Beyond Internet Gaga
For a time in the mid-1990’s I was an analyst at Forrester Research, in its Network Strategy Service. Last week's Distributed Denial of Service attack waged against Dyn recalls a report I wrote that I still consider groundbreaking.
I asked George Colony, CEO/Founder of Forrester, if I could reproduce it here because I believe the technique I used — called scenario building — is a credible way for businesses from startup to global to generate useful insights about risk, and opportunity.
I wrote this in early 1995. It is easy to forget how rudimentary your technology life was then compared to now. Given the state of things then, this report was viewed by some as a bit loony. But to the contrary, many of the fanciful forecasts proved to be spot-on. Yes, some of the details were wrong; but huge businesses have been built around many core ideas imagined here that were nearly unthinkable in 1995.
I hope this report will prove to you the value of scenario building, and why you might want to take the time to try it for your business.
The Forrester Report, Network Strategy Service
Beyond Internet Gaga
Volume Nine, Number Three
Paul D. Callahan
Anne Treacle and Maureen Kloempken
Copyright 1995, Forrester Research, Inc. (Reproduced with permission)
Everybody is talking about the Internet. To some, the Internet is the foundation for an entirely new generation of inter-corporate applications. To others it is the next Home Shopping Channel. To still more, it is much ado about nothing.
To Forrester, the exploding growth of the Internet alone guarantees that it will be a part of your future. As a result, we believe Global 2,000 companies must begin now to think about the alternate lines along which the Internet could develop - and how these could impact your businesses in the future.
In this report we will use a technique known as “scenario building” — creating stories about the way the world might be in the future — to help you been to prepare for different possibilities. Our inspiration comes from Peter Schwartz, the author of The Art of the Long View, published by Doubleday. The book describes how this technique operationally - and emotionally - equipped executives at Royal Dutch/Shell to deal with the OPEC-triggered oil price catastrophe of October 1973, when few others imagined it might happen.
To be similarly prepared for the Internet’s impact, Fortune 1,000 IT directors and industry vendors must move past their own hard-wrought beliefs about what will happen and ask, “What if…."
The plots that follow incorporate market forces from beyond the Internet itself, such as global demographic trends and the changing roles of people, organizations, governments, and technology. As you read the resulting stories, instead of judging whether our predictions could come true, ask yourself whether your company will be prepared if they do.
As appeared in the New York T*mes
Siege Against Internet Continues
Administration adopts hard line
MEXICO CITY, May 15, 2000 — For the tenth day in a row, Internet-based computer links in the United States remain frozen due to an attack by cyber-terorists known as the Mexican Liberation Front (MLF). The elusive group continues to insist that the U.S., Canadian, and Mexican governments must rescind the North American Free Trade Agreement (NAFTA) before it will reveal how to restore the network to full operation. The terrorists contend that NAFTA is merely legalized slavery of Mexican workers by U.S. multinational firms.
The attack began symbolically on Cinco de Mayo-2000, Mexico’s turn-of-the-century independence day. In a press conference yesterday, President Gore said, “We appreciate that NAFTA has been a mixed blessing for some people. However, we will not accede to the demands of these 21st century highway bandits. Unless a technical solution is found, our country must prepare for a prolonged outage."
The Internet has become so critical to U.S. commerce that the administration’s decision to stand firm will have a large impact (see Figure 1). Estimates of current losses due to the blackout now exceed $10 billion per day. The most heavily impacted businesses have been inter-modal transport forms, which use this network to coordinate tightly scheduled ship, rail, and dockside container deliveries.
These delivery delays have in turn afflicted the large number of companies now dependent on just-in-time manufacturing. Many are coping with the disaster by hiring a raft of temporary workers to match orders with delivery schedules over the telephone network, which so far has escaped penetration by terrorists.
According to analysts, the severity of the problem stems from the Internet’s broad business applicability. “There are literally hundreds of sales, accounting, marketing and management functions that are made much more efficient by linking user’s PCs across the Net,” according to John Frank of Harvard University. “Everything from appointment scheduling to paycheck processing is automated via this network today. Five years ago, firms required 25% more people to do the same amount of work."
