of

your business you don’t want them to come into if it isn’t set up and managed

properly. By the way I asked, “Do you know the state of the morale of the person

who administers your firewall”? When did they get their last salary increase? Are

they a disgruntled employee? A security study once showed that the most

common password for operating firewalls is the word ‘password’ which comes

shipped as the default password when getting new firewall hardware or software!

We all know how we feel about en employee who cheats the company by

claiming reimbursement for a meal or travel expense they didn’t actually have.

We don’t tolerate it. End of discussion. How do we feel when an employee puts a

stick-on memo on their PC screen or under their mouse pad with their password

on it? We should feel the same way as with the expense fraud because that

employee has compromised the security of the company. Is it condoned for

employees to share passwords? How about the physical security of your server

room? Is it ok to leave the door open if it gets warm in the room? Can visitors get

into the server room? Does the audit department make periodic attempts to

“break in” to the server room and see if they can turn something off or walk out

with some backup tapes?

One of the fastest growing businesses at IBM is the “ethical hacking” group. For

a fee they will try to break into your servers from the Internet. If successful they

tell you how they did it and offer advice for how to prevent it in the future.

Unfortunately, they are usually successful. At PC Forum, an exclusive I/T

industry conference of top executives from around the world several companies

volunteered to be guinea pigs while a team of IBM “ethical hackers” attempted to

break into their servers. This was done on the condition that the company name

would not be revealed. An IBM expert stood at the podium while talking over a

speakerphone with the “ethical hacker” team that was at a technology center far

away. The discussion was broadcasted over the sound system to the audience.

The first break-in took eleven minutes after which the IBM engineers were

looking at the driver’s license of the daughter of the CEO of the company. The

second company attempt took seventeen minutes after which the engineer had

access to the company payroll file. These were not failures of technology. They

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were failures of process, procedure and, audit. The source of the problem is

attitude about security. It should not be feared – it should be embraced. The right

attitude will not restrict the opportunities but in fact will enable more opportunities

and enable them to be handled in a more secure manner.

Who are you – really?

There was a cartoon by Peter Steiner in the July 5, 1993 issue of The New

Yorker showing a dog at a PC speaking to another dog watching from the floor.

The caption was, “On the Internet nobody knows you’re a dog.” Very true and in

fact nobody really knows for sure just who you are. Nor do you know who is at

the other end of a chat session or e-commerce transaction either. In the NGi we

will have Digital IDs that will change this. There has been a prevailing attitude

that digital IDs would mean that the “government” would issue an ID that would

then enable them to spy on us; read our email, track what we do on the web, or

invade our privacy in some way. A bit of knowledge plus a healthy Net Attitude

would actually instead lead us to a very positive view -- that digital ID’s are not to

be feared but in fact should be embraced. They represent the empowerment that

can unleash the full potential of e-business. They will allow us establish that we

are who we say we are and to validate that the web server we are doing

business with is really who they say they are. Security is not the issue.

Authentication is.

It is true that large numbers of people have learned that security technology can

encrypt their credit card number in such a way that only the web server at the

destination is able to decrypt it. When people see the solid lock or key at the

bottom of their browser they implicitly know that their credit card number or other

private information is being encrypted using the public key of the server at the

other end. And, since only that server has the corresponding private key then

only that server is able to decrypt the private information. An important question

however is who is that web server on the other end? How do you know it really is

the merchant or university or government agency that the server’s home page

said it was? Answer? You don’t. It could in fact be a hacker who has “spoofed”

the web site; i.e. the site could be an imposter. Likewise the web site at the other

end doesn’t really know for sure that you are who you say you are. What we are

talking about here is authentication. For the most part we do not have it on the

Internet today. Yet, it is one of the core capabilities needed to achieve the

ultimate potential of the Internet and enable us all to fee we can Trust the

Internet.

Today we use the login ID and password as a substitute for authentication. We

all use them every day but the problems with them are nontrivial. First is the

password sharing problem that enables someone else to be you. If you leave

your password on a stick-on on your PC or under your mouse pad then one of

your children or a colleague can become you. They can get into your bank

account, buy a book at Amazon, or engage in a chat session as you. Assuming

you keep your password to yourself, there is another set of problems. Web sites

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have different rules for login Ids and passwords. Some require that you use your

email ID as your login, some require you to use your social security number,

others allow you to pick anything you want as long as it is at least so many

characters or in other cases as long as it is no more than so many characters.

For good reasons they all require that your ID be unique. Sorry, but jjones is

already taken. The same thing is the case for the password. Some require at

least so many characters, some require that a password must contain at least

one numeric character, some require that it be all numeric, and others require

that contain no numeric characters. The variations are vast and the result is that

you end up with a lot of different IDs and passwords.

Digital IDs to the Rescue

There are basically two ways to deal with managing this problem and neither of

them is a good solution. First is to devise an ID (and password) that conforms to

nearly all web site rules but which is also unique. Maybe you design an ID or

password something like k7jyt14s that seems to work just about everywhere and

surely nobody else will already have it. On the surface your multipurpose

universal ID or password seems to be a good idea until you realize that if one of

your web merchants turns out to be a scofflaw or if someone somehow steals

your ID and password he or she now has access to your bank account,

brokerage account, and every other web site where you have registered! By

making things simple for yourself you have compromised yourself with every web

relationship you have.

The other potential solution, which many people use, is to create a small

database of all your IDs and passwords. Where to put it? On a piece of paper?

Where to put that? On the desk. Then it falls off of the desk and dog eats it. You

now have No ids or passwords! Then you decide to get serious and buy some

database software and create a PC database of your IDs and passwords.

Hmmm, this is a really important database --. maybe you need an ID and

password for your ID/password database? Hmmm. Maybe you need a backup

and recovery scheme? You have now become a database manager!

In case you aren’t discouraged about IDs and passwords yet there is one more

peril. Whatever your ID and password are, when you send them they are almost

always sent “in the clear”; i.e. not encrypted. Even sites that use encryption for all

transactions normally do not use encryption to receive your ID and password.

This means that an unscrupulous person might be able to “sniff” your ID and

password from the Internet. They wouldn’t need to even know who you are. They

just know they have a way to gain access to many web sites as an impersonator

of you. There has to be a better way. Fortunately there is.

In the near future most people will have a digital ID along with an accompanying

biometric link such as a fingerprint, face print, voiceprint, iris or retina scan. The

combination of digital ID and biometric match will enable you to establish yourself

as a completely unique person. At last you have the ability in the digital world to

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establish that you are who you say you are just as you can in the physical world!

Step one is to get a digital ID from someone that knows for sure who you are and

who is trusted by others as a reliable source for authenticating you. And who

would this someone be? The Certificate Authority, or CA, is the place. The CA

will ask you for information to validate that you are who you say you are. The

degree of certainly they require will depend on your intended use. For routine

things like email perhaps asking your mailing address and mother’s maiden

name will be adequate. If you are going to use your digital ID to make millions of

dollars worth of purchases for your employer then a personal appearance may

be required where you show multiple forms of identification and then the CA

gives you a diskette or other form of digital ID.

Over time there will be many CAs. Governments will operate them as will banks,

companies, and institutions of all kinds. In theory there could be one CA that

authenticates everyone and you would have just one digital ID. In theory you

could have a “national” drivers’ license in your wallet (actually, most countries

outside of America do) or a “universal” credit card and that one card could be

used for all purposes. In theory, but not in practice. Can you imagine that VISA

or MasterCard or American Express will give up their logo on the card and be

part of a generic ID? I don’t think so either. Not only do they not want to give up

their marketing presence on the card they also don’t want to take on the liability

for providing a general purpose digital ID that you could potentially use to go to

the hospital for a leg amputation. If the hospital happens to take the wrong leg off

of the wrong person the credit card company will surely not want to be liable for

having validated that you are who you say you are. Just like we have multiple

physical id’s in our wallet we will have multiple digital id’s.

The important thing is for a CA to be able to be quite certain that you are who

you say you are before they issue you a digital ID. This can happen in various

ways. For example, Equifax is a consumer credit reporting company that has

information about 200+ million people. They know your name, your last few

addresses, your phone number, and in many cases your mortgage balance! So

when they ask you for certain information they can compare it to what is in their

database and if there is a match the odds are very high that they can indeed be

sure that you are who you say you are. With this assurance they can issue you a

digital ID or provide the information to another third party who can THEN issue

you the digital ID.

Digital IDs are actually being issued already in some parts of the world.

Singapore and Taiwan have established guidelines that provide for CA’s. Europe

has established a directive that will enable CA’s across the continent. In fact the

Ministry of Finance in Spain issues digital ID’s that allow citizens to make their

tax payments over the Internet. A Spanish citizen can log on to the site by

entering their password into their browser. The digital ID is stored in the browser

and does not have to be passed over the Internet in the clear. Once

authenticated, the Spanish citizen can pay taxes or check the status of tax

payments. The U.S. government in July 2000 passed legislation that will allow

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CA’s to be established that can enable digital signatures to be used anywhere in

the country.

Once you get a digital ID, where do you keep it and how does it work? There are

two parts to your digital ID; a public part and a private part. The public part is

something you want to make easily available to anyone. This will be described in

more detail a little bit further on. The private part of your ID is something you will

keep very private and never share it with anyone. Where will your digital ID be

stored? There will be a lot of choices including on our PC hard drive, in our

mobile phone, in smart cards in our wallet, in a PCMCIA card, in an electronic

ring on our finger, or in a token we wear around our neck. A company called

KeyNetica is developing products that will enable a broad spectrum of Internet

users - everyday people who do everyday things like banking and shopping - to

move among many different Internet access devices during the course of a day

using a portable personal identification tool that they can use on almost any

computer via a “USB flash memory key”. Since all PC’s shipped today have a

USB “port” used to plug in printers, digital cameras, and other devices, the USB

flash memory key could enable you to plug your digital ID into any PC anywhere.

Wherever you keep it, the digital ID is a very empowering capability.

Does a digital ID mean we lose our privacy? No, quite to the contrary. By having

a Digital ID you can establish not only who you are but what privacy preferences

you want to stand by. If you choose to be anonymous you will be able to.

Authentication (you are who you say you are)

There are five important attributes in a world of digital IDs. The first is

authentication. Once you have a digital ID you will no longer have to send your

your smart card, token, or your PC. Instead you will use your password to enable

an encrypted exchange of digital data between your PC (or phone or other

information appliance) and the other party. The result of the exchange is that

both parties will be able to confirm that the other party is indeed who they say

they are. If you have also provided biometric data the person will know not only

that it was your ID but that it was actually you who initiated the transaction and

not someone who may have “borrowed” your login/password. Digital IDs are

stored in a digital certificate (hence the origin of the certificate authority) and

during the initial exchange of information you will see some of the data that is

stored in the other party’s certificate. For example, you will see who issued the ID

to them and you can use this information as an additional input to determine

whether you want to trust the other party. Authentication is the beginning. If you

want to be really sure you can examine the other party’s “fingerprint”. This is

analogous to the small key number embossed on your house or car key. Your

credit card statement, for example, may have the “fingerprint” printed on the

statement so if you wanted to you could check it against what appeared on the

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web page to be 100% certain that the credit card company’s web site was indeed

them.

Authorization (who can do what)

Now that you have established that who you are who you say you are (been

authenticated), various service providers such as banks, merchants, and others

can authorize you to do various things. This might include reading a subscription

to a publication, banking, investing at an on-line brokerage firm, establishing an

account with a merchant so you can buy things without having to register each

time you purchase something, or voting in local or national elections.

Authorization goes deeper however. Since you are authenticated, you can be

authorized to authorize others! Let’s suppose your company has an intranet

application that allows you to enroll annually for various medical and dental

benefits. Suppose you wanted to allow your spouse to do this for you. How would

that work? In today’s world, unfortunately, many people don’t think twice about

giving their password to a friend, colleague, or relative. In tomorrow’s world that

is not a good idea. A digital ID gives each of us great power and enables us to

establish our privacy at the same time. Sharing our password with others dilutes

that power. An alternative approach is simply to have a web application that

allows a person to authorize someone else to do something on their behalf

without giving up their own identity. You authenticate yourself and then you

authorize your spouse to be able to enroll or change your medical and dental

plan benefits. Then the health care provider or insurance company knows not

just that a valid ID and password were used to enroll, but that in fact, the person

using the application was authorized by an authenticated person.

