Ross Mayfield: The Grid

The Matter of IT

Tue, 20 May 2003 06:38:47 GMT

As the technology industry emerges from the bottom, it criticism has been lowered to the nature of being. Information Technology has always been a source of competitive advantage. At the bottom of the business cycle, advantage is basic survival, risk taken only on low hanging fruit. But now, as the leaky pipes have stopped dripping, some wish to relegate the job of IT to that of a plumber.

Friday's article in the NY Times by Steve Lohr asks the question, "Has Technology Lost its Special Status?" Technology as an industry is 10 percent of the economy and 60 percent of business spending. According to John Gantz of IDC, technology spending has increased 2-3 times the rate of economic growth since the 1960s. The question is if the industry will return to its historical growth rates, the driver of valuation multiples. Lohr reports:

That assumption about technology's special role is questioned in a provocative article this month in The Harvard Business Review, titled "IT Doesn't Matter." The article asserts that information technology, or I.T. for short, is inevitably headed in the same direction as the railroads, the telegraph, electricity and the internal combustion engine — becoming, in economic terms, just ordinary factors of production, or "commodity inputs."

"From a strategic standpoint, they became invisible; they no longer mattered," Nicholas G. Carr, editor at large of The Harvard Business Review, wrote in the article. "That is exactly what is happening to information technology today."

John Hagel and John Seely Brown believe this is an important article because it very effectively captures the backlash sweeping through executive suites against IT spending...But Carr’s article is also dangerous because it endorses the growing view that IT offers only limited potential for strategic differentiation....and are preparing a rebuttal in the July issue of HBR:

Extracting business value from IT requires innovations in business practices. In many respects, we believe Carr attacks a red herring – few people would argue that IT alone provides any significant business value or strategic advantage.
The economic impact from IT comes from incremental innovations, rather than "big bang" initiatives. A process of rapid incrementalism enhances learning potential and creates opportunities for further innovations.
The strategic impact of IT investment comes from the cumulative effect of sustained initiatives to innovate business practices in the near-term. The strategic differentiation emerges over time, based less on any one specific innovation in business practice and much more on the capability to continuously innovate around the evolving capabilities of IT.

Some tech executives have countered in the NY Times article:

"I.T. is the vehicle by which you turn ideas and content into intellectual property products," Mr. Craig Barrett (of Intel) said. "As a nation and as a company, you either upgrade your I.T. infrastructure or you won't be competitive."

Samuel J. Palmisano, chief executive of I.B.M., made the case for his industry's growing at twice the rate of the economy when he spoke to analysts on Wednesday. "The industry is fundamentally a growth industry because it underpins productivity," he said.

Kevin Werbach speaks of new models in the Post-PC era in his Supernova report:

...The point of the article is not that tech is dying, or that innovation is drying up. It's that enterprise technology is moving into a new phase. Bigger, faster, and more feature-laden are no longer selling points in the same way. Smarter, simpler, more efficient, and more flexible are the new criteria. It's much harder to make powerful system simple than to make them complex....

Zack Lynch points how IT drives growth in other sectors:

For instance, although not a punctuated leap in competitive advantage, social software has the potential to accrue significant value for companies that leverage its potential to accelerate innovation. In some industries, two product cycles can be the difference between corporate life and death.
For example, decreasing innovation cycle times in the pharmaceutical industry by 10% could slash years off product research, development and approval processes. When translated into revenue and market capitalization impacts, intelligent adoption of social software could significantly disrupt the balance of power in this multi-billion dollar industry. Who says IT competitive advantage is dead?

What is unique about IT compared to other revolutions is how it extends the capabilities of people and groups. IT fuels competitive advantage by enhancing productivity. Erik Brynjolfsson of MIT has demonstrated that productivity gains occur not through IT in and of itself, but when it is introduced with new business practice and process.

This is actually a contrarian point for many. Some private equity investors shy away from technologies that require change of behavior, for example, because it adds risk that users will resist change. But in fact, that's the real promise of IT, to extend our capabilities in new ways. Changing behavior is good in a changing world.

Brynjofsson's studies have been in process-intensive areas of organization. Areas where economies of scale can be easily realized. When business process is defined, it is almost immeadiately outdated because environmental conditions change presenting new sets of information. This underscores the need for business practice that realizes economies of scope (agility), but also the limits of process itself.

What remains is knowledge work. Most jobs in the service sector spend the majority of their time undertaking unstructured tasks in social context. And this time is where innovation occurs (Palmisano points to IP creation, but that's just one set of montetizable outcomes).