Security experts say that the Internet is a victim of recent technology advancements. “The Internet relies heavily on the newest parts of our telecommunications system,” said George Philpott, chief of network security for AT&T. “Today, all our computer traffic is carried on ATM switches, and that’s the problem. These new switches were all built to specs that are publicly available. The terrorists found a hole in the spec that allowed them to block all the circuits carrying TCP/IP traffic. We can’t stop them because every ATM switch in the network obeys this boneheaded spec."
The unusual technique used for this terrorist attack has many companies scrambling to compensate. Until now, Internet disaster prevention has been focused on creating “security firewalls,” not preparing for network paralysis. This despite warning flags raised by recent Internet “brownouts” and slowdowns in cities with insufficient network capacity.
Some firms were more prepared than others. A spokesman for L.L. Bean indicated the company was able to resume near-full operations shortly after the disaster began. “The Internet is only one of the ways we have of getting information to and from our partners,” said the spokesman. “We were quickly able to switch our systems over to a network of fax servers. When the Net went down, we asked our suppliers to fax us pre-formatted orders. Our servers use OCR to scan these for the same information that normally comes in via the Net."
Aircraft manufacturer Boeing in Seattle escaped the slowdown through other means. “We switched our Internet connections over to a private network from Comdisco, and asked our business partners to do the same,” said Gene Lisko, manager of Boeing’s networking. “I can’t say we foresaw the details of this failure, but at least we had a recovery plan."
By dint of inertia, customers of several smaller internetworking firms have been able to dodge the terrorists. Upgrades to ATM have proven too expensive for tiny firms such as San Jose-based NetLink, which has been able to isolate its old “router-based” networks from the larger providers’ frozen nets. As a result, users on these older systems remain connected to each other.
Steve Case, chairman of World Online, was present with President Gore at yesterday’s White House press conference. WOL, the largest international Internet operator, remains stymied about how to solve the problem. “All Internet operators in the U.S. have taken their ATM networks off-line, and we know that the MLF terrorists no longer have access,” said Mr. Case. “All telecommunications companies are working together around the clock to find a way to get the Net up again — safely — and we hope to have a solution within a few days."
Although most European and Asian Internet operators paper to be unscathed by the MLF’s attack, embryonic Chinese businesses are bracing for a similar shutdown, this time by Chinese government officials. Democratic revolutionaries have been using China’s rudimentary Internet ties to export information about human rights abuses and rebel responses in the ongoing Chinese civil war, similar to the way InterFAX was used during the fall of communism.
As appeared in the October 2, 2000 issue of T*me Magazine
TVs Are Out —PCs Are In
Internet PCs are stealing the home entertainment market.
IT IS 9:30, AND NINE YEAR OLD JOEY STAFFORD IS GLUED TO HIS PC. Despite the new household rule about cutting back on surfing time, his parents are reluctant to rush him off to bed. Before Joey hooked up to the Internet, he was a disruptive problem student at a Des Moines elementary school. His teachers claimed he needed special education to deal with acute attention deficit disorder. No more. Joey just needed a different way to communicate with people and absorb ideas.
The Stafford house is not unique. All across America, the Internet is replacing the television as the place where people spend their relaxation time. Now, instead of watching “Where in the World Is Carmen Sandiego?” after school, kids become quiz show players with others across the country in real time. And it is not just kids. Adults are also jockeying for time in front of the family’s new PC.
This shift in peoples’ desires has fooled even the best prognosticators. “Everyone thought that interactive TV’s movies on demand and point-and-click home shopping would win,” says Bob Brugerrer, professor of social dynamics at UCLA. “Instead, people gravitated toward the human interactions enabled by their Internet-connected PCs.".
This never would have happened had it not been for the dramatic changes of the last two years. In 1998, World Online shipped Internet access kits to 60 million Americans. In the 12 months that followed, the vast generation of the Nintendo/Sega kids dropped Super Mario Brothers 6 and glommed onto the Interent PC. “No one counted on the creative power that came from millions of children being connected to one another,” says Fred Barszick senior partner at advertising agency Saatchi and Rubicam.
The second big push toward household Internet use came in 1999, when Microsoft shipped its second please of WinWeb, Web server software for home PCs. Within weeks, millions of Internet-connected teens created their own Web pages containing everything from electronic finger-paint art to dating invitations and mini-novels (See Figure 2).
Just how successful has WinWeb become? To give you an idea, there will be as many multimedia “Christmas letters” created on home Web servers this year as will be sent through the U.S. Mail. But as you might expect, not everyone is an artist. Most of these web pages are interesting only to the child author and his or her parents.