If you read the fine print at on-line banking sites you will find that you agree that

as long as your ID and password was used to execute a transaction that they are

not liable for it not being you. If one of your children finds your ID and password

and sells your portfolio (or doubles the size of it on margin) the on-line brokerage

is not liable. It was you!

Confidentiality (only the intended recipient can read your messages)

The killer application on the Internet is arguably still email. Unfortunately of the

trillions of emails sent each year most are sent “in the clear”. In other words they

are not encrypted. Think about writing your most sensitive personal thoughts

about someone on a plain postal card and dropping it in a postal box or the slot

at the post office. You would have no idea who might be able to read it as it

travels from postal box to post office to post office to mail room to intended

recipient. That is how it is with all the emails you send! You really have no idea

who can read them. When we all have Digital IDs there will be a better way. If

you want to send Josef a very private message that nobody but Josef can read

you will go to a Certificate Authority and get a copy of Josef’s public key. You will

then use your email program or other encryption software such as PGP (Pretty

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Good Privacy) to encrypt your message to Josef. When Josef receives the

scrambled message he decrypts it using his private key. Nobody has Josef’s

private key but Josef so you and Josef both know that nobody but Josef was able

to read the message.

Integrity (you both know nothing got changed)

How does Josef know that the email really came from you and that it wasn’t

altered in some manner on its way to him? A by-product of using the encryption

keys is a function called “hashing”. A calculation is made based on all the

characters in the message you create. This calculation is encrypted along with

the message. After the decryption takes place, the calculation is compared to the

one that was made at the time of the encryption. If they agree then your software

will in effect tell both you and Josef that the message was not altered. Also, the

message was “signed” by you using your private key. Josef gets your public key

from the CA and decrypts your digital signature to confirm that it was actually you

who “signed” it.

Non-repudiation (no one can deny a conversation or transaction)

Have you ever been told, “We did not receive any request from you to make that

stock sale” or have you had to say, “I did not receive that confirmation notice”? If

you receive an encrypted message from someone that is “signed” with their

Digital ID (with their private key) and you are able to decrypt it with their public

key then you know that the message must have been signed with their private

key. Only they have their private key, so they must have signed it. They cannot

deny it. This works in both directions, of course. Many major countries of the

world have now passed legislation that makes digital signatures as good as

signatures with ink. They will stand up in court. Soon we will realize that they are

actually much better than ink.

Digital signatures are not perfect. Bruce Schneier, founder and CTO of

Counterpane Internet Security Inc., has pointed this out in great detail in various

writings. This is because computers and computer software are not yet perfect.

In order to trust the digital signature, we implicitly trust the hardware and software

that enabled us to use our digital ID to create the digital signature. In spite of the

imperfections there are many instances where digital signatures are adequate

and in fact a clear advantage in efficiency and effectiveness versus current

methods. Where the dollar value that depends on the signature is very high, strict

security measures need to be taken in proportion.

Back to the GE wire transfer

Remember my saga with GE Capital in trying to wire money to my attorney?

Let’s contrast that process with how it might have worked using a public key

infrastructure approach with the five security functions described above.

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Authentication. Yes, I was authenticated by the bank. They looked at my driver’s

license and put a rubber stamp on the fax request form. The only difference was

that instead of a mouse click or two it was a harrowing forty five minutes running

around the streets of New York on a hot summer day.

Authorization. Yes, I was authorized by GE Capital because once they received

the authentication they could look up my account, see that I had adequate funds,

and therefore authorize the funds transfer.

Confidentiality. Sort of. If I call GE Capital and the person I am talking to is

standing at a fax machine and I am standing at a fax machine and I say “Ok,

here it comes” and they say “Ok, I see it coming” then arguably we could say it is

a confidential transfer of information. In reality faxes tend to go from an outbox to

an assistant who takes it to a fax machine where someone could be looking over

their shoulder. And then the document is faxed to a number and received in a

“fax room” to be read by anyone who happens to pick it up. And of course there

was the hassle of finding a fax machine and the time delay. Hardly a mouse click.

Integrity. Definitely not. This is the real flaw in the manual paper based process.

When the fax was taken by me or someone else to the fax room I may have

placed in on a table and made a quick run to the men’s room or gotten distracted

by a phone call. Meanwhile someone sees the wire transfer form and changes

$500 to $50,000. Then the form gets faxed. What amount gets wired? $50,000.

No integrity.

Non-repudiation. You bet. The transaction will stand up in court. As far as GE

Capital is concerned I requested the wire transfer of $50,000. I was

authenticated, the transaction was authorized and the fax form was transmitted

“confidentially”. If I contested the transfer I would probably lose in court.

So what is missing? Why couldn’t I have done this transfer on the web with a few

mouse clicks or mobile phone clicks? Technology problem? No. Security

problem? No. It is time for the leadership of institutions of all kinds to move

forward to make digital IDs available to their constituencies so that Trust can be

achieved.

Open standards need to continue to rule

Another dimension of Trust has to do with standards. The Internet is the only

thing I know of that works the same everywhere. Most things work differently in

different parts of the world. The side of the road we drive on, the side of the car

we drive from, the width of the railroad tracks, the plugs that we put in the wall; all

work differently around the world. But not the Internet; it works exactly the same

in every corner of the world. It is based on standards. There are a lot of debates

during the process while Internet standards are being developed but once

published as a standard every vendor implements the standard. The vendors

compete on how well or how fast they are able to implement standards but they

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do not compete by changing an Internet standard. As an application developer,

when an application is built with open standards you can have a high degree of

Trust that the application will interoperate with other applications, that technical

support will be available in the event of problems, and that there will be flexibility

to change vendors if appropriate.

An open standard means a standard that is supported on all information

technology platforms. XML and HTTP, for example, work with Windows, Unix,

Linux, Apple, IBM, HP, and all PC’s. There are other important technologies like

IBM’s mainframes or Microsoft’s Windows that are dominant in various ways.

They support open standards, like XML and HTTP, but they are not themselves

open standards.

So many issues; so little time

The final element of trust comes from public policy. There are many policy issues

that will affect the Internet -- taxation, trade rules, jurisdiction over transactions,

protection of intellectual property, privacy, and others. Although the Internet is

transferring power to the people there is still an important role for governments

and global organizations. Generally speaking, regulations are not needed but

thoughtful standards and cooperative policy work are. The private sector needs

to provide aggressive leadership. We can’t delay. We have to anticipate the

impending issues such as privacy and run hard and fast to address them. The

alternative is to wait until the political pressures result in regulation that, in many

cases, may be difficult and costly to implement.

Part 3 -

Attitudes for success

My first keynote speech about the future of the Internet was at Internet World in

December 1994. Compared to today the web at that time was very crude. It didn’t

make the dramatic change in one big step though. It evolved. Seems like every

month there has been a new technology, a new version of a browser, the

introduction of Java, JavaScript, streaming audio; a lot of things that cumulatively

added up to what we think of as the Internet today. That same path is continuing

to happen to the next generation of the Internet. As breakthroughs are made in

the laboratories of companies, governments and universities that progress gets

incorporated into the Internet and it thereby morphs itself into a commercial

version of the prototypes that are in the labs. And then the process repeats.

Constant evolution is the hallmark of the Internet.

Meanwhile, the Internet has transferred power to the people and their

expectations are rising by the day. More and more people are coming to the Net

but an increasing number are not satisfied. The NGi is under development and

the fast, always on, everywhere, natural, intelligent, easy and trusted new

medium will provide many of the capabilities that can satisfy people in new and

exciting ways. But there is a big IF. The technology will only do the job if it is

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applied in the right context – call it attitude – that lines up with the cultural

aspects of the Net. Mastering the technology and the new business models is

difficult but achievable. The hard part is mastering the attitude that is necessary

to both attract the talent needed and to satisfy the expectations of customers and

all the other constituencies. Getting the people on board to help build successful

e-businesses and e-marketplaces will require that same attitude. Once you

recruit them the attitude becomes even more important so that you can motivate

and retain the best talent.

Getting an attitude

Net Attitude means thinking about things in a way much different than the way

many of us grew up. We need to think along the lines of the development of the

Internet; to think like those who were part of the grassroots development of the

Internet. We need to think more “outside” than “inside”. Thinking big is important

but starting simple and growing fast are even more important. Good security

starts with attitude – not with technology. We need to utilize the rigid six sigma

quality thinking for some projects but leave it at the doorstep others and adopt a

just enough is good enough approach -- trial by fire – for others. We need to

learn how to get requirements directly from the market – not from complicated

processes and studies. We need to believe in small teams and give them

maximum freedom of action. We also need to think differently about information

technology systems; in particular to adopt an attitude for rapid deployment and

integration of applications. The Net makes it possible to communicate in new

ways and an attitude of over-communications is usually the right one. Last but

not least a healthy Net Attitude can best be adopted if you get a real taste of the

culture. The best way to do that is to talk to your kids.

A new vocabulary is needed

Business vocabulary needs to change in a hurry. “Please call during our normal

business hours of nine to five Monday to Friday” doesn’t even come close to the

realities of a connected world. The source of the problem is usually based on an

attitude that is centered in the past – and many years of habit. It is ingrained into

business vocabulary. Even some new Internet startups have somehow adopted

the old language. You find the old vocabulary in newspapers, you find it on the

doors of stores, and you find it on the web. You won’t find it on many

homepages but if you drill down far enough on most web sites you will eventually

get to something that essentially says “Oh, if you need to know that, then call us

nine to five Monday to Friday”.

Companies should ban the old hours of operation from their web sites. Make 24

x 7 service the mantra – faxes by special request only. Send the signal that your

e-business is progressive and ready to serve customers around the clock and

using modern communications methods. Some may say, “But nine to five is

really when we are open. This is when we have always been open.” They are

thinking about when they are in the office instead of when people are out there

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on the web looking for help. Some corporate managers even say that they can’t

afford the extra labor cost to handle all the inquiries that may come from an

around the clock web site. People with Net Attitude salivate about the possibility

of such a problem! As more and more customers come online it may call for a

restructuring of work hours. Careful monitoring of web traffic can be used to map

the availability of online chat support to the pattern of web visits. Support

resources can telecommute to provide the support.

Then there is the fax. Here a fax; there a fax; everywhere a fax. The vocabulary

of the fax is equally ingrained as the hours of operation – the words just roll of the

tongue. Even businesses that have email systems routinely ask for your fax

number when you request information. It is a habit that is hard to break. Email

messages surpassed “snail mail” messages in the last millennium. Getting an

email account is a free service offered by many sources and email is still the

most popular use of the Internet and yet, when it comes to the “forms” of the

world, the fax continues as a mainstream communications tool. The information

that gets delivered via fax often gets entered into a computer; sometimes the

same computer that the information came from! It’s habit and attitude. Make

email information delivery the norm and offer fax by special request only. Change

the vocabulary. Highlight the availability of price quotes, product information, and

support requests by email. Think of email as an advertising medium. Most email

programs now support HTML mail, which means that an email can look like a

web page, complete with color, graphics, and multimedia. Every email can have

an epilogue with company specials or additional product information. Get rid of

the old medium and pizzazz to your communications.

The concept of a “maintenance window” for a web site is also an old habit. The

vocabulary is ingrained – “down for maintenance”. If the site is not yet up to 24 x

7 standards technically, then at least express a Net Attitude when explaining to

customers; “We apologize to any of our valued customers in parts of the world

that are seeing this system outage while we make some necessary

improvements”.

Just Say NO to ALL CAPS

Part of vocabulary consists of the words we use and part is how we present

those words. As information gets relayed between buys and sellers in the supply

chain it often gets converted to all uppercase letters. Some people create ALL

CAPS because they want to EMPHASIZE something. Most people don’t like

getting ALL CAPS in their face; it is unpleasant to read. FUNDS RECEIVED.

ACCOUNT PAST DUE -- and other unfriendly snippets. Some companies even

send you email in the same manner. GREETINGS. GET RICH QUICK. Typing in

all CAPITALS is like shouting or yelling in someone's ear. It is time to make user-

friendly text the rule and use upper-case words only to make a point and, even

then, to use them in a very restrained manner. If you'd like to emphasize certain

words, consider highlighting them with **asterisks**.

