By John Latta
Wave Issue 0329 8/22/03
Palo Alto, CA
AlwaysOn is a conference put on by the publication
Red Herring and hosted by the Stanford University Law School. It is
also an insider’s
conference with many key individuals from technology companies and VCs
in the San Francisco Bay Area. The panels are populated with CEOs and
CTOs. These are also the survivors of the bust.
One way to consider this event is to ask the question – Where
do we go from here? The conference organizers might view this is overly
harsh. What is being sought is to validate the impact that AlwaysOn will
have. As a result, the conference is probing many issues from wireless
to security to home networking. The panel discussions are unstructured
and the insights frequently haphazard. There is an audience poll on two
key issues per panel and an on-going web cast. This is all great use
of Internet technology, but in the end the value to those who paid the
bucks to come are the insights and contacts. What is important is the
networking between individuals, many of whom are the who’s who
in technology in the Bay Area.
AOL Shows AOL 9 with Wireless Support
Jonathan Miller, Chairman and CEO, AOL spoke for
the first time about the impact of the restructuring it has been going
through. One element
of this is built-in wireless support in AOL 9, which he showed for the
first time at this conference. The details of the wireless support were
not fully announced but included the major Wi-Fi hot spot companies of
AT&T and T-Mobil and implied support for Wi-Fi. At the same time
AOL 9 shows how the company is seeking to be a one stop subscription
services company. Broadband plays a central role in this but it remained
unclear how AOL will provide the connectivity.
This was the first public airing of the AOL strategy after the hail
storm of reorganization and turmoil. Jonathan Miller seemed less than
comfortable with the presentation but it came off with many insights
on company directions. He was clearly seeking to fit within the theme
of the conference of AlwaysOn. AOL has been doing extensive consumer
research to set this direction and Jonathan used much of this to pepper
We recently completed research with 25,000 customers.
We found that there are substantial different use patterns of connected
with extensive online experience. We call these the “highly tenured” users.
Typically these have 4 years or more of experience.
This group spends 2X more time online per day;
88% more e-mail sessions and
40% higher IM usage.
½ use broadband radio or music.
55% watch video or movie clips.
They spend 65% more time than non-tenured broadband users.
This group is 3X more likely to buy a book online, 7X more likely to
buy a game and 5X more likely to buy online.
The #1 concern of parents is parental control but 97% do not use what
We need to clean up the neighborhood that has been created by the Internet.
This has many forms from parental control, to spam to virus.
At AOL we block from 1.5 to 2.5B spam messages a day.
Our new user interface will be made available to
users in a few weeks is AOL 9. Some of its features include – an
example session was shown.
We seek to significantly ease the user access to
features and content of interest to each user. Much of this
will be made available with either
one click or zero click – the latter being menus or information
which surface as the mouse hovers in an area of interest.
We have computed the value of the free content and services in the AOL
subscription of $14.95 is $130 if purchased independently and this is
exclusive of e-mail and IM.
We believe strongly that content drives functionality. That is, that
content will drive the value of the user experience. One important element
of this is peer to peer.
The theme of AOL 9 was:
Always in Control
Always Engaged and
Always with You.
As part of Always in Control was SFO – Search,
Find and Obtain.
Always with You encompasses Home Networks but little
was said on what and how AOL will support this. Another component
is via Wireless and
Voice – it is assumed that this implies a WiFi connection
Significant improvements to parental controls were shown that allowed
parents to remotely control access that their children have to the Internet.
We have relationships with the major wireless providers
and this includes AT&T and T-Mobil and this is reflected
in AOL 9.
One of the fastest selling add-on products we have is virus protection
for the home PC.
We seek to make AOL for life.
AlwaysOn – we are betting the company on this.
Our business model is that of subscriptions to services purchased by
Palm Looks to the Future
Eric Benhamou, Chairman, Palm and 3Com, laid out his view of the future
of handheld devices. His list of factors and technologies included:
Flexible displays including electrophoretic (e-ink);
Software configurable hardware
Software defined radios
Power conserving OS and
Eric was particularly bullish on the potential and
technical advancements in displays. As we have stated before we believe
that Palm is likely
to be the first company which e-ink speaks about as having a portable
electronic book reader device. An example to a Palm Tablet was shown
which includes a stylist. A role for the remote control was indicated
when Eric stated that there were 500m remote controls shipped in 2002 – more
than the number of cell phones. With 30m handheld computers having shipped
the exciting market has yet to arrive. It is here that pricing will play
a key role. Eric stated that, as he has seen before, the $100 price point
is where the market will explode. This is on the horizon at Palm.
Eric ended his talk with the impacts of the recent
on the industry. Palm, when combined with handspring, will become the
Palm Solutions Group, and Palmsource, the independent OS company. This
company will be free to pursue many applications for the OS, independent
of the hardware. Eric provided broad categories of: ultra-mobil, communications,
information, lifestyle, industrial and education.
It was interesting that on this panel was both eBay and Match.com, a
dating service. Some of the eBay comments were the most interesting.
Major corporations are now using eBay as a soft launch medium. They
could not identify any products that were pulled due to poor response
from such market testing.
BuyItNow happened due to user demand and now 30% of the sales are done
eBay began as a collectable site but now 60% of the
merchandise sold is what they call “practicals.”
Some of the experiments with wireless for eBay bidding have gone very
well, in particular in the UK and Germany where bidding is done on SMS.
The US does NOT get wireless.
This panel struggled with the debate: Wi-Fi vs. 3G.
Qualcomm held on to its position that 3G is the future, but acknowledged
that Wi-Fi has
a place. One of the more interesting points centered on the struggle:
what is the role of fixed, all-you-can-use pricing? T-Mobil has unlimited
usage of Wi-Fi at $19.95 and GPRS at $29.95. Many on the panel felt
that $50 is the market breakthrough level. That is, at $50 or less
data market will expand rapidly. Sky Dayton, CEO of Boingo Wireless,
compared this to his experience at EarthLink – when the ISP
pricing dropped to $19.95, Internet access exploded.
Home Networking Panel
This was lead by Kristine Stewart, the President of the Internet Home
Alliance. On the panel were Invensys, Sears, Whirlpool and Microsoft.
Sears made the case for remotely monitored appliances.
They have 13,000 service technicians who make 12m service calls
a year. 12% of those require
a second visit – mostly due to the need to get a part. There
is a huge economic incentive on Sears' part to understand what the
is before going to the home.
Invensys Home Control Systems made the point that there could well be
enough value from home networking, such as power management, that the
value from the home networking change would not require any consumer
investment. This is another way of saying what we have heard from 2Wire
and Linksys, that the MSOs and ILECs are offering home network equipment
for free as a part of the service contract.
We spent two days with the best minds in the business of
PC/IT/Networking and related areas. One word sums it up - incoherent:
The areas of discussion
Real Time organizations;
OpenSource and Linux and
By definition the companies here are the survivors of the bust. Yet,
there were no fresh insights as everyone struggles. Be it eBay or Palm
they each tune their respective playbooks in the markets they understand.
It can be rightfully argued that incoherence is the
nature of markets and the future. But we go beyond that. With what
have been 30% growth
markets they are now collapsed to <10% and in many cases <0% growth.
Few are interested in these markets – they are boring. It remains
to be seen if this sector will regain its glory. If that will happen
was not at all clear from AlwaysOn.
The format of free flowing panel discussions has its high and low points.
The high point is that the moderator may be able to elicit fresh insights,
and the low point is that nothing new may be said. All the sessions were
framed in the latter. We believe that the combination of the unstable
industry and format made the conference interesting but not a blockbuster.