>Even so, a small fraction of creative types have found these Web pages a liberating new medium for expressing their ideas. Closet photographers, amateur writers, and weekend painters are combining their images, sounds and words to create new, virtual books.
Known on the Net as WebBooks, these collections are already attracting the attention of major publishers. A WebBook by Phil Greenspun of Cambridge, MA was acquired by Boston publisher Little, Brown. Mr. Greenspun created a compelling WebBook he called Travels With Samantha, which catalogued his travels through the U.S. heartland. Little, Brown took notice, and has sent Mr. Greenspun to work on his next project, A Year In Burgundy.
Some publishers are taking to this new medium like ducks to water. As Gail Evans, executive editor at Random House, explains, “We have several deals with budding Web writers to put their works on our own Web server. This immediately elevates unknowns to the level of our other high quality titles, and gives authors instant recognition and real money.".
But not everybody is willing to sit in front of a computer screen to read a travelogue. Never fear — this is, after all, a technologist’s playground. Inventors are already riding to the rescue with a new paperback-sized electronic book. Early next year, LightBook Technologies in Santa Clara, CA will begin shipments of the “WB-Reader,” a hand-held computer that can hold an entire WebBook so people can consume the latest and greatest title wherever they are: in bed, at the kitchen table, or on the airplane.
While adults are becoming enamored with these new Net-based novels, kids are bored by the action-free, cerebral appeal of WebBooks. Instead, the latest Net-hopping fad for kids is to play games using Web-controlled robots. The seeds of this new category came from early inventors at the University of Southern California. As early as 1995, experimenters set up a robot over a snd pit containing mystery objects (see Figure 3). The challenge for the players was to explore the sand pit using the robot-controlled video camera and view the pictures on their Internet-connected PCs.
This nascent idea created today’s raft of “tele-arcades.” Tommy Beaver, director of network entertainment for Mattel, saw robotics and games as a natural combination. “Internet-based RoboBoxer is a huge success for us. The only thin holding us back from developing more sophisticated games is the slow network access lines in most homes."
For kids who need even more action, iD Software is at it again with Doom IV. The latest Internet-ready version of this famous shoot-em-up game allows players to use scanned images of themselves to play in live multi-player games. In essence, the scenarios have 12-year-olds shooting at each other in virtual reality, complete with simulated blood and guts when the more hapless players get blasted. The vernacular of this game is sweeping past the Net into everyday use. Prepubescent adolescents now refer to each other as flakbait and zaptargets.
The latter term arises from use of homemade game playing keypads available through the Doom players’ underground. The keys on this pad have small metal plates through which players receive a low-voltage electric shock when hit by gun blasts from Net opponents.
This is a dark side to the emerging Net-gaming business that has already led to several serious injuries. “We’ve seen six cases of second-degree burns and severe emotional shock from these DoomPads,” says Dr. Stephen Bernstein of Beth Israel Hospital, Boston. “And since the pads are not commercially manufactured, there is no way to keep these things off the street."
Another problem with the shifting center of family entertainment is the spats created among siblings. Frequently the seat in front of the PC is already occupied, and tempers flare up wen one child thinks he or she is not getting equal time. Solutions to break up this logjam are starting to crop up, however.;
One answer is the PC with two monitors and two keyboards from Idaho-based Micron Computer. Another approach comes from Santa Clara-based 3Com Corporation, which has created a new “personal area network.” Known as HomeNet, it allows multiple PCs to be connected throughout the home via micro-cellular radio links.
The amount of time that cash-rich teens are spending on the Net has not gone unnoticed by Madison Avenue, either. Advertisers are already renting space on the walls of virtual rooms in Doom IV and Myst V games. Players walk down halls festooned with graffiti-cum-advertisements for the latest in combat sneakers. In fact, Nike, Pepsi, and Levi Strauss have all created new product lines to tie into the most popular gaming scenarios from Broderbund and iD Software.
As one might expect, social watchdogs are decrying Internet-based games as the source of too much violence for children. But in the final analysis, Ruth Stafford, Joey’s mom, is happy to see the shift away from the TV. “Joe was a vegetable when he sat in front of the television. We aren’t exactly thrilled that he spends so much time on the computer. He should really be playing with his neighborhood friends. But we’ve seen such a positive change in him since he started spending time on the PC that I guess we are willing to compromise."