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Some of us can remember when messaging was still a matter of sending a FEW

ALPHANUMERIC CIPHERS from one dumb terminal to another. And, of course,

we wrote in ALL CAPS -- a charming holdover from the industry's roots in the old

keypunch days, before lower case letters existed. Proper use of letters,

abbreviations, and symbols is part of Netiquette. As the term implies, Netiquette

is a combination of "Net" and "etiquette". Netiquette has evolved over the past

few years and its role is to make electronic communications more pleasant, as

well as more effective.

David Singer, senior technical staff member and guardian of Net culture at IBM

Corporation, offers some additional basics:

The basic rule of netiquette is to show consideration for the other party. Stop

and think how the other person is likely to receive your communication.

Use white space to make things easier to read. Don't run your entire message

into one long paragraph.

If you're replying to a message, only quote as much of it as you need to make

your point. Don't quote the entire message and then add a one or two word

comment like "I agree". You ca also preface paragraphs with the sender's initials.

Be brief. Your recipients are probably as busy as you are!

“Emoticons” can be useful but, if you say something not so nice and try to take

the sting out of the remark by using a <g> to represent a grin or :-) to represent a

smile, it usually doesn't work. If you think your phrasing might offend the reader,

fix the language -- don't rely on a “smiley” to convey your feelings.

Abbreviations, like btw for “by the way” or imho for “in my humble opinion” or iac

for “in any case” can be helpful and save typing, but should not be overused.

There are times to use e-mail and times to use the phone. E-mail is generally

NOT good for solving conflict or for emotionally charged subjects. Messages

should be concise and to the point. Think of your memo as a telephone

conversation that you are typing instead of speaking.

Communicate, communicate, and communicate

In 1993 a number of us were talking about the Internet at IBM and someone said

“How do we make money on the Internet? We all agreed we had no idea but one

thing we all knew for sure was that Internet was surely the greatest tool ever for

communicating both to our employees and to our external constituencies. Gone

forever were the words in an internal announcement “For more information see

your manager” or for external announcements “For more information, please

contact your IBM Marketing Representative”.

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Effective communications is a challenge in any organization, large or small. Key

messages from the top often get “filtered” on their way down the chain of

command. An email, on the other hand, can go directly from the CEO to all

employees to personally make a point, introduce a new idea, explain a shift in

company strategy, or congratulate and recognize a significant accomplishment.

The email can be replete with hyperlinks to web pages on the company intranet.

The email becomes the “push” mechanism to drive people to the intranet where

they can find much more information.

In July 1995 IBM made a hostile takeover of Lotus Development Corporation.

The announcement was made to the press at ten o’clock in the morning and at

that very same moment an Internet web site came alive to enable Lotus

employees to see a picture of Lou Gerstner, IBM’s chairman, and hear his words

through a recorded “webcast” as he described IBM’s vision for acquiring Lotus.

The employees didn’t have to read the Wall Street Journal or the Boston Globe

to get a reporter’s version of what Lou Gerstner said at the press conference –

they could get it timely and “straight from the horse’s mouth”! All major

companies have issues that arise from time to time; mergers, product liability or

employee suits, government investigations, or financial surprises. There is no

substitute for getting the information to employees first hand.

The webcast has emerged as a powerful way to communicate. The concept is to

capture the audio and video of a speech, convert it to digital form (encoding), and

then “stream” it (web version of broadcast) over the intranet or Internet. Many

organizations don’t take advantage of webcasting because of fears of inadequate

bandwidth to deliver the content with good quality. This is often a valid concern

but there are clever ways to get around the problem. A webcast does not have to

be live. Chances are all the employees are not available to watch it live anyway.

At IBM, speeches are captured and then stored in a “video jukebox”. When a

major speech by the CEO or other executive is to take place an announcement

goes out via email and encourages employees to participate in it if they are able

but if not to visit the video jukebox and watch it at their leisure. During the live

webcast, the number of employees allowed to “get in” to the webcast is limited

just like seats in an auditorium are. This allows for controlled bandwidth usage

and good quality for those who are able to get in. Others watch it later in the day

or the next day or whenever they get a chance. The video jukebox becomes an

invaluable library of content over time.

A personal web site can make your life very interesting. In 1995 I was getting a

lot of calls from people asking for a copy of the presentation I was giving at

Internet World and various places. I decided to build a web site of my own and

launched www.ibm.com/patrick as a place to put copies of my presentations. It

evolved to become an efficient way for me to share and become part of the

community at large. There is a lot to be learned by being “out there” – actively

creating content for your own site and especially from the feedback people give

you. It is also a good feeling to be able to lend a hand to people who come to the

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site looking for something. My “Gadgets” section has a lot of things in it but the

one that has gotten the most attention for some reason is the Pepper Ball (an

ingenious gadget that grinds pepper as you squeeze its two handles). Numerous

people have sent me email asking where I bought it and more than one have

sent me mail asking how to refill it with pepper! One woman wrote “Mr. Patrick -

thank you for responding about the pepper ball. I have been searching the world

over for how to refill it and no idea I would finally get the answer from a vice

president at IBM.”

Staying connected to the real world

Numerous newspaper stories have commented about employees at companies

who are spending too much time on the web. Charts and graphs have shown the

hours per day or week that these employees are surfing, the implication being

that they are wasting time. I have heard multiple middle managers and CEO’s

say things like “I don’t want our people surfing the web. We have real work to get

done around here!” The presumption is that the people on the web are shopping

or trading stocks or chatting with friends or a family member. If that is true (and

surely it is to some degree) is it bad? Do people bring a newspaper to work in

their briefcase? Do people ever do any shopping on their lunch hour on the

phone? Or do they take even more time away from work by driving somewhere

for an errand they could do on the web instead?

In a big organization it is so easy to spend all of your time talking or emailing with

colleagues. That is how big companies can lose touch with customers and

markets. The Internet has transferred power to people. They can now

communicate across management layers, have discussion groups about

technologies or products, learn what is going on at competitors, find out who is

hiring what skills, learn of new research initiatives, explore new product ideas,

provide real-time focus groups to get a lead on requirements, and link directly to

any company of their choosing to facilitate sales or purchases. More important

than the use of the Net as a new medium for efficient communications is that by

spending time on the web they stay connected externally and generally become

much better informed about what is happening in the real world. Most of the

people in the world are outside the organization. Let people in your organization

stay connected to them. The alternative is to cut off Internet access for

employees (which some companies actually do) and in effect put all heads in the

sand. Worry if your people are not spending enough time on the web.

“Outside-in”

The concern over employees spending too much time on the Internet is a classic

“Inside-out” attitude. It is a focus on what is going on inside the company or

organization. There are still many executives and managers who don’t realize

that the key to being effective in markets is understanding the competition,

knowing what is going on at key universities in technology areas that are

important to their business, and experiencing new trends and new business

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models first hand. Is it possible that if executives from the music industry, or

financial services industry, or publishing industry had spent more time “outside”

than “inside” that they may have developed new models for their businesses

instead of later getting on the defense about the web and in some cases losing

focus and spending large amounts of money trying to stop the new models?

Inside-out is a pharmaceutical company website that contains information about

a new drug only from the perspective of what the company wants you to know.

All the links on the site are to company publications and company perspective.

An Outside-in approach would acknowledge that there are sources outside of the

company that may be of value. An outside-in site would provide links to key

universities where joint work is being done, independent healthcare sites, and

even discussion groups that are focused on the company’s products. There is in

fact a lot of information out there that may be useful to customers and if the

product is truly a good product, its merits will emerge in discussion by others and

add creditability to statements made by the company. Providing an external link

should not imply that the company “suggested” that you go there and should not

make the company liable if a person goes to a discussion group and takes an

action that results in negative consequences for the person. Providing external

links should be viewed as a service and an acknowledgement that there is a lot

of information outside of the company.

There is a lot being said on web sites and Internet discussion groups about

virtually every subject and organization. Do you know what people are saying

about your organization and your products? A key decision is what approach do

you take to dealing with the information that exists. One approach is to just

monitor it, but a more proactive approach is often better. By participating directly

an organization can gain great creditability – assuming you are always

completely forthcoming. Any attempt to put one over on a discussion group will

be detected almost immediately and recovery from it would take a very long time.

Interacting, listening hard, empathizing, explaining, describing actions that will be

taken to resolve problems discussed, etc. can lead to a level of trust that can

endure.

Name that product

There are many dimensions to Outside-in versus Inside-out. Product naming is a

good example. I have always wondered about the model names of various

consumer electronic devices. Anybody ever ask you what model Discman or

Boom Box you have? You take a look and find it is the Model QLP-5810 CSi.

Now there is a memorable user-friendly model number! It was named inside-out

instead of Outside-in. There are probably some good internal reasons, perhaps

based on engineering or distribution channel factors, for the model being called

the QLP-5810 CSi. It is what someone Inside wants to call it instead of what

someone Outside can remember. It makes perfect sense to people Inside and

no sense at all to people Outside the company. Apple is a great example of

Outside-in thinking in their product naming. I suspect there were at least some

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product development engineers at Apple that thought naming their neat new

computer after a fruit was a really stupid idea.

There are currently billions of web pages out there. Which is easier to

remember? http://23.124.65.129 or netattitude.org? The Domain Name System

(DNS) was invented so that people would not have to remember the Internet

Protocol address (like 23.124.65.129) but rather could just use a name. The

name is Outside. The IP address is Inside. Part of communications is giving

names to people that they can remember. The shopping site at IBM is

http://commerce.www.ibm.com/content/home/shop_ShopIBM/en_US/home_840

Hardly something anyone can remember. The printed ads of the company

refer people to ibm.com/shop. There are good Inside technical reasons why the

URL may need to be long and ugly. Coming up with simple aliases allow visitors

to think in their own terms, not the terms of the server administrator or systems

people.

The call centers we love

The ultimate in inside out mentality is the automated call center. What is going on

with call centers? They are Inside-out. The call center is in charge. The menus

from inside are controlling you. Don’t dare to second-guess the menus or you will

waste even more time. The company is saving time. You are getting frustrated.

There is hope on the horizon and in fact many companies are moving fast to

integrate their call centers with the web. The integration is a big step toward the

outside-in model. At IBM there is an automated call center for annual enrollment

in the employee medical and dental plans. It has countless choices, options, and

menus. I used to dread that time of year when I would have to go through the

enrollment. In the year 2000 an intranet application was installed that shows all

the options on a web page. You look them over, check the options you want,

click for help as needed, and click submit when you are satisfied with your

choices. You know what you want and the web page lets you have control over

the process. Outside-in.

Groovin’ with peer-to-peer

Perhaps the most profound Outside-in model will be peer-to-peer computing.

The advent of powerful PC’s plus an Always on Internet makes this new model

practical for many purposes. There is no central authority. While the peer-to-peer

model lacks connections and integration with the vast amount of enterprise data

and is only a small piece of the full collaboration needs of the enterprise, it will

clearly have value for many people. Much like the PC and Local Area Networks

allowed users in the eighties to by-pass the CIO and meet their own needs, peer-

to-peer computing may enable users to share files and documents without

“permission” from any central authority. The hype in the media may be overdone

on peer-to-peer but it clearly represents a new computing model that will add

value. Many CIO’s had the attitude that PCs and LANs were not “real computing”

and they ignored what was happening. By the time they were forced to embrace

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it, a lot of control had been lost and it took more than a decade to get things back

under control. The Internet has shown us that new models can emerge quickly

and so a good Net Attitude would be to take any new computing model seriously,

get an early pilot going, and evaluate the potential.

Peer-to-peer is a case of “It’s all in the name”. While peer-to-peer is very real as

a potentially emerging shift in information technology, it isn’t quite what meets the

eye. While various kinds of computer files can be transferred directly from one

PC to another, most of the peer-to-peer technologies actually have some reliance

on a server. Napster uses a server to provide a directory of who has music to

share and Groove has a central server for registration and to provide users the

latest version of their software. Dan Powers, a former I/T manager and now

director of early stage Internet technology at IBM says, “There is no such thing as

pure peer-to-peer. I haven’t found a case yet where there wasn’t a server

involved”.

Think globally and act locally

The Internet is the ultimate decentralized system. It is often said that the reason

the Internet works so well is that nobody is in charge! Many organizations still run

their web sites in the same way. Organizations with numerous divisions, groups,

departments, etc. often want to allow for autonomy in the creation of web

content. There are obvious merits to enabling autonomy but the results can

backfire in a major way. While the Internet provides the best ever method of

communications, the autonomous sites may create multiple images, multiple

messages, or worse yet conflicting messages about what the organization in total

is about. Some organizations don’t see this as a problem and in fact do not want

any overall identity but increasingly organizations are finding that consolidating

and centralizing offers economies of scale they can’t afford to pass up. It can

also enable them to be more competitive.

