Death of distance
Focusing on the importance of location is interesting in the context of the evolving world of e-business. First lets look at how location is being undermined by technology. In a seminal article,* way back in the mists of time (1995 - that’s older than PDM!), the Economist’s Frances Cairncross forecast the ‘death of distance,’ as competition between operators and new technology would drive telephone charges down. This was supposed to make a long distance call no more expensive than a local call. Well, we may not be there in voice telephony, but we sure are in data, as a web browser mouse click may involve interaction between machines all over the planet - all for no extra charge.
Yada, yada, yada
If distance is dead, then in a sense, location (which is a sort of inverse of distance) is dead too. Not perhaps to the extent that boo.com investors believed, as people seemingly still prefer to walk into Gap and try clothes on. But again, in the field of data communications, the location of a service provider is becoming immaterial. So what is the requirement above all others for successful e-commerce? Its not "location, location, location" any more, its .... "yada, yada, yada." But what is "yada?"
The first candidate for yada is bandwidth. It was bandwidth that killed distance, and you can’t have enough of it. Buy as much as you can afford! But bandwidth has already done its job on both distance and location. Bandwidth is already yesterday’s "yada," not tomorrow’s killer attribute.
Judging by the Application Service Provision (ASP) offerings on show at the Calgary SEG convention (see pages 6 and 7 of this issue) we are already in a sense, beyond bandwidth. It maybe easier to perform some highly interactive operations in a very high bandwidth environment like Calgary. But many of the demos as the show were interacting with data on servers in Houston.
What is happening is that as expectations run ahead of nominal bandwidth, good old ingenuity steps in, with clever strategies of minimizing traffic. These optimizations are operating at many scales right down to the re-use of copper in the local loop. Who ever thought you’d be able to get the megabit bandwidth that DSL delivers out of your phone line.
While e-commerce and ASP are the headlines today, I think they would represent something of a whimper-ish end to the Internet revolution. Both ASP and much e-commerce offerings today share a common trait. They are ‘middle-man’ applications. At the extreme end of the spectrum, a start-up might offer ASP services without actually having any software to ‘provide.’ The business model here is ‘grab the high ground’ and is predicated on the idea that a) there is high ground to grab and b) future competition will not be able to catch up. Both of these predicates are somewhat shaky.
Clicks and mortar
A strong e-commerce offering needs more substance than this. In the field of ASP, the software vendors are coming into the field as "clicks and mortar" enterprises. In other words, they exemplify the leveraging of a traditional business via the web. What distinguishes these businesses is that they have something the newcomers do not - content.
Yes, my candidate for ‘yada’ is content. It is content which sorts men from boys on the web, whether it is software licenses, data or information. The key deals being done today revolve around the sharing and distribution of such content. A lot of alliances and deal-making is being done in this field as content providers team with software vendors and technology specialists. Maybe we will reach the nirvana of being able to buy fully-functional software pre-loaded with data sometime soon. But there is just one small problem.
The big issue today in buying e-data in bite sized chunks, or software on pay as you go is pricing. How much you charge for the new integrated services, and future web usage patterns, will be extremely visible on the profit and loss statement. For clicks and mortar shops, with established revenues, a few cents here or their could reflect, in a most embarrassing manner, on the bottom line.
* A Survey of Telecommunications: The death of distance - Cairncross, Frances, The Economist 30-Sep-95.
© Oil IT Journal - all rights reserved.