August I 2007

Fredric Morris, Editor-In-Chief, Connect-World
Fredric Morris

Little by littler …
Little is getting big, but less, as architect Mies Van der Rohe said so many years ago, is definitively more – at least in the ICT world.
In the eLetter at the end of May this year, I commented that Microsoft’s parallel interest in on-line advertising, in online-software usage, widgets and mobile computing was far from coincidental, that all the signs point to a grander scheme and a tight interconnection between these spheres of interest.
Reports from Microsoft’s recent Financial Analysts Day at their headquarters, only served to confirm my suspicion that we are witnessing the birth of a major trend – doing more, affordably, with less. According to a variety of published reports, Steve Ballmer, told financial analysts that they will be investing heavily in online advertising, online services, consumer electronics and: “software plus services”. Microsoft, it seems, is transforming its business model orientation; apparently, it will now centre upon software plus online services.
Another focus of its business model will be online advertising. The last time I felt such drive, such enormous determination to change, was when Microsoft jumped on the Internet bandwagon. Microsoft is taking on a potentially disruptive technology – its enemies, I am not one, might say like a snake changing its skin – and make it its own. If the MS Internet Explorer serves as an example of what a fundamental change in Microsoft’s strategy portends, the sector is about to undergo a major shift in direction.
“We are hell-bent and determined to allocate the talent, the resources, the money, the innovation to absolutely become a powerhouse in the ad business,” Steve Ballmer is quoted as saying. Ballmer outlined their commitment to advertising supported Web services.
The command centre for hell might well be the new centre dedicated to online advertising and search services announced by Bill Gates. Hell’s command centre, Microsoft renamed it the Internet Services Research Centre, will concentrate upon searching scanned images – especially print publications, fighting spam, determining new ways to build the relevance of search results, and who knows what else.
Ballmer made it clear that the markets targeted – advertising-supported Web services, online services in general and consumer devices – are all leading markets for the company’s software. Online Services and the Microsoft Entertainment and Devices division have never done well, but Microsoft has a record of betting on losers for years – look at the history of its server software – before they become major revenue generators.
I’m not as good as they are at predicting winners, but when I drop mobile services and mobile Internet devices into the equation with the above strategies and multiply, I see a new model for the sector emerging with Microsoft, once again, at the forefront.
Microsoft, notoriously, has never focused upon advertising revenue as much, or at least as successfully, as companies like Google. Now, though, according to Steve Ballmer, they will be an “advertising and devices” enterprise.
The most significant idea found reading Bill Gate’s presentation, was not the perennial promise of more powerful user-oriented functions for slicker devices coupled with a better user experience. The noteworthy concept, the one that I believe centres the MS strategy, is that of reconsidering the traditional computing model that confines processing to the device, a computer of some sort, and moves much of the processing to the Internet. It’s not a new idea, but now, with the blessing of hell, its time may have come.
The Internet-as-the-processor is ideal for handheld, always-carry-it-with-you, mobile computing. So too is an ad-based revenue model for the massive majority of users that are always a bit strapped for cash. With billions of users throughout the world, you don’t need to hit users with high prices to earn fantastic profits from advertising and micro-fees-per use.
The business model works, and there are several additional advantages. Software, for one, is much harder to pirate with this sort of model. Most important, though, is the change this makes in the way people use the Internet, in the equipment – the devices they use and the way the whole value chain of the industry slips and slides off the road it’s been following.
This type of computing needs a lot of bandwidth. Current mobile broadband is too slow and too expensive, but WiFi, WiMesh, WiMAX and, perhaps, LTE (Long Term Evolution – UMTS mobile broadband) promise faster and cheaper wireless broadband.
Since the storage and computing power can reside on the Web small, handheld, mobile devices with full keyboards can serve as full-function computers. The screens are small and the keyboards cramped, but these devices, potentially, can do anything larger more expensive equipment can do. Add a full-size keyboard and a box to connect it to a television or monitor and you have a set-up that many people – perhaps most eventually – will be using, especially in developing regions.
In a few years, powerful, low-cost, slip it into your pocket, computer and communications devices will become a common sight everywhere in the world and this ‘personal mass-media’ will be a force to be reckoned with.
Today, in some age groups and communities, communications through sites such as Facebook that describes itself as, “a social utility that connects you with the people around you”, and MySpace, “an online community that lets you meet your friends’ friends”, are rapidly taking over the functions of more traditional Internet email communications. These kids just don’t use email much, except to talk to adults! This is happening not just in the USA, the EU and parts of Asia, but in Latin America and probably other parts of the world as well. These on-line communities let one network, exchange messages, share photos, and clips with other members of your personal community of friends and acquaintances.
Nowadays, many students are starting to log into Facebook through their cell phones. In a few years, as mobile broadband availability grows, I expect mobile access to predominate. Also In a few years, these students will be adults, and bring at least some of their communications habits with them to the business world. Although email is still the standard for business, the millions upon millions of Facebook, MySpace and other similar networks
With millions and millions of members each, MySpace and Facebook are among the frontrunners to control a huge chunk of this promising market. Of course, they have a small problem coming up – the Microsoft elephant will soon be barging in on this market and, oh yes, so will Sprint Nextel teamed up with Google.
A few days ago Sprint Nextel announced they would develop a new mobile portal to provide Web searching and social networking using WiMAX. The announcement said Sprint’s wireless broadband network, together with its ability to detect location will be combined with Google’s email, chat and other applications.
Couple all this with over-the-air software and Web services and lower subscriber costs financed by ad- based revenues, carry-at-all-times, mobile Internet devices and little by little… anyone ready for a revolution?

Our next Connect-World Europe, Middle East & Africa (2007) Issue will be published later this month. The issue will be widely distributed to our reader base and, as well, at shows where we are one of the main media sponsors such as: Carriers World, London, UK, (25-28 September, Victoria Park Plaza, London), Eastern Europe Broadband Convention, (27-29 September, Kiev), Broadband World Forum Europe, Berlin, Germany, (8 -11 October, Berlin, Ukraine) and Broadband Russia, (21-22 November, City: Moscow).

The theme of this issue of Connect-World Europe, Middle East & Africa (2007) will be: Access technology trends

BPON (broadband passive optical network), FTTx (fibre to the x?), PLC (power line communications), Wireless, 3G WiFi, WiMAX, Satellite, other..

Access was once a question of stringing copper – or a string between two paper cups. Wireless access has, in a few years, outpaced wired access so that mobile phones now outnumber all the traditional fixed phones in the world. Fibre brings TV, broadband and inexpensive voice, and even power lines are being used by utilities, or locally at the office factory floor, or home, to provide broadband access. Much of the change, the revolution in telecom, is the result of better access technologies. Technologies already in the pipeline, and others on the way, promise to change the way we communicate, work and play to an even greater degree than anything we have seen.

This issue will explore the consequences of these new technologies.


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