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of bizarre roots - it is bound to yield

strange fruit as a medium.

So what business opportunities does the Internet represent?

I believe that they are to be found in two broad categories:

* Software and hardware related to the Internet’s future as

a medium

* Content creation, management and licencing

The Map of Terra Internetica

 

The Users

How many Internet users are there? How many of them have

access to the Web (World Wide Web - WWW) and use it? There are

no unequivocal statistics. Those who presume to give the

answers (including the ISOC - the Internet SOCiety) - rely on

very partial and biased resources. Others just bluff.

Yet, everyone seems to agree that there are, at least, 100

million active participants in North America (the Nielsen and

Commerce-Net reports).

The future is, inevitably, even more vague than the present.

Authoritative consultancy firms predict 66 million active

users in 10 years time. IBM envisages 700 million users. MCI

is more modest with 300 million. At the end of 1999 there were

130 million registered (though not necessarily active) users.

The Internet - an Elitist and Chauvinistic Medium

The average user of the Internet is young (30), with an

academic background and high income. The percentage of the

educated and the well-to-do among the users of the Web is

three times as high as their proportion in the population.

This is fast changing only because their children are joining

them (6 million already had access to the Internet at the end

of 1996 - and were joined by another 24 million by the end of

the decade). This may change only due to presidential

initiatives to bridge the “digital divide” (from Al Gore’s in

the USA to Mahatir Mohammed’s in Malaysia), corporate largesse

and institutional involvement (e.g., Open Society in Eastern

Europe, Microsoft in the USA). These efforts will spread the

benefits of this all-powerful tool among the less privileged.

A bit less than 50% of all users are men but they are

responsible for 60% of the activity in the net (as measured by

traffic).

Women seem to limit themselves to electronic mail (e-mail) and

to electronic shopping of goods and services, though this is

changing fast. Men prefer information, either due to career

requirements or because knowledge is power.

Most of the users are of the “experiencer” variety. They are

leaders of social change and innovative. This breed inhabits

universities, fashionable neighbourhoods and trendy vocations.

This is why some wonder if the Internet is not just another

fad, albeit an incredibly resilient and promising one.

Most users have home access to the Internet - yet, they still

prefer to access it from work, at their employer’s expense,

though this preference is slight and being eroded. Most users

are, therefore, exploitative in nature. Still, we must not

forget that there are 37 million households of the self-employed and this possibly distorts the statistical picture

somewhat.

The Internet - A Western Phenomenon

Not African, not Asian (with the exception of Israel and

Japan), not Russian , nor a Third World phenomenon. It belongs

squarely to the wealthy, sated world. It is the indulgence of

those who have everything and whose greatest concern is their

choice of nightly entertainment. Between 50-60% of all

Internet users live in the USA, 5-10% in Canada. The Internet

is catching on in Europe (mainly in Germany and in

Scandinavia) and, in its mobile form (i-mode) in Japan. The

Internet lost to the French Minitel because the latter

provides more locally relevant content and because of high

costs of communications and hardware.

Communications

Most computer owners still possess a 28,800 bps modem. This is

much like driving a bicycle on a German Autobahn. The 56,600

bps is gradually replacing its slower predecessor (48% of

computers with modems) - but even this is hardly sufficient.

To begin to enjoy video and audio (especially the former) -

data transfer rates need to be 50 times faster.

Half the households in the USA have at least 2 telephones and

one of them is usually dedicated to data processing (faxes or

fax-modems).

The ISDN could constitute the mid-term solution. This data

transfer network is fairly speedy and covers 70% of the

territory of the USA. It is growing by 100% annually and its

sales topped 10 billion USD in 1995/6.

Unfortunately, it is quite clear that ISDN is not THE answer.

It is too slow, too user-unfriendly, has a bad interface with

other network types, it requires special hardware. There is no

point in investing in temporary solutions when the right

solution is staring the Internet in the face, though it is not

implemented due to political circumstances.

A cable modem is 80 times speedier than the ISDN and 700 times

faster than a 14,400 bps modem. However, it does have problems

in accommodating a two-way data transfer. There is also need

to connect the fibre optic infrastructure which characterizes

cable companies to the old copper coaxial infrastructure which

characterizes telephony. Cable users engage specially

customized LANs (Ethernet) and the hardware is expensive

(though equipment prices are forecast to collapse as demand

increases). Cable companies simply did not invest in

developing the technology. The law (prior to the 1996

Communications Act) forbade them to do anything that was not

one way transfer of video via cables. Now, with the more

liberal regulative environment, it is a mere question of time

until the technology is found.

Actually, most consumers single out bad customer relations as

their biggest problem with the cable companies - rather than

technology.

Experiments conducted with cable modems led to a doubling of

usage time (from an average of 24 to 47 hours per month per

user) which was wholly attributable to the increased speed.

This comes close to a cultural revolution in the allocation of

leisure time. Numerically speaking: 7 million households in

the USA are fitted with a two-way data transfer cable modems.

This is a small number and it is anyone’s guess if it

constitutes a critical mass. Sales of such modems amount to

1.3 billion USD annually.

50% of all cable subscribers also have a PC at home. To me it

seems that the merging of the two technologies is inevitable.

