This article is based on my personal observations and what I learned at my weekly chat program "Business on the World Wide Web", on September 30, 1999. The complete transcript is available at www.samizdat.com/chat112.html For details about the chat program, the upcoming schedule, and earlier transcripts see www.samizdat.com/chat.html
This article was heard on the radio program "The Computer Report," which is broadcast live on WCAP in Lowell, Mass., and is syndicated on WBNW in Boston and WPLM in Plymouth, Mass, and is also available as RealAudio at www.thereport.com
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I see two huge waves of business change coming on the Internet. One is based on high-speed access. The other is wireless.
We're going to be facing a whole new range of issues, opportunities and risks. And just when you might have thought that the Web and traditional business were working out some kind of peaceful co-existence, radical change hits again.
Now what's the likely direction of business change from the wireless wave?
Our invited guest on this chat session was Alan Reiter, from Wireless Internet & Mobile Computing.
As Alan pointed out, today, wireless Internet includes paging, digital cellular and PCS. It's a global business. Alpha pagers have e-mail addresses, many cellular and PCS phones can accept e-mail. He sees wireless chatting coming soon, also wireless banking, wireless stock trading, and wireless shopping.
A set of diverse applications like that makes me wonder if -- for the short term -- we might see many low-cost single-function gadgets: maybe giveaways linked to one or just a few information and transaction services. For instance, it might make sense for an E-Trade to give away free wireless gadgets to its customers -- a gadget that made it easy to trade with them, but only with them. In other words, we could see a phenomenon like the early days of transistor radios. There was a brief window back then when radio stations or advertisers would give away free transistor radios that could only receive one station -- theirs.
Alan believes that the real growth will come from general purpose devices, that can accommodate a variety of services. He believes that devices with an operating system are the future. You will be able to use your handheld pager, etc. for different applications. Special-purpose wireless devices will be a very niche market. The future is devices for millions of people.
For the long-term, I agree that general purpose will win, in part because with advances in technology, we're make increasing functionality available at lower cost, in smaller boxes, and using less power. But in the short term we could see an interesting and large window of opportunity, with lots of little gadgets that connect to a single source of information or transactions and social activity and given away free to customers (hoping to "lock" them in).
Think of gameboys, as opposed to the general purpose computers. Think of wireless gameboy-like gadgets that are preset to link to one and only one Internet-based game-playing service.
Alan doesn't expect to see many single-purpose gadgets like that. Rather he expects branded general-purpose gadgets, like Merrill Lynch pagers or Yahoo phones, that won't be just for trading with Merrill or accessing Yahoo data, but rather will have all the regular features.
I'm inclined to bet on human nature, rather than logic and technology. General purpose, flexible, powerful devices would certainly make sense, and clearly technology will make them possible. But human nature being what it is, I believe that the first shot will be to try to own the customer by giving something away that provides access to just one service or a limited number of services (each of which pay you to be added to the list). We see this kind of thinking in video games. You sell the game box for very little (compared to its cost) and try to make your money selling the razor blades/games. And you make your cheap game box incompatible with your competitors'. Add wireless and Internet, make your handheld gadget as simple as possible. Then you don't sell the gams, but rather sell the game-playing service. Thent he clout of your business model comes in part form the limits of that cheap or giveaway wireless input device -- connecting to your service and only your service.
I don't say that's good or that in the long run it wins. But in the short run, that's what I expect to see.
Agreeing to disagree, Alan pointed to the Palm VII, which is wireless-enabled but still comes with all the Palm computer features. He also points to the Qualcomm PDQ phone, which has a Palm operating system and a phone. Already, BellSouth provides a pager service that lets you do trading and messaging. He doesn't see single-purpose devices becoming a big market... unless prices decrease dramatically.
I, on the other hand, expect that while costs may not decrease dramatically, prices will, and that the short-term market-clout of the single-purpose device will be that you get it for free. Keep in mind that these gadgets might need very little memory or local functionality -- the data related to you is stored on the Internet, at the service you are doing business with, and that's where the software runs. Your gadget is just an input-output device, pre-set to connect to and interact with one and only one remote service. Simple, very low cost, and requiring very little power.
In fact, how long this window of opportunity stays open could depend in large part on batteries. If I can use free single-purpose gadgets for days or weeks or even months without having to recharge the batteries, I might well turn to them repeatedly, even though I've paid for a powerful, general purpose device whose batteries run out far faster.
Alan also mentioned another interesting development: Bluetooth. It's a standard, using radio, not infrared, for connecting devices. He expects Bluetooth devices to hit the market at the end of this year or beginning of next year. Think about the possibilities of having, for example, one screen in your pocket that is connected wirelessly to you palmtop and phone and pager -- which are now much smaller because they all use one screen.
Interestingly, that technology could support both business models -- general purpose and single-purpose. My giveaway game gadget might hook to that single screen as well.
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For details about the weekly chat program, edited transcripts of past sessions, and the schedule of upcoming topics see www.samizdat.com/chat.html. Our chat site is http://www.web-net.org
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