Fortunately, the Internet can let you have it both ways. Decentralize the creation

of content but centralize the way that content gets placed on the web. Creating

templates so that all departments, divisions, etc. will have an identical look and

feel to their web pages can do this. This results in a strengthened and consistent

image of the organization overall. There is a caution, however. Avoid thinking

Inside-out. Regardless of your internal wrangles and inconsistencies within an

organization, someone has to have the presence of mind to have empathy with

the people visiting the site and say "what do we want people to think of our

company?" -- how should it look to the outsider? Templates give the uniformity

that gives the impression of "one voice", but it requires some editorial control to

ensure that conflicting messages aren't being presented inside of a great page

structure and color scheme.

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Actually, the operation of the Internet is more organized than you may think.

Although no one "owns" the Internet there are in fact a number of organizations

that propose and develop standards that make it all work.

One of the original design principles of the Internet was to make it work even if

parts of the network were to fail. As long as both ends of a communications

session remain connected, the session will survive internal faults in the core of

the network. Brian Carpenter, former chairman of the Internet Architecture Board

and now chairman of the Internet Society, says “That was an engineering choice,

but by the Law of Unintended Consequences, it turns out that as a result the

Internet doesn't need central management in the same way that (say) the

telephone network does. So operationally, nobody is in charge”. Thousands of

Internet Service Providers compete and but also collaborate. Hundreds of

hardware and software vendors supply technology to the ISPs and users,

millions of systems get plugged together -- and somehow, it all works.

This doesn't happen entirely by chance. There are technical standards such that

when two, or two million, boxes get plugged together, the packets can flow and

applications can interoperate. The technical standards come from many

organizations, including the International Organization for Standards (ISO) and

the International Telecommunication Union (ITU), both in Geneva, Switzerland.

The basic standards that define how the Internet actually works come from a

group called the Internet Engineering Task Force (IETF). The IETF is unusual

because it is not a legal entity with defined membership - it is simply a world-wide

group consisting of a couple of thousand very committed engineers from many

companies and universities from all over the world, who meet three times a year

in person, and 365 days a year by email. They argue, debate and ultimately

agree on the basic technical standards of the Internet. The motto of the IETF is

"rough consensus and running code", meaning that rather than taking a formal

vote, the IETF's working groups make decisions on the basis of argument and

practical experience. Brian Carpenter says, “This isn't always the fastest or

simplest way to make a decision, but it does lead to good engineering choices”.

A unique feature of the IETF is that it is self-governing: its management

committees (the Internet Architecture Board and the Internet Engineering

Steering Group) are nominated by the active membership of the IETF, not by

stakeholders such as governments or companies as in most other standards

organizations. The IETF's standards are published in what are called "Requests

for Comments" known in the industry as RFCs. The name reflects the open-

mindedness of the IETF. RFC 1 was issued in April 1969 and RFC 3001 in

November 2000.

Another important source of Internet standards is the World-Wide Web

Consortium (W3C). This is a more traditional organization with corporate

memberships. Tim Berners-Lee and a handful of companies, including Digital

Equipment and IBM, founded it in 1994. The W3C concentrates on specific

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technology standards for the web and these standards have a lot to do with how

web pages actually look and what they can do. Other major contributions of the

W3C have included standards for privacy and for the rating of content.

So the IETF and the W3C are in charge? “Hardly”, says Carpenter. There are

dozens of technical organizations around the world that help to keep the Internet

alive and well.

Organizing to get things done

The most important ingredients to accomplishing great things as an e-business

are to find, attract, recruit, hire, motivate, and retain really great people. Every

year the crop of students gets better so you have to continually raise the bar --

look at every movement of staff and ask yourself if you are improving your hand.

Everyone has to not only bring something to the table but bring unique value to

the overall equation. When things are working right the whole organization

breeds and feeds on itself. If the caliber of your team is high, there's a much

greater likelihood of being able to attract additional high caliber people. Once you

have them it is critical to nurture and support Net Attitude and to have creative

programs to take advantage of their skills.

The Skunk Works

Every CEO I have met has asked how to make e-business web projects go

faster. Every CIO I have met worries about e-business web projects going too

fast. The CIO has spent decades getting information technology under control

and making it reliable. Fast moving projects are sometimes in conflict with that

goal. The solution to the dilemma is multifaceted but one key element is to have

a “Skunk Works” where rapid prototyping is the modus operandi.

As far as I can tell, the origin of the term Skunk Works was at the Lockheed

Corporation. For over a half century, the Skunk Works built a reputation that is

unique in the world. Almost routinely, this elite group has created breakthrough

technologies and landmark aircraft that redefined the possibilities of flight.

The Skunk Works was created to design and develop the P-80 Shooting Star,

America's first production jet aircraft. Since then they have created a string of

firsts. In the 1950’s was the U-2, which to this day defines the possibilities of

high-altitude jet aircraft. Then there was the SR-71 Blackbird which, with its

titanium airframe is still the fastest jet aircraft in the world. The F-117A Stealth

Fighter, which incorporated low-observable technology into an operational attack

aircraft, created a revolution in military warfare. Its capabilities were

demonstrated dramatically in combat during the Gulf War.

The company, now Lockheed Martin, says the key has been to “identify the best

individual talents in aviation, blend and equip them with every tool needed, then

provide complete creative freedom so they may arrive at an optimum solution in

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short order.“ This simple formula is highly effective not only for creating state of

the art aviation but also for any kind of corporate endeavor.

Lockheed Martin Skunk Works continues to serve as a wellspring of innovation

for the entire organization and as they build advanced aerospace prototypes, and

contribute to technology research and systems development. Lockheed Martin

says this happens because they are “not big on titles or protocol - just getting the

job done, regularly meeting schedules on time and under budget.”

The Skunk Works got its name from the "Skonk Works" of Al Capp's L'il Abner

comic strip, where they had a hidden still in a secluded hollow. The name still fits,

because exciting things continue to “brew” there.

Small teams with maximum freedom of action

Product development is typically managed in a very structured organization with

multiple levels of management and a lot of controls. This can be effective in

many cases and is probably necessary for extraordinarily complex projects like

putting a man on the moon but this approach will likely not bring any

breakthroughs. The Skunk Works uses a different model. Small teams with

maximum freedom of action, very flat management structure, and minimal

controls can lead to breakthrough ideas – if the people are allowed to work below

the radar tracking level of the larger bureaucracy. (Small teams of really top

people are also more productive, and have more fun, than a significantly larger

team.)

Skunk Works are also good at figuring out what key problems there are in

existing systems -- because the Skunk Works members have no vested interest

in the success or failure of those systems. They can often solve problems that

the larger organization can’t solve because the larger organization is too close to

the origins of the problem. It is usually best to let the Skunk Works figure out

what things they should work on as opposed to “assigning” problems or projects

to them. Problems the organization thinks are most important may not be optimal

ones for the Skunk Works to invest in. The formal requirements processes

typically used to determine what should be developed don’t always anticipate

some of the most profound issues and problems. The Skunk Works often just

stumbles into profound things if you trust them and give them freedom of action.

The instant messaging system being used by over 200,000 people at IBM did not

come about because anybody asked for it or because a strategic planning or

requirements process called it out. A few Internet software engineers stumbled

into it, tried it out, built a prototype, and then nurtured it. In a couple of years it

became an indispensable application for the company.

A subtle but critically important element in a successful Skunk Works is executive

support, or “air cover”. There needs to be a well respected and highly placed

executive who trusts the “lunatics” who are out on the edge. At times the

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executive will be scared to death that a project the Skunk Works is pursuing will

fail, but has to have the nerve to place a bet on it and trust the team to come

through. Visiting the team late at night or on a weekend, bringing pizza and soda,

showing that he or she cares and has a clue about what the team is working on,

even if they don’t really understand the details, are critical ingredients. The little

touches motivate the team beyond belief.

Impedance matching

One of the biggest challenges with a Skunk Works is figuring out how to take the

prototypes developed by a small team with a “just enough is good enough”

mentality and integrate it with a more disciplined development process of the

larger organization. In effect you have a tiny gear spinning at high speed trying to

synchronize with a much larger and slower turning gear. One approach to solving

this dilemma is to use an “impedance” matcher. Think of it as placing a third in-

between-sized gear between the small one and the large one. Rather than a

gear, of course, it is a small group of people whose mission is to adapt the

prototype to the standards of the larger organization. Their focus is not

developing it but rather adapting it, smoothing over the rough edges, and getting

it into good enough condition that the larger organization will look at it and say it

is good enough to be adopted and taken to market or put into production. The

result is a speed to market that is a little slower than pure prototype but much

faster than the full-blown process. Without the impedance matcher the larger

organization is more likely to view the prototype as a virus and seek to eradicate

it.

Fail and fail often

A successful organization has to be willing to have projects that are going to fail.

A process designed to keep failures from happening is antithetical to a Net

Attitude for innovation. But you need to be able to declare a failure, move on,

and not punish the participants for being assigned to (or even creating) the

failure. A good process encourages people to submit ideas into the mill as

quickly and as often as possible and allow others downstream to figure out which

ideas are worth pursuing further. There should be no penalty for putting in an

idea that gets rated "close - no action required”.

Skunk Works are a vehicle for developing new things, or for bringing alternative

ideas forward – they are not a universal answer to all problems of innovation.

For Skunk Works to succeed, the company at some point may have to be

cannibalistic. Children that come to life through the Skunk Works have to be able

to eat their parents. In many companies there are countless examples of brilliant

ideas and technologies that came to life in Skunk Works fashion but were then

squashed by the mainstream part of the company. These same innovations are

often successful when they are brought to market outside of the company.

alphaWorks

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There are a number of Skunk Works scattered around IBM Research

laboratories and other parts of the company. One thing they have in common is

the challenge of finding a path to market for some of their ideas which have no

clear destiny. During an early 1996 visit to one IBM’s Research laboratories,

Irving Wladawsky-Berger, then general manager of IBM’s Internet Division,

noticed a particularly interesting streaming audio technology that had potential

use for Internet applications. In fact he saw numerous technologies that seemed

to have potential. While the technologies were quite impressive, there was no

clear “business case” to take them to the market. Irving asked me to figure out

how to reinvent the process of getting these research-phase (often referred to as

“alpha”) technologies out of the lab and into the market. I thought about it all that

weekend and then it hit me like a ton of bricks -- all the bells and whistles went

off in my head. Put these technologies on a website and offer them as free

downloads and let the market tell us what they think the technologies are good

for. We could put basic legal protections in place, create an easy mechanism for

feedback, and perhaps even build a community around these early stage

technologies. Without much planning, reviews, or analysis, we decided to

implement alphaWorks quickly.

There were a lot of questions. Aren’t we giving up control of the technology? How

about if someone takes our idea and turns it into a big business? By putting great

technologies on the Internet for anyone to download, are we giving up intellectual

property and will we later regret it? Yes, it is surely giving up some control but we

believed there was more upside than downside. The technology candidates for

alphaWorks were in some sense “orphans”. If the business case was clear for

them they would be adopted by a product line of business and would be

developed into products. These orphans seemed to be brilliant ideas but the

application for them was not clear. If a lot of people download them and find them

useful we will get feedback on what they found them useful for. This could help

us go the next step toward product development. If nobody downloads them or

the feedback is negative we could kill the project and redeploy the resources to

other more fruitful areas.

There was no formal organization; it would just evolve. That is how most

important ideas flourish. If there is conviction in the idea, just do it, don’t’ study it.

Don’t focus on who reports to whom. Just focus on getting something into the

market and then let the market tell you what is good and what isn’t. If the idea

takes hold you can build a more formal organization later -- organization can kill

an entrepreneurial idea if it is formalized too early.