As appeared in the August 20, 2000 issue of The Econom*st
The Disappearing Internet
InterTronics has moved the Internet out of view
In ten years, you may not be sitting down in front of computers anymore. Instead, tiny, single purpose systems will be woven into the fabric of the environment around you - including your light switch, your dishwasher, your watch, and your wallet.
This is not hogwash. It is a vision known as “environmental computing” that dates back to 1983 at Xerox Corp.’s R&D laboratories in California, and has already started sneaking into your life. To wit: New York City has installed a new subway pass system employing electronic cards that never need be removed from your purses or wallets. New gates that look like airport metal detectors determine whether a rider has a pass on his or her person. If so, open sesame.
An unusual trio of players is bringing this vision to your homes and families. U.S. electric power companies are seeking to manage residential and commercial energy consumption. To do it, they are laying a vast fiber optic communications network to control an upcoming generation of smart appliances. They have teamed with environmental controls manufacturer InterTronics, which has invented a standard method for hooking these intelligent appliances to the new utility fiber networks. A key element in this specification is the Internet’s lingua franca — TCP/IP.
In this way, InterTronics and its power company partners are installing an invisible Internet tap to every house they touch. And most new “tele-power” companies have linked up with the third team member, IntelliNet, to run these new Internet networks. Virginia-based IntelliNet secured its place of affection with U.S. electric company executives after it bailed Florida Power & Light (FPL) out of FPL’s ill-fated attempt to provide cable TV programming over its fiber. Instead of video, IntellNet convinced FPL to deliver basic Internet data services to satisfy the then-exploding Internet surfing craze.
The power management triumvirate has had no trouble lining up makers of decidedly un-computer-like equipment. Johnson Controls, Whirlpool, General Electric, Carrier, and dozens of others have signed on to build products that use TCP/IP to send energy level consumption information up the power stream. Within five years, the Internet will be an invisible part of many homes in America with as many smart appliances connected to the Internet as there are PCs today.
At the same time, the Internet has truly been reduced to “utility” status for corporate users. PC users are unaware that most of their desktop applications use the Internet in some way. As a result, the Internet has become an invisible and expected part of today’s corporate network.
The Internet’s transition from stardom to mere humdrum utility has the technology industry in a tizzy. Traditional PC giants are not players in the world of the invisible Internet. The most vocal whiner is the once giant, now floundering, Novell. As early as 1994, the company sought to own a concept it called “ubiquitous computing,” an idea not dissimilar to the original Xerox PARC concept.
But Novell was bested by Motorola, which recognized that engineers at consumer product companies like Whirlpool would prefer a simple TCP/IP chip instead of bulky applications software form Utah. Motorola is now churning out this IP silicon for appliances by the millions.
Novell, gasping for air, has filed a massive lawsuit against Motorola, whom it accuses of broad patent infringement. Not to be left out of the fray, Xerox has also jumped in, trying — probably vainly — to profit from the fact that this whole thing was its idea. This isn’t the first time Xerox has missed out on profiting form the inventions of its R&D lab. The California geniuses were the inventors of the computer mouse and windowing-style user interface, which Apple and Microsoft capitalized on. Plus, it lost out on its invention of Ethernet networks when 3Com took all the money to the bank.
But the most notable super-lose in this emerging tele-power age is Microsoft. Like Novell, the company had its own vision of how to weasel its way into smart appliances. But few consumer products companies have been willing to adopt its Microsoft At Home standard, fearing the kind of dependency on Microsoft that the PC industry suffers form. In Microsoft’s place, the winner is InterTronics, whose royalty-free interfaces were adopted by manufacturers virtually overnight.
THE TORTOISE AND THE HARE
Five years ago, the telephone and cable industries were only slightly fearful of how a “third fiber” on the utility pole might affect their futures. But at heart, telco execs felt confident that the power companies would stumble as communications providers. As a result, most telco and cable operators foolishly dismissed boring power companies as no threat to their franchises.
How wrong they were. Though emerging tele-power companies did not get it right the first time, IntelliNet gets it right now. Its IP applications knowledge and network operations expertise indirectly gave tele-power networks the ability to give telecom giants a run for their money. Now, the triumvirate of power companies, InterTronics, and IntelliNet are stealing voice and video phone business wherever regulatory freedoms permit.