Other technological solutions - such as DSL, ADSL, and the

more promising satellite broadband - are being developed and

implemented, albeit slowly and inefficiently. Coverage is

sporadic and frustrating waiting periods are measured in

months.

Hardware and Software

Most Internet users (82%) work with the Windows operating

system. About 11% own a Macintosh (much stronger graphically

and more user-friendly). Only 7% continue to work on UNIX

based systems (which, historically, fathered the Internet) -

and this number is fast declining. A strong entrant is the

free source LINUX operating system.

 

Virtually all users surf through a browsing software. A fast

dwindling minority (26%) use Netscape’s products (mainly

Navigator and Communicator) and the majority use Microsoft’s

Explorer (more than 60% of the market). Browsers are now free

products and can be downloaded from the Internet. As late as

1997, it was predicted by major Internet consultancy firms

that browser sales will top $4 billion by the year 2000. Such

misguided predictions ignored the basic ethos of the Internet:

free products, free content, free access.

Browsers are in for a great transformation. Most of them are

likely to have 3-D, advanced audio, telephony voice video

mail (v-mail), instant messaging, e-mail, and video

conferencing capabilities integrated into the same browsing

session. They will become self-customizing, intelligent,

Internet interfaces. They will memorize the history of usage

and user preferences and adapt themselves accordingly. They

will allow content-specificity: unidentifiable smart agents

will scour the Internet, make recommendations, compare prices,

order goods and services and customize contents in line with

self-adjusting user profiles.

Two important technological developments must be considered:

PDAs (Personal Digital Assistants) - the ultimate personal

(and office) communicators, easy to carry, they provide

Internet (access) Everywhere, independent of suppliers and

providers and of physical infrastructure (in an aeroplane, in

the field, in a cinema).

The second trend: wireless data transfer and wireless e-mail,

whether through pagers, cellular phones, or through more

sophisticated apparatus and hybrids such as smart phones.

Geotech’s products are an excellent example: e-mail, faxes,

telephone calls and a connection to the Internet and to other,

public and corporate, or proprietary, databases - all provided

by the same gadget. This is the embodiment of the electronic,

physically detached, office. Wearable computing should be

considered a part of this “ubiquitous or pervasive computing”

wave.

We have no way of gauging - or intelligently guessing - the

part of the mobile Internet in the total future Internet

market but it is likely to outweigh the “fixed” part. Wireless

internet meshes well with the trend of pervasive computing and

the intelligent home and office. Household gadgets such as

microwave ovens, refrigerators and so on will connect to the

internet via a wireless interface to cull data, download

information, order goods and services, report their condition

and perform basic maintenance functions. Location specific

services (navigation, shopping recommendations, special

discounts, deals and sales, emergency services) depend on the

technological confluence between GPS (satellite-based

geolocation technology) and wireless Internet.

Suppliers and Intermediaries

“Parasitic” intermediaries occupy each stage in the Internet’s

food chain.

Access to the Internet is still provided by “dumb pipes” - the

Internet Service Providers (ISP)

Content is still the preserve of content suppliers and so on.

Some of these intermediaries are doomed to gradually fade or

to suffer a substantial diminishing of their share of the

market. Even “walled gardens” of content (such as AOL) are at

risk.

By way of comparison, even today, ISPs have four times as many

subscribers (worldwide) as AOL. Admittedly, this adversely

affects the quality of the Internet - the infrastructure

maintained by the phone companies is slow and often succumbs

to bottlenecks. The unequivocal intention of the telephony

giants to become major players in the Internet market should

also be taken into account. The phone companies will, thus,

play a dual role: they will provide access to their

infrastructure to their competitors (sometimes, within a real

or actual monopoly) - and they will compete with their

clients. The same can be said about the cable companies.

Controlling the last mile to the user’s abode is the next big

business of the Internet. Companies such as AOL are

disadvantaged by these trends. It is imperative for AOL to

obtain equal access to the cable company’s backbone and

infrastructure if it wants to survive. Hence its merger with

Time Warner.

No wonder that many of the ISPs judge this intrusion on their

turf by the phone and cable companies to constitute unfair

competition. Yet, one should not forget that the barriers to

entry are very low in the ISP market. It takes a minimal

investment to become an ISP. 200 modems (which cost 200 USD

each) are enough to satisfy the needs of 2000 average users

who generate an income of 500,000 USD per annum to the ISP.

Routers are equally as cheap nowadays. This is a nice return

on the ISP’s capital, undoubtedly.

The Hitchhikers

The Web houses the equivalent of 100 billion pages. Search

Engine applications are used to locate specific information in

this impressive, constantly proliferating library. They will

be replaced, in the near future, by “Knowledge Structures” -

gigantic encyclopaedias, whose text will contain references

(hyperlinks) to other, relevant, sites. The far future will

witness the emergence of the “Intelligent Archives” and the

“Personal Newspapers” (read further for detailed

explanations). Some software applications will summarize

content, others will index and automatically reference and

hyperlink texts (virtual bibliographies). An average user will

have an ongoing interest in 500 sites. Special software will

be needed to manage address books (“bookmarks”, “favourites”)

and contents (“Intelligent Addressbooks”). The phenomenon of

search engines dedicated to search a number of search engines

simultaneously will grow (“Hyper-or meta-engines”). Meta-engines will work in the background and download hyperlinks

and advertising (the

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