A full-blown web site for alphaWorks was built in weeks. A couple of college

interns who didn’t know things like this were supposed to be hard created a very

impressive site. The legal team created a very simple agreement that said that if

someone downloaded our technology they could do whatever they wanted to

with it – except sell it. A process was put in place to enable IBM researchers to

introduce one of their technologies onto alphaWorks. Executive “air cover” was in

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place and alphaWorks came to life – downloads started happening and feedback

started to pour in. Outside-in.

alphaWorks morphed from a site for “cool orphan technologies” to an effective

way to surface emerging technologies and create paths to market for them. A

community of hundreds of thousands of early adopters, entrepreneurs and

innovators emerged that provided “headlights” to enable the company to see how

people are thinking about the technologies, what challenges they face, and what

features and support they would like to have. As a byproduct of reaching out and

forming a community the company received positive press coverage and was

able to build mind share about its technology.

We are all in this together

One important piece of Net Attitude is a very people-oriented thought: "We are

all in this together." A system or a web application isn't a success if only one

participant in the transaction wins -- there have to be benefits for all sides.

Customers and companies aren't at war here -- customers benefit from faster

access to data, and companies benefit because it costs them less to deliver the

information. Because customers see speed as a direct benefit to them, they're

likelier to come back -- and the company gets to save money. Similarly, a doctor

with Net Attitude won't feel threatened if patients use the Internet to find out more

about their conditions -- in fact, the doctor can work better with an informed

patient, and again, both parties win.

Unfortunately, many companies don't have Net Attitude -- they view their

customers as resources at best, adversaries at worst. You see this when you

encounter a web site or application which asks many questions just to get in the

door, and then burdens you with more "required" fields when you order or

request something -- fields which are only required so that the company can best

exploit your information.

One way to focus on "we are all in this together" is to spend time and money

listening to your customers -- your partners. That doesn't mean a "contact us!"

link is enough, either -- you need to listen to subtle input, such as unanswered or

bogus fields on your forms (you don't really believe that half of your customers

are named "Bugs Bunny", do you?). .

Planning ad nausea

There are four phases of e-business to consider. Planning for an e-business,

building an e-business, running (operating) an e-business, and using an e-

business. We have talked about the importance of planning. It starts with sorting

out your business strategy, figuring out what your value proposition and business

model are, committing yourself to meeting the expectations of people who visit

your e-business and finally establishing a framework that provides for an e-

business which is scalable, manageable, available, reliable, and secure.

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In a world where so much is possible, it is really important to think big. The

challenge is to both think big but to start with a simple implementation and grow it

fast toward the big idea. Many organizations have planners. Planners like to

plan -- that is their job. New ideas require a plan before they can be

implemented. The problem is the plan expands and expands to encompass the

big thought – the entire vision. The result in many cases is that the plan gets so

big that it can’t be implemented or by the time it does the whole world changed

and then the plans have to be scrapped and things go back to square one.

Prior to the Internet becoming commercialized, the model for creating new I/T

applications was Plan, Build, Deliver -- eighteen-month cycle. With technologies

and markets now changing at Internet speed, the new model has to be based on

Net Attitude, Sense and Respond – 18 hours cycle. Sense what is happening

with the project or your web site and respond to it. Seek feedback, listen to it

hard, and act on it. Iterate with baby steps but on a fast cycle. Evolve as fast as

possible toward the big thought. The traditional model yields a second release of

the product a year or two after the initial release. Net Attitude takes you down a

different path. Deliver a release .1 product. A month or less later, deliver a

release .2 product. After a year you are at “Release 1.0”. Chances are good that

your Release 1.0 after one year is way ahead of where a traditional Release 2.0

would be after two years

Just enough is good enough

This shouldn't be taken to mean to do sloppy work or throw something against

the wall and hope it sticks. It is a fine line. You've got to know or even sense

when to “Just Ship It”, and when to be sure things need to be really well

engineered. Many new technologies that have been introduced on the Internet

including streaming audio, Java, and even the protocols of the Internet itself were

arguably inferior to alternate approaches that could have been developed or

even that already existed. However, they all “did the job”. Just enough turned out

to be good enough to get the idea out there and enable people to start to benefit

from it. Early adopters are happy to get a hold on new things and are very willing

to spend hours providing their feedback on bugs and suggested improvements.

This same Net Attitude can be applied to projects of all kinds in any size

organization. You can actually use the model and culture of how the Internet was

developed to develop any idea – using the Internet itself as the platform for

feedback, review, collaboration, and communication. There have been many

examples of this approach on the Internet over the past five years. When the

National Center for Supercomputing Applications released the first alpha version

of Marc Andreessen's new web browser (called "Mosaic”) in February 1993, it

was a bit crude. Likewise on May 23, 1995, when John Gage, director of the

Science Office for Sun Microsystems, and Marc Andreessen, then cofounder and

executive vice president at Netscape announced that Java technology was real,

it was hardly ready for prime time. Ditto for many other technologies. In all cases

the early adopters greeted the technologies with open arms, provided feedback

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and reviews to the developers, and actually collaborated with the developers to

iteratively improve things until they were usable by larger numbers of people.

Avoid the one-size-fits-all approach

While explosive developments in all aspects of the Internet were happening out

in the public domain there were an equally important set of things happening

inside of organizations of all kinds around the world. Internal networks using

TCP/IP, the protocols of the Internet, were constructed and firewalls were

erected to protect against unwanted intrusion from the Internet. The internal

networks became known as intranets. Web technology is relatively low cost and

relatively easy to implement and this enabled the intranets to mushroom. They

were initially used to publish information such as reference manuals and

employee directories. As the web application tools have become more

sophisticated the intranet applications have too. CIOs of organizations have

embraced the use of web applications and many have also begun to apply the

disciplines of more traditional information technology application development

including requirements planning, system architecture, design specifications,

development, testing, systems integration, etc. This is good on the one hand but

potentially can impede rapid progress if taken too far.

For some applications the “quick and dirty” approach of the early web days is still

adequate. A good Net Attitude is to avoid a “one size fits all” approach. A payroll

application that allows an employee to set up deductions on the web needs all

possible rigors. An application to enable an employee to signup for next weeks

blood drive doesn’t. The risk of harm to the organization or to the customer

needs to be weighed against the time and effort to apply all the processes to

creating the application.

In addition to sensing and responding it is also a good idea to be proactive. Many

organizations have put everything but the kitchen sink on their web sites. This is

not all bad but it is time to clean it up. I recommend hiring a college student for a

few afternoons per week whose job is to scour your entire web site and find all

the things you can’t do. While they are at it, have them find all the instances of

“fax me the form” or “call us nine to five Monday to Friday”.

Trial by fire

A few things are certain about a new web site -- you don’t know how many

people are going to visit, you don’t know when they are going to visit, and you

don’t know what they are going to do when they do visit. In the “old days” of the

sixties, seventies, eighties, and early nineties, it was relatively easy for the CIO to

test things before putting them on line. Most of the users were “hard wired” to the

mainframe or central mini-computer. Since the CIO actually controlled the

applications, he or she knew exactly how many users there were and knew which

applications would be used and when they would be used. With the web it is

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much more difficult to plan. In many cases the best approach is to put something

out there and see what happens, gain some feedback from users on their

experience on the site, monitor constantly, measure the performance under

load, and then use all the input to build a truly scalable and reliable system.

Trial by fire is dangerous because you really don’t know what is going to happen.

Therefore it is really important to set expectations – and set them low. In 1999

Victoria’s Secret, a retailer of women’s undergarments, proudly announced it was

going to have a live webcast of models showing off their latest products during

the Super Bowl football game. Talk about setting high expectations! The number

of people who watched the webcast was a record but the numbers who were

disappointed was probably larger. The site just could not handle the load.

Another approach would have been to announce that an experimental prototype

of a modeling webcast was going to be introduced “in the near future”. Plenty of

people would have “discovered” the webcast. No “announcement” was

necessary. Instant messages would have been flying around the Internet. “Yo,

Bill, check out http://victoriassecret.com”.

Good communications to set the expectations are critical. “This will be the first

time such an event has taken place on the web and we are proud to introduce it.

Because of the experimental nature of this we are not sure how many visitors

there may be and what the resulting performance may be. We look forward to

your feedback and apologize in advance if you are anything but delighted with

the experience”. Based on the feedback and measurements of system load and

performance a more aggressive marketing approach could be taken on the next

webcast after the appropriate systems design was incorporated.

Kasparov 1, Deep Blue 0, web site in the ditch

In 1995 IBM began to experiment with sporting events on the web. Everything

they did was a first of a kind; never done before for large audiences. It was

perpetual learning. One of the first events was the U.S. Open in 1995 when a

small team of Internet engineers worked in a construction trailer at Flushing, New

York and put the tennis scores on the web. They also used live video cameras on

multiple tennis courts and gathered real-time data from radar guns that measured

the speed of the tennis balls as they flew across the net (not Net). There was no

basis, no textbooks, no data from which to plan for such events on the web. It

was pure trial by fire. After each event the team was smarter -- they learned the

effect on the server when something exciting was going on and a large number

of people started interacting with the web site. This enabled them to optimize the

structure of the databases and fine tune the server.

That same year was the first match between the world famous Gary Kasparov

and a supercomputer from IBM named Deep Blue. An advertising agency in New

York City hosted the web site because the Internet team was busy getting ready

for the following summer’s Olympic Games. After the first chess match the

headlines proclaimed “Kasparov 1, Deep Blue 0, web site in the ditch”. No one

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had any idea that a chess match on the web would be so popular. The web site

at the ad agency was not well designed and the system that was running it was

not prepared for scalability. The IBM team raced to New York, gathered up all the

information for the site, and took it back to IBM. They then went to the head of

the supercomputer division of the company and made a request to borrow a

supercomputer. After thirty non-stop hours of frenzied programming and systems

work, the team built a replacement web site and the chess match continued

offline on the chess board and online on the web. Deep Blue won match #2. After

the third game, the headline was “Game 3 chess match a draw; IBM site up”.

The chess matches enabled IBM to learn a lot about how to build scalable web

sites. They devised a method for handling large and unpredictable numbers of

incoming web requests by deploying software that could intelligently distribute

the requests across multiple servers in order to balance the load. This in turn

enabled the site to provide stable and reliable performance. The technology

developed that weekend later became crucial to the Atlanta and Nagano Olympic

Games sites (both of which held world records traffic) and then went on to

become part of IBM’s flagship WebSphere web application software product. It

may have been possible to invent it in a laboratory environment but using a trial

by fire approach certainly got it to market faster.

Another attitudinal aspect of web sites has to do with registration. More and more

sites require that you register in order to explore the site or to receive an email

newsletter. The motivation is to get demographic information for analysis and

marketing. There is nothing wrong with that as long as you have a really solid

unsubscribe. Some sites make it nearly impossible. The right Net Attitude is to

not just make it easy to unsubscribe but to make it really easy -- at least as easy

as registering in the first place. People will remember. (Besides, the people who

want to be subscribed are more likely to be the ones who will accept offers,

promotions, etc.)

Make easy things easy!

Making things easy is a key Net Attitude. It doesn’t come naturally, you have to

plan for it, test it, and refine it. Some of the hardest things are subtle. Most of the

people visiting web sites are going to be doing simple things – click here to buy,

make a payment, check the status on something, and other basic transactions. It

is important to make those things easy to do. One simple idea is to make URLs

easy to remember and type. For example, it would be nice if ups.com/track

worked, but it doesn't -- ups.com/tracking doesn't work either. The URL that does

work is ups.com/tracking/tracking.html. Fortunately, you do not have to type the

Not to pick on UPS – there are many examples around the web – but

hitting the Enter button on the ups.com/tracking/tracking.html screen gets you a

screen where you can enter more tracking numbers instead of giving you

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tracking information for the numbers you've already entered -- especially if you've

only entered one number.

Making things easier applies to your employees, too. Part of Net Attitude is

treating your own people's time as valuable -- time they spend fighting your

internal web is time they can't spend working on customer problems.

One way to find out what users really want is to use focus groups. Focus groups

have served the world well. Get a specially selected group of people behind a

glass wall and videotape them while they are interviewed or shown a

presentation. Today the Internet allows a focus group to be self selected in real

time. People on the web who participate in discussion groups are brutally honest.

Get out there proactively and talk to them. It is much more real world than the old

focus groups. You may not like what you hear but it will likely be the truth. People

who take the time to give feedback are usually the most discerning users and

have the most valuable input.