Phone and cable companies are screaming bloody murder, and have launched a full court press for action from any part of the government that will listen. But Washington is unlikely to help them out much. The effect of having competition in the local telephone market for the last three years has been stunningly positive for the U.S. As a result, most telco or cable lobbyists looking for competitive restraint are secretly polishing their résumés.
AMERICA, THE LAB RAT
All these American machinations are not lost on the rest of the world. Britain, France, and Germany privatized their power utilities in 1998 and 1999, thinking it to be a fairly harmless action. Wrong. These newly privatized behemoths have been lunching regularly with their utility friends across the pond to learn how to repeat the U.S. success. The European utilities are also laying fiber at a liberal rate, and are having early success with EC regulators in getting the right to carry the “invisible” TCP/IP traffic to and from smart homes. The still-socialized French and German PTTs are shaking in their boots. They recognize how small a regulatory step it would take to permit utilities to expand beyond appliance control traffic and deliver a fully competitive telecommunications service.
But while the Internet is being absorbed into the woodwork all over the U.S. and Europe, its initial appearance is leading to political problems in Asia. Emerging economies starved for electric power have borrowed huge sums from the World Bank to build new power plants. But as a condition of the loans, countries have been required to install smart home equipment to intelligently manage this new power, bringing with it fiber, InterTronics, and the Internet.
Running parallel with the Internet’s Asian invasion, an explosion in the teenage population in these emerging economies is driving a home PC sales eruption. Plus, the black market of electronics that can bypass refrigerator hookups to connect these PCs to the Internet has been white hot. The combination of these three is leading Korean, Vietnamese, and Singaporean adolescents to discover the Library of Congress, NASA, and the New York Stock Exchange. And to these users, the outside looks pretty good.
The unintended result has been a shattering of the propaganda filters so carefully crafted by socialist leaders. Chinese officials are having the hardest time with this. The problem is worst in Manchuria, where after a slow start, the privatized economy and its accompanying cry for democracy are leading Beijing to consider a total communications crackdown.
The original inventors of the Internet technology seem proud of how their anarchistic network is changing world politics. “Most of us knew this would happen. We just couldn’t figure out why it took so long,” said Ben Barker, co-inventor of the original BBN Internet switch for the U.S. defense department, and current president of IntelliNet. “The people who said research spending for defense technology was a sinkhole are eating their words."
Copyright 1995, Forrester Research, Inc. Reproduction prohibited.
- The Palm (PDA) had not yet been released (1996). The iPod didn’t come until 2001, nor the iPhone until 2007(!).
- AOL was still the dominant dial-up service available to home computer users, and was more of a closed, content and forum site than an on-ramp to the web.
- Windows 3.2 was the current Microsoft OS. (Windows 95 wasn’t released until August that year.) Users needed to purchase 3rd-party IP-stack software to connect a PC to the Internet.
- Windows was dominant. Apple had an alliance with IBM to try to survive the slow adoption of Macintosh. Sun dominated the Unix world, and Linux was a 4 years old with a bare skeleton, and not widely known.
- Bill Gates had not yet sent his now-infamous memo to Microsoft staff about jumping on the Internet “tidal wave”.
- Microsoft had not yet built any Internet products, nor had it acquired its first Internet-related company & product, Vermeer Technologies’ Front Page, where John Mandile (who would later be a venture investor in the Series A round at my company Acquia) was CEO.
- CompuServe was still in business, and reached its peak penetration in April of that year before a rapid decline.
- Al Gore was still Vice President of the U.S.; he had not yet claimed to "invent the Internet" (1999).
- Global Internet penetration was only 0.6%, with only 35MM users.
- Only 32% of U.S. households had a computer at home, and only 6% used any online service.
- Katie Couric & Bryan Gumble bumbled when reporting on the Internet for the first time.
- And since having a connection to the internet still required businesses to sign the National Science Foundation's Acceptable Use Policy, only a tiny fraction of (mostly technology-centric) businesses were connected.
I look back on this report with fondness. Thanks, Paul - you pushed me to imagine far and deep, thinking about what was possible, not just probable. I can hear your voice, and mine in this piece. We did good work. And thanks, George, for your typical extraordinary insightfulness in setting the approach for this report. But - what does this mean now? (WIM!)