Think integration

Application integration is the Holy Grail of e-business. Designed separately at

different points in time on different platforms the preponderance of systems can’t

talk to each other. Most of the transactions on the web today are between people

and servers. By thinking Integration an e-business can be built where servers

talk to servers. Today’s typical approach to solving the integration problem has

been to utilize business process reengineering (BPR). BPR is certainly critical

long term but the problem is that it takes a long time to get the resulting new

systems implemented. Most organizations, for competitive reasons, don’t have

time to wait for a BPR solution. Fortunately, there is an alternative.

BPR will eventually result in an updated hotel and airline reservations systems

that incorporate the frequent guest or flier systems so that things are totally

integrated. In the meantime there is an approach called Message Queuing (MQ)

that enables incompatible systems to communicate with each other. Going back

to the hotel reservation scenario, recall that I had made a reservation for a hotel

room and wanted to pay for it with frequent guest points. Imagine the

reservations system sending a “message” – think of it as an email – to the

frequent guest system. “I have this guy here who just reserved a room for one

night in New York City. He wants to use his points to pay for it. His guest number

is 1234”. A message goes back from the frequent guest system to the

reservations system. “Yes, guest 1234 is a valid account and he has a balance of

125,000 points. The New York City room would cost 30,000 points”. The

reservations system now sends another message. “Ok, please deduct 30,000

points from guest 1234 and confirm”. A final message goes from the guest

system. “Points deducted”. This all happens in less than a second and then your

web page gets updated and it says, “Your reservation has been confirmed.

30,000 points have been deducted from your guest account. Happy travels”!

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Neither system was reengineered. They were just enabled to communicate with

each other. Each system could have been operating in a totally different software

environment. The integration took place in the web server that provides the

interface to the customer. Implementing the messaging is not trivial but it is much

simpler than reengineering the two systems. Japan Airlines has used this

approach to enable their gate scheduling system and their flight arrival system to

communicate. They solved a problem that greatly annoys large numbers of

people. Sometimes you order something that isn’t coming directly from the

manufacturer or the distributor and the delay can be extensive. Typically you will

get quoted four to six weeks for delivery. The long lead-time isn’t because the

item is not available but because the supply chain involved in getting it to you

does not have integrated systems. One participant may fax a form; a second may

enter into their automated system that then generates something which gets

mailed to a second participant. That participant then faxes it to another

participant, etc. Incompatible systems are at the root of the problem. Utilizing

message queuing interim to, or in some cases instead of BPR, is a form of “just

enough is good enough”. It can mean transactions that make our life easier and

result in us waiting less or standing in fewer lines.

Build on a framework

To sense and respond at Internet speed is critical but to do so by throwing things

against the wall and hoping they stick is not a good idea. E-businesses must be

built to “scale”. Remember we are 3% or so of the way into the Internet. The

biggest potential problem facing many e-businesses is success! The

infrastructure technology that exists today isn't ready for what is coming. We are

going to see ten times more people using the Net, one hundred times more

network speed, 1,000 times more devices and a million times more data!

Expectations of the users are going to be very high and so the information

technology planners in all kinds of organizations are going to have very large

challenges.

Things are compounded by the fact web sites are overwhelmed with

“maintenance” of their software. Many of the e-businesses, even the startups,

have built a huge base of programming and content over the last six years of the

web’s evolution. Many of them decided not to standardize on commercial

products and architectures and the web services model did not exist. They

adopted an approach, somewhat out of necessity, of “we can build it better from

scratch ourselves”. This is not a good attitude for the long term. What many of

them have now as a result are incredibly complex systems based on their

homegrown system. One of the results of this approach is that now many of

these companies take a very long time to fix things and add new features to their

sites – they are too busy performing maintenance of what they already have. The

cost of development and time to make changes has gone exponential on them.

Like the sports sites discussed earlier, e-businesses are going to find that they

too don’t know how many people are going to come to their site, when they will

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come, nor what they are going to do when they get there. Peak performance

needs will be very hard to predict. Having the many devices the next generation

of the Internet is facilitating is going to exacerbate this. People with devices of all

kinds that they can use wherever they are will greatly increase the number of

transactions. Scalability will become paramount in importance. The typical e-

business today puts in some database software and some web servers and

when demands increase they add more servers. This will work to a point but

eventually the management of the large numbers of servers becomes a problem.

Building an e-business is a big job. The web site needs to be comprehensive –

built to handle the end-to-end needs of the constituencies. In addition it needs to

be connected to and integrated with the existing information technology systems

-- bringing the “front end” (the web) together with the “back end” (the existing

systems). Stability must be maintained while this is done – and while transaction

rates and numbers of visitors are growing rapidly. It is like changing the tires on a

car while it is speeding around a curve on two wheels. The solution to the

challenge is to build the e-business on an architecture that provides a SMART

infrastructure. A SMART infrastructure includes Scalable servers that you can not

outgrow, Management tools to allow you to identify and fix problems, Availability

options that provide self-healing failsafe operations, Reliability for all the

components so the weakest link doesn’t bring you down, and Total Security so

you can protect all the data for you and for your constituencies.

Various information technology vendors have blueprints or architectures that

meet these needs to various degrees. Whatever architecture you select it is

essential to pick one that embraces open standards including the Internet

standards and the web standards of the World Wide Web Consortium. As new

ideas evolve on top of the Internet there are more and more proprietary

implementations. Wherever open standards exist, however, it is a good idea to

demand that your information technology vendor support them. Standards are

evolving rapidly and it is important to have someone in the organization

responsible to closely follow the standards processes and to test the commitment

of vendors to contribute to them and follow them.

Where is the leadership?

Leadership is a core Net Attitude. It is all about making it happen versus

watching it happen. I am looking forward to the day when I can have all of my

medical records on the Internet where I will know that at last they will be safe. I

went to Yale University Medical School for my annual physical and while

checking in (filling out forms with information that I had filled out during each of

the prior years) I observed the large number of manila folders containing medical

records. I wondered who the people were who had access to them and on what

basis. I wondered if the son or daughter of my next-door neighbor might work

there and whether they have been reading my medical records. I was thinking

about how referrals work. Your doctor suggests you see a specialist about some

condition. A copy of your medical records may be forwarded to the specialist in a

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manila envelope. Who opens the envelope? Who will be able to read the

contents? No idea. I wondered if I borrowed my daughter’s stethoscope and put

on a white jacket, if I could walk behind the counter and pick out a dozen or two

manila folders and walk out with them.

Suppose my medical records were encrypted with my own public key. That would

mean that they could only be decrypted with my private key. Only I have my

private key so only I could enable access to my medical records. I spoke to my

doctor (now retired) about it and he said he thought it would be hard to capture

the “real” conditions and observations because each doctor likes to record the

information in their own unique way. If my choice was to have encrypted

information coming from a marginal doctor versus unencrypted handwritten

information coming from a great doctor I would of course take the latter. But isn’t

there some way we could have both? Isn’t it possible to record medical

conditions with voice recognition and to capture blood pressure data, test results,

and even a doctors hand written notes and make them part of a digital record

that is encrypted and securely stored on an Internet server?

Why don’t we have digital ID’s that can allow us to keep our medical records on

the Internet, to wire money with a mouse click, to open new accounts without

having to fax forms, make online funds transfers, online vehicle registrations or

driver’s license renewals? Is it a lack of technology? No. Lack of leadership with

Net Attitude? Yes, and at multiple levels.

The governor of a mid-west state once told me that he believes that the votes he

may lose from constituents displaced by on-line services would be more than

offset by the votes he would gain from constituents who were delighted with new

Internet based services. That is leadership and Net Attitude. Unfortunately this

may still be a minority opinion in many jurisdictions of the world.

You are not normal

How about financial services? I had lunch with the CEO of a major insurance

company and described to him how the only thing standing between me and

being really satisfied with his insurance company was his agent! When I want to

do business the insurance agent is not working. When he is working I don’t have

time to focus on insurance. I described how I would like to see a web page where

I could check off all of my needs for coverage; cars, house, liability, etc. and then

I would like to iterate on various coverage options until I got what I wanted. He

said, “You aren’t normal”. I then described how I had a home in one state and a

vacation cottage in another state but I had to have two different agents and I

couldn’t understand why I couldn’t just deal with one. He said, “Well, there are

some ‘regulatory’ issues”.

If I were to speak to the firms involved in my wire transfer about why wire

transfers can’t be done on the web I am sure I would hear about more “regulatory

issues”. When I asked First Chicago why I couldn’t transfer a share of stock

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without a “gold medallion” signature from a bank, they told me about “regulatory

issues”.

There are “regulatory issues” for sure, but I think the real problem is lack of Net

Attitude. There is fear and misunderstanding and a lack of leadership to make it

happen. Major institutions have been dealing with regulatory issues for decades.

They have found ways to educate and influence regulators to enable them to do

business in developing countries, break into new markets, get approval for new

products, and get investment tax credits. But they can’t convince regulators that it

is a good idea to automate wire transfers or securities transfers using digital

signatures?

Entrepreneurs don’t know it can’t be done

Clever entrepreneurs are attacking the “regulatory issues” with a vengeance.

One of the most highly regulated areas of commerce is the ordering and

shipment of wines and liquors to consumers. Every state has different regulations

and most of them are highly restrictive. Some states have regulations that specify

that liquor or wine can only be sold to a consumer by a retailer, who in turn can

only obtain the liquor from a wholesaler. It is a form of protectionism.

Nevertheless, entrepreneurial companies are finding clever (and legal) ways to

get around the regulatory restrictions by using various distribution intermediaries.

When California passed a digital signature law in 1999 E-Trade proclaimed that

this would enable them to open new securities accounts for anyone anywhere

since E-Trade is a California company. The Wall Street Journal quoted New York

attorneys saying that they were not so sure. Could they have been part of the

established firms? Charles Schwab has a MoneyLink feature that allows their

customers to move money to or from a Schwab account and any bank account –

24 x 7, no faxes, no phones. I don’t know of any banks that do the same.

In the U.K., all the banks are members of The Banking Automated Clearing

System (BACS) that does funds transfers between any bank and any bank every

night. It has been running for years. You can deposit a check at any bank and it

goes to your own bank account at your own bank. The U.S. banking system has

a long way to go. It is not a technology or security problem.

Escrow.com has a simple web page approach for setting up an escrow account

for selling your car to a stranger or any other purpose. You fill out an on-line form

with the conditions and it is emailed to the other party. When they agree the

escrow is established. When the conditions are met the money is released. All

on-line. All secure. The fee is $100. Seems like it should be profitable for them. I

am sure there were “regulatory issues” but some entrepreneurs took the

leadership to make it happen.

Established institutions have the choice to stand by and watch things happen or

to use their considerable influence to accelerate the process of regulatory reform

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and make it happen. Everyone would benefit. If they don’t the entrepreneurs will

gain market share from the established institutions.

Organizing to get things done in the fast paced world of the NGi cannot be done

by the textbook. It takes a new way of thinking – Net Attitude. Moving out a bit

closer to the edge – where things are somewhat uncertain; where you don’t have

the control you would like to have, but where innovation is happening

continuously. On the edge is not the place to live but a place to visit often to get a

sample of the culture – or at least have someone assigned to visit there for you

and keep you a breast of what is happening.

Get a taste of the culture

The thorcolervo

In May 1994 a colleague, Dave Grossman, and I gave a presentation to a group

of senior managers at IBM. It may sound hard to believe but back then most

people had not yet seen the web. We showed an artificial hip simulation from a

medical site at Cornell University, some pictures from the Vatican Library, some

dinosaur pictures from Honolulu Community College, and the very first release of

ibm.com. These were all impressive but the most impressive part of the

demonstration was Andrew’s web page. Andrew is Dave’s son and at the time he

was seven years old. After Dave showed him the dinosaur pictures at home one

night Andrew wanted to make his own web page. He drew a picture of a dinosaur

and gave it the name “thorcolervo” (after the name of a robot in a book he had

just read). Dave helped Andrew scan the picture and turn it into a web page.

Andrew then recorded a sound byte; “Hi, this is Andrew and you are looking at

my drawing of a thorcolervo”. This totally blew people away. Seeing a picture of

dinosaur come across the Internet and get displayed on the screen and then to

hear a voice come across the Internet describing it and then to find out it was

done by a seven year old! In 1994 Andrew thought that making web makes was

normal.

When Lou Gerstner saw the new IBM homepage, his first question was, “Where

is the BUY button?” The term e-business had not yet been invented -- there was

nobody buying anything on the web back then -- and here was the CEO of IBM

asking how people were going to be able to buy things! He had the insight and

intuition to see what was possible long before most major companies of the

world. Later he was the first CEO to publicly say that the Internet is for business;

not email or surfing, but for business transactions. Another first was the audio

recording on the homepage that said, “Hi, I’m Lou Gerstner. Welcome to our

homepage. I hope you will come back often.”

A few years later I was talking to Dave one day and asked how the kids were

doing. He said the family had a nice weekend skiing and that during the trip to

the mountains Andrew had a great time chatting with his buddies back home. I

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asked what he meant. He described how Andrew was in the back seat of their

van with a ThinkPad connected to the Internet using a wireless adaptor and he

was using IBM’s “instant messaging” program and his “buddy list” to have an on-

line chat session with his friends. So as Dave was driving seventy miles per hour

to the mountains, Andrew was having an on-line chat session with his friends and

Andrew thought that was normal. This was in 1996. At the time a lot of people

were still amazed that the Internet worked at all and here was a ten year old

using instant messaging in a car and he was completely unimpressed.

Dad, you should know more

One day at home I was trying to get a new SoundBlaster audio card working in

my PC. For a variety of technical reasons that I won’t go into here it was proving

to be quite difficult. It had to do with deep technical parameters that most people

don’t know exist (and shouldn’t have to). I got myself totally confused and

frustrated trying to get the parameters set properly. To my great relief my son

Aaron arrived home from school. He was 15 at the time. I told him the problem.

He walked over to my PC and in about 15 seconds had everything working. After

I thanked him, Aaron said, “You know Dad, for someone at your level in IBM, you

should really know more about PCs”. The kids wonder why we think technology

is so hard. I want to know less. He thought I should know more. He thought it

would be normal to know more.

Visiting colleges and universities is a great way to learn what is going on today

and more importantly where things are headed. Occasionally I get an invitation

to visit a campus and speak about the Future of the Internet. One summer I

visited Lehigh University (my alma mater) and spoke at a combined session of

the ACM and IEEE membership – a very technical audience. I asked how many

were writing Java programs and all the hands went up. This became an

important proof point for me as skeptics about Java emerged. Professor Ron

LaPorte of the University of Pittsburgh in Pittsburgh, Pennsylvania invited me to

visit the College of Epidemiology. Ron is leading a terrific project called the

Global Health Network. I got the chance to meet some wonderful and creative

graduate students who are collaborating to improve the health of the world.

During this visit I learned how non-technical people were getting as much out of

the Internet as the technical people I was used to spending time with. A visit to

The J L Kellogg Graduate School of Management at Northwestern University

was nostalgic since I had attended their executive program some years ago.

More importantly I got to meet with a group of students and hear their questions

during an extended Q&A session. They stimulated my thinking about where

things are going. Similar sessions at MIT, the University of Pennsylvania and

Stanford have inspired me greatly. There is no formal training program or

company experience that can compare with an hour of Q&A with bright students

– they ask questions that really make you think. When I leave one of these

sessions I always feel that I have gained at least as much as they have. I tell

them they are the most fortunate graduating class in many years because they

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are about to enter a networked world of e-business and they can be the technical

and business entrepreneurs who can help create it.

What is normal?

What we consider esoteric or even bizarre our kids consider normal. When we

think of an insurance agent we think of a person. They think of a Java applet that

runs on the Internet finding the optimum deal for insurance coverage. When we

think of opening a bank account we might think of sitting in front of a desk while

someone is filling out a form. They think of “click here to open an account”. When

we hear someone say they had a chat with a friend we are thinking of them doing

so in person and the kids are thinking of instant messaging on the Internet. The

kids talk about Napster and Gnutella and we don’t even know what they are

talking about.

There is so much we can learn from the kids. They represent the way e-business

is going to be. I recommend to CEO’s and CIO’s that they hire a student for a few

afternoons a week and make it their job to review the company web site and look

for things that you can’t do. There are plenty of them. Listen to the students; ask

for their suggestions. They think about things differently – like most of your

customers are beginning to think.

Extreme Blue

In early 1999, an Internet engineer at IBM named Ron Woan had an idea to bring

in a group of a couple of dozen computer science students to be part of a really

unique summer program. Ron’s idea was to go out to the top ten Computer

Science schools in America and recruit the best of the best students. His idea

was to create leading edge projects for the students to work on and to set up a

mentoring program whereby the students would work closely with IBM’s best

technical leaders; Senior Technical Staff Members, Distinguished Engineers, and

IBM Fellows. A further part of Ron’s idea was to give the students the latest IBM

technology to use, provide housing for them, and generally make their life as

fantastic as possible. We all thought this was a great idea but questioned

whether we could actually pull off the administration, find the budget, and

manage all the details. There were doubting Thomases but in the main many of

us thought it was a great idea. The management team; Dave Grossman, from a

technical point of view, and Jane Harper, from an operational point of view,

believed in Ron’s idea and made the commitment to make it happen.

The project became known as Extreme Blue. Wired Magazine wrote a story

about it called “Big Blue Reinvents Internships”. The vision was to enable some

of the world’s brightest computer science students a chance to spend a fast

paced summer working on real, cutting-edge IBM projects. Not running the

copying machine or “make work” projects but real projects; things IBM was

actually quite interested in making happen. The students were split into teams of

three and each team had a mentor who was a senior technical leader from a

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product group somewhere in IBM. The mentor had a very specific technical

project that may have been on their dream list but for which he or she had not

been able to get funding or skills.

Getting some top computer science students to tackle the challenge would have

all upside and no downside. The students exceeded everyone’s expectations.

The thing about students is that they have no “baggage”. They don’t know all the

things that didn’t work in the past or all the reasons why something can’t get

done in a short period of time. No blinders. Totally uninhibited. They have the

summer – all of twelve weeks or so. Whatever it takes, they will get the job done.

Students are fearless and tireless. Yes, I am sure they learned a lot about IBM

and from their mentors but I think IBM learned even more from the students. How

they think and work together. Their attitudes about technology. The trends they

see. Their view of the future. It is so uplifting and enriching to talk to the students

and learn from them.

Talk to the kids

So, talk to your kids. Look over their shoulder. Ask them what they do on the

Internet. Talk to them about their values. What do they think of intellectual

property rights? What do they like most about the Internet? What do they like

least? What sites are really with it? Which are brain-dead? What do they think

the Internet will be like in five years? How do they expect they will use it after

they get a job? If what they tell you makes sense, think about how you can

incorporate some of their kind of thinking in your business or institutional

planning. If what they say doesn’t make sense or you don’t agree with what they

say, talk to your kids some more. If you don’t have any kids, borrow one! If you

can’t find any kids to talk to then talk to some ThirdAgers.

ThirdAgers

If you can’t find any teenagers to validate your business plans for the web, look

for some 60 year olds. When I visited the Heritage Village retirement community

and went into their “web room” I saw a huge banner across one wall. It said

“Keeping Pace in Cyberspace”. That is their motto. They are not intimidated in

the slightest by technology. A petite elderly lady looked up from her keyboard to

say hello. She was helping a friend learn how to send email to her grandchild. At

their monthly meeting a seventy-year-old gentleman made an announcement

that the “Hardware” special interest group (SIG) was going to start a new project

whereby each participant would be building their own PC from scratch and he

asked if anyone would be interested. Dozens of hands were in the air to join the

group.

ThirdAgers are generally between the age of forty-five and sixty-four. The heart

of the group is made up of those who Mary Furlong, founder of ThirdAge Media,

describes as being in their “transitional fifties”. Some are going through job

changes or a divorce. Others have aging parents, health issues, or are

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experiencing the birth of grandchildren. These are all issues which change the

lives of the ThirdAgers and create a desire to join a support group, go to a class

or pick up a hobby. In many cases, explains Mary Furlong, the changes “lead to

a quest for a more spiritual life and more focus on one’s interior life. The result is

that people become more intrinsically motivated”. For all these reasons

ThirdAgers are flocking to the web. They are not intimidated by the technology.

They have goals and the web can help them cope. ThirdAgers are going to

MyFamily.com to share family pictures and learn about genealogy. They are

going to ThirdAge.com to get career or health advice or check the romantic tip of

the day. There is no substitute for the loss of a loved one but these web sites are

helping people find others with similar interests and enabling them to create new

friendships. In some cases these have lead to marriages.

ThirdAgers represent a fast growing segment of the economies of the world.

They have a lot of personal challenges but they also have time, motivation, and

decades of experience. As the next generation of the Internet evolves as the new

medium it will enable members of this highly skilled workforce to come back to

work part time from their retirement communities via telecommuting. They may

prove to be crucial in filling the huge skills shortage that is facing the information

technology industry today. For those who don’t choose to come back to work the

Internet will enable them to fulfill their lives in various ways and to find help in

meeting the challenges they face.

What to do next

Now that you have a Next Generation Attitude and a grasp of the coming

technologies of the Next Generation of the Internet, what do you do next? Here

are some very simple ideas, organized in five categories, that I hope will help you

survive and thrive on the Internet in the days, weeks, and months ahead.

First and foremost, Communicate, Communicate, Communicate

Leverage the power of email for communication with customers,

suppliers, stockholders and business partners. Add staff to handle

external e-mail on a 24 x 7 basis, and find ways to justify the cost

based on increased business, improved customer satisfaction, and

offsets to paper-based processes. Use flexible, pre-drafted

responses and use software to categorize the email by department

or product and by whether it is feedback, a question, or a

complaint. Automatically route the email to the right part of the

organization. Ensure that every email is answered within 24 hours.

Use a follow-up system to ensure closure on issues.

If you use an email form on your web site instead of providing an

email address, give the sender the option to receive a copy of their

email message. People often don’t use the email form because

they have no confidence it will get delivered and they have no

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record of having sent it. Allow them to attach a document that may

contain more information about a situation at hand.

Set up an email directory search capability that enables people

outside of the organization to find email addresses of employees

and departments. When some question whether this is giving away

proprietary information, remind them the company switchboard

already gives out phone numbers and email is usually more

efficient. Accept the principle of opening up your organization and

allowing outsiders to easily send you e-mail. Become the easiest

organization in the world to communicate with.

Set up an enterprise-wide Instant Messaging system that provides

encryption of messages. Make it available to all employees.

Provide the infrastructure to enable them to have e-meetings in

addition to messaging.

Make your web site a comprehensive information resource for

customers, prospects, industry analysts, consultants, editors, and

your employees. Include not just press releases, but owner

manuals, white papers, and technical and customer support

information about your products and services. Put someone in

charge of keeping things current and managing the archives.

Establish a company standard, such as the Adobe portable data

format (PDF), for publishing all information. (If you choose Adobe,

provide a link to get the free Adobe Acrobat software to enable any

visitor without one to quickly be able to read your content.)

Provide external links related to your products and services. Include

links to your customers and business partners, to universities doing

research in areas affecting your business, to third parties who write

about your products or services, and to relevant discussion groups.

Don’t make your constituencies find these places on their own. If

you provide plenty of links away from your site, people will

remember it and they will return often.

Establish an “Experts and Executives Online” program to enable

your constituencies to engage in open electronic dialogue with your

executives and subject matter experts. Use electronic forums,

discussion groups, chat rooms, and e-meetings. Have offline

approaches where answers can be staffed out and posted after the

appropriate executives or experts have approved them, but also

have periodically scheduled online dialogues. Realize that you don’t

control these groups and that your conversations with them are not

private.

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Use the threads of the electronic dialogues as a sort of electronic

town hall meeting from which you can learn first hand what your

constituencies like and dislike. Use the dialogues to deliver key

messages about your organizational philosophies, the principles

you are dedicated to and the plans you have for the future.

Always think Outside-in. Outside is where all the people are; they have the

power, walk in their shoes.

Make sure key people are well connected outside of the

organization. Encourage product development executives to spend

a lot of time with customers but also attending conferences where

they can learn what competitors and influencers of your industry

have on their mind. Encourage them to network outside of the

organization. Make trip reports widely available on the intranet.

Use the Internet as the world's largest focus group. Analyze

incoming email in detail and take it seriously. Realize that extreme

or even insulting views may be directed at your organization from

the Internet but that these messages often represent the leading

edge of opinion. (People on the Internet are passionate about their

areas of interest.) Listen really hard to what people are saying --

you may save a lot of time and money and be able to anticipate

problems that the masses will later experience.

Create a privacy program that enables you to know where your

data goes and who's responsible for it. Have a solid privacy policy

and appoint an accountable person who ensures that the policy

gets implemented (Chief Policy Officers are the rage -- and they

should be empowered to talk to people inside and outside the

company)

Audit your privacy policy. Make sure it is a comprehensive one, that

you are following it, and that it has teeth in it from a compliance

point of view. Ensure that safeguards are in place over data that

belongs to others.

Examine how you have linked your brand to your web presence.

Make sure the policies and actions on your web site are consistent

with the values and principles of your organization.

Employ open standards and require that your vendors do. Assign

someone in your organization to follow Internet and web standards.

Conduct periodic standards reviews to ensure you are compliant.

Follow key Internet policy issues in those areas where you have

expertise or a vested interest. Visit the Global Internet Project at

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http://www.gip.org for an overview of some of the current Internet

policy issues.

Think big but start simple and grow fast. Use trial-by-fire, just-enough-is-good-

enough, and sense and respond approaches where it makes sense.

Inspect all of your core business processes in marketing,

distribution, order processing, application development, human

resources, etc. Make sure that you are using the plan-build-deliver

model only where you have to and are using the sense-and-

respond model wherever you can.

Set up a Skunk Works somewhere where it can’t get snuffed out or

attacked by the white corpuscles of the organization. Give it top-

level support.

Use the Internet to introduce new product and services ideas.

Iterate to improve the ones that get good feedback. Stop

development or quickly change development on the ones where

feedback is negative. Move from idea to proof of concept to

prototype with a subset of customers as fast as you can.

Evaluate the role digital IDs (a big idea) will play for your

organization. Start a pilot project with a subset of your constituency

to experiment and get feedback. Establish long-term goals, iterate

from the pilot toward them, and fine-tune them as you learn more.

Use incentives, recognition and communications to encourage

knowledge sharing. Consider appointing a “chief knowledge officer”

with responsibility to evolve a system that facilitates broad and

deep sharing of knowledge across the organization.

Build an information technology infrastructure that enables you to have a

scalable, manageable, highly available, reliable, and secure e-business on the

Internet and the intranet.

Assume your constituencies will be using an Internet that is Fast,

Always on, and Everywhere and that those constituencies are

going to be interacting with your e-business 24 x 7. Build or buy or

e-source an infrastructure that you cannot outgrow – one that can

handle the spikes of demand and is intelligent enough to handle the

unexpected, perform diagnostics, and heal itself.

Make your e-business Natural, Intelligent, Easy, and Trusted.

Constantly seek feedback from visitors and constantly improve the

site based on what visitors tell you. Do it often and in small

increments. Make your Web interface at least as easy for the

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customer as talking to a real live, experienced and well-informed

sale representative.

Select a content management system to create and manage

content for your e-business and intranet web sites. Standardize on

XML to give context to your content and give you the flexibility to

publish to the many devices that will be part of the NGi.

Include multimedia capabilities in your infrastructure, including

audio, video, and animation, to provide constituencies with product

photos and videos, demonstrations, infomercials, and tutorials on

how to assemble or install a product. Set and manage expectations

for what you can deliver with the multimedia. Do not assume that all

of your customers have the capacity to handle multimedia.

Put as much energy into creating a powerful intranet for your

employees as you do for your external customer web site. Identify

all processes from signing up for the blood drive or health care

benefits, to ordering business cards, to using e-meetings for more

effective collaboration. Encourage the formation of communities

within your organization. Make sure all employees have access to

the web and email -- provide training for all new employees.

Consider issuing a notebook computer to all new employees so

they can be connected when they are at home or traveling. Provide

a docking station so that the notebook can be connected to a

display and keyboard when they are in the office.

Consider a wireless infrastructure to enable employees and visitors

to connect their notebook computers to the Internet wherever they

are in the organization. Offset the cost by eliminating separate

phone lines that people use to connect today.

Look at all the functions in the cycle of everything a constituent can

do with your organization – end-to-end. Evaluate how many of

these functions are available on your e-business, prioritize the ones

that aren’t, and develop plans to get them in place.

Identify key applications that are not integrated (like the hotel

reservation system and the frequent guest system, or the gate

scheduling system and the flight arrival system) and evaluate the

use of message queuing to enable your incompatible systems to

communicate with each other in a seamless way that adds value to

your customers.

Establish a plan to consolidate all employee information into a

single directory. Do the same for your customers, suppliers, and

other constituencies. Use these directories as the single “hub” of

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information and then build applications that all use the same

directory. Create a “single sign-on” for all applications.

Last, but certainly not least, get a taste of Internet culture – and then change the

culture. Ensure it has a healthy component of Net Attitude. Let people know you

care about Net Attitude. This can be done tops down or bottoms up.

Setup an advisory council composed of some of your new, young

employees in the organization (and maybe a couple of sixteen year

old high school interns). Meet with them quarterly. Give them

assignments to look at key business or organizational problems

and have them come back with ideas on what solutions they would

apply. Take their suggestions seriously.

Hire a college student to review your site on a regular basis and

look for signs of “Fax this form” or “Call us nine to five Monday to

Friday”. Use your expanded email support structure to replace the

old methods.

If you are in a position of leadership, establish strong executive

commitment to the new communications program. Electronic

communications has the effect of flattening the organizational

structure, thereby potentially threatening some middle management

groups. The commitment from the top is critical to keep the

grassroots teams energized and to avoid bureaucratic resistance to

the implementation of new ideas.

Eliminate fax machines from the organization. Numerous fax-email

gateway software solutions are available to replace the paper-

based system. The announcement of this change will send a strong

signal that Net Attitude is alive and well in the organization. If you

don’t have the authority to do this tops down do it bottoms up. Get

an account at eFax (http://www.efax.com) and then spread the

word through the grass roots.

Pick a time of the week, Saturday morning, Tuesday night,

sometime that can be reasonably consistent and spend an hour on

the web on a regular basis. Do this whether you are a programmer

or the chairman of the board. Try something you haven’t tried

before. Use Yahoo! or Excite or Google or other search engines

and look for something about a product or a service or any subject

of interest. Follow the links and see where they lead you. Look at

surveys like Media Metrix (http://www.mediametrix.com) that

regularly rank the most popular Web sites to help you identify the

new sites people are visiting. Explore and learn.

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Get an email account (from one of the free Internet email services

such as Hotmail or Yahoo! mail) that disguises your identity and

then do a transaction at your e-business every week. Buy

something, look for something, or ask a question. If you find any

disappointing results, convene a meeting to have the responsible

people in your organization explain why things are the way they are

and what can be done to improve.

When you have a meeting with important people in your

organization, ask an unsuspecting person what the best thing was

they saw on the web this week. Chances are they will begin to

avoid getting in that awkward spot each week. The culture will

begin to change.

Grassroots support. Many different kinds of skills are necessary to

implement the concepts of Net Attitude. Some are technical, some

are communications-oriented and some are marketing-oriented.

This program most likely cannot be implemented with only a top-

down approach. Grassroots teamwork must be encouraged,

nurtured, and supported. Every organization has a grass roots

contingent somewhere. See if you can find yours. Have lunch with

the grass roots leaders. Listen to them and give them tops-down

support. The most profound long-term positive change may occur

when key initiatives come from people on the front lines.

Getting a Net Attitude can help you energize your organization and allow you to

transform it to meet your vision for doing business into the next century. The

challenges are real, but the benefits are spectacular – if you get a Net Attitude. If

you want to find some early indicators of what e-business will be like in the

months and years ahead, talk to the kids – as often as you can. They may not

know anything about e-business per se but the way they think, the way they

interact with their friends, and the expectations they have represent the future.

Epilogue

Assuming you have been wildly successful in building an e-business you might

want to think about how to give something back. I think we are all aware of how

well the economy has been doing in recent years. The unprecedented growth

has resulted in prosperity for many people beyond what they may have imagined

was possible. For many people the amassing of a million dollars of net worth

was a dream they didn't really expect to happen. Now many of those same

people likely dream of $10 million. Those with $10 million dream of $100 million

and those with $100 million dream of being billionaires! Much is being written

about the wealth of so many – even after the huge drop in the early part of 2001.

At the same time there are much larger numbers of people who have not been so

fortunate. There are many people who go to bed hungry. Even in "affluent"

communities there are long lists of people waiting to gain access to barely

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habitable Federal housing. For reasons of health, location, skills, misfortune, or

disadvantage there are large numbers of people in need.

Who is responsible -- the government or those who are more fortunate? Many

would agree it is at least in part the latter? What can be done? A lot. For those

of us who have been fortunate there is a range of ways to help out. Basically,

there are so many ways to help that there are no excuses for not doing so. The

means to help follow a hierarchy as do so many things. At the base of the

pyramid of helping is giving money anonymously. This can be done through the

United Way, churches or synagogues, private foundations, various national

appeals, or directly to pinpointed charities. Web sites abound.

A second level up the pyramid is to not be anonymous; to directly support causes

that are meaningful or important to you or your. friends and family. A couple of

years ago I attended a reception of the Society of Alexis de Toqueville, a group

of contributors to the United Way who exceed a threshold of $10,000 in giving

per year. At the reception I was astounded both at how many people were there

and how many people were not there. It was initially impressive to see a group

of 150 or so in the room. Some quick arithmetic suggested that the giving

represented was probably greater than $2 million. On the other hand seeing that

there were just a very few people (literally) from any one of the major companies

represented (GE, IBM, Merrill Lynch, Chase Manhattan, Texaco, etc.) made it

painfully clear how small the participation really was.

Given that the stocks of all these companies (and many more) have appreciated

so much and the additional fact that these companies all provide a corporate

match of the employee gift shows how much potential there really is. Suppose,

for example, an employee had options to buy company stock at $25 per share

and the current price of the stock was $50 per share. A gift of just 100 shares of

stock would be worth $5,000. The company match would make the gift worth

$10,000. The cost of the donation to the employee would be $2,500 to exercise

the options plus a capital gains tax (assuming the donated shares had been held

sufficiently) of roughly $750 minus a tax savings of $2,000 (assuming a 40% tax

bracket) or a net cost of $1,250. The leverage of the gift: 8 to 1!

A further extrapolation of the leveraged giving idea is the formation of a private

foundation. On October 21, 1998 the Senate passed a bill that made permanent

the section 170(e)(5) Charitable deduction for gifts of appreciated stock to private

foundations. This means that any person can establish a private foundation and

use appreciated stock to do so. This can be a very useful way to reduce tax

obligations in the event of a bonus payment, retirement payout of restricted

stock, or any "spike" in income. At the same time the foundation can be used to

provide charitable donations for subsequent gifting or even to receive and

distribute charitable donations from others. There are a few catches but they are

reasonable. One is that your foundation must give away at least 5% of its

average net assets per year. Another is that you have to file a tax return for the

foundation. If all this is too daunting, you can donate to an existing foundation

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that someone else has established. Some links to resources can be found at

http://www.jcdowning.org/

The Alexis de Toqueville reception was hosted by Jane Pauley (NBC) and Bob

Wright (GE), I was quite impressed with the short speech made by Jane. She

talked about the positive impact people can have by publicly revealing the

amount of their contributions. Put modesty aside, she said, and let others know.

It will challenge them and spur larger gifts. I think she is right. As the United

Way and others publish their gold/silver/platinum giver lists the top categories

seem to be growing.

And then there is the most important gift of all; our personal involvement. Our

time is our most scarce resource and giving even a small amount of it is very

difficult. In the end however this is the greatest gift and the greatest leverage.

An hour of time donated to a board or committee makes the 8 to 1 leverage

seem small.

How can we get more people thinking about all this? One idea is e-philanthropy.

It is not just "click here to donate". It is a larger idea. Creating a local community

of interest, a charity portal that can enable charities to make their needs known

and where those with resources can make their abilities known whether it is an

anonymous gift, targeted visible funding, or volunteer time. If the idea were to

spread it might mean enabling people to contribute to charities where they grew

up, went to school, or have a vacation home. It might also be a resource to help

people set up their own private foundations or contribute to existing ones. It

might also be a way for the smallest of charities with no executive director,

corporate sponsors, nor advertising budgets to make themselves visible.

The bottom line is simple. Incomes and assets are up. So is need of those less

fortunate. Let's give e-philanthropy a chance. A modest attempt to spread the

word is at http://localkind.org A more comprehensive look is at

http://www.greenstar.org/ephilanthropy/

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