IT will continue to drive competitive advantage for business because an incremental enhancement of how groups work still yields exponental benefits.

World of Ends

Fri, 07 Mar 2003 05:41:48 GMT

Dr. Weinberger and I decided to sum up a whole bunch of stuff in one big site: World of Ends: What the Internet Is and How to stop Mistaking It for Something Else. Dr. W. explains more here.[The Doc Searls Weblog]

The Nutshell

1. The Internet isn't complicated
2. The Internet isn't a thing. It's an agreement.
3. The Internet is stupid.
4. Adding value to the Internet lowers its value.
5. All the Internet's value grows on its edges.
6. Money moves to the suburbs.
7. The end of the world? Nah, the world of ends.
8. The Internet’s three virtues:
a. No one owns it
b. Everyone can use it
c. Anyone can improve it
9. If the Internet is so simple, why have so many been so boneheaded about it?
10. Some mistakes we can stop making already

It all begins with Simplicity, turns out bandwidth is a commodity, and let's be stupid and not screw it up.

Google buys Pyra

Sun, 16 Feb 2003 04:29:04 GMT

Google Buys Pyra: Blogging Goes Big-Time
• posted by Dan Gillmor 07:41 PM
• permanent link to this item

NOTE: This is a slightly edited version of a special column running in tomorrow's San Jose Mercury News. We're posting it early to get the story out.

Weblogs are going Googling.

Google, which runs the Web's premier search site, has purchased Pyra Labs, a San Francisco company that created some of the earliest technology for writing weblogs, the increasingly popular personal and opinion journals.

The buyout is a huge boost to an enormously diverse genre of online publishing that has begun to change the equations of online news and information. Weblogs are frequently updated, with items appearing in reverse chronological order (the most recent postings appear first). Typically they include links to other pages on the Internet, and the topics range from technology to politics to just about anything you can name. Many weblogs invite feedback through discussion postings, and weblogs often point to other weblogs in an ecosystem of news, opinions and ideas.

"I couldn't be more excited about this," said Evan Williams, founder of Pyra, a company that has had its share of struggles. He wouldn't discuss terms of the deal, which he said was signed on Thursday, when we spoke Saturday. But he did say it gives Pyra the "resources to build on the vision I've been working on for years."

Part of that vision, shared by other blogging pioneers, has been to help democratize the creation and flow of news in a world where giant companies control so much of what most people see, hear and read. Weblogs are also becoming a valuable communication tool for groups of people, and have begun to infiltrate the corporate, university and government spheres.

Just three and a half years old, Pyra's Blogger software has 1.1 million registered users, Williams said. He estimated that about 200,000 of them are actively running weblogs. Pyra charges for some higher-capability services not available in the base configuration, but most of its registered users don't pay.

Google is known best for its search capabilities, but the Pyra buyout isn't the company's first foray into creating or buying Internet content. Two years ago Google bought Deja.com, a company that had collected and continued to update Usenet "newsgroups," Internet discussion forums. More recently, it created Google News, a site that gauges the collective thoughts of more than 4,000 news sites on the Net.

But now Google will surge to the forefront of what David Krane, the company's director of corporate communications, called "a global self-publishing phenomenon that connects Internet users with dynamic, diverse points of view while also enabling comment and participation."

"We're thrilled about the many synergies and future opportunities between our two companies," he said in a statement on Saturday. He didn't elaborate further on what those synergies and opportunities might be, but said more details would emerge soon. Users of the Blogger software and hosting service won't see any immediate changes, he added.

For Williams and his five co-workers, now Google employees, the immediate impact will be to put their blog-hosting service, called Blog*Spot, on the vast network of server computers Google operates. This will make the service more reliable and robust.

How Google manages the Blogger software and Pyra's hosting service may present some tricky issues. The search side of Google indexes weblogs from all of the major blogging platforms, including Movable Type and Userland Radio. Any hint of proprietary favoritism would meet harsh criticism.

Blogging was moving mainstream even before this buyout. Several weblogs draw a large readership, and bloggers demonstrated their collective power to keep an issue alive even when the traditional media miss the story, as former U.S. Senate Majority Leader Trent Lott discovered to his dismay late last year.

Major technology companies are seeing the potential. Tripod, the consumer web-publishing unit of Terra Lycos, recently introduced a "Blog Builder" tool. America Online is expected to be on the verge of doing something similar, and no one will be surprised if Yahoo and Microsoft do the same. Are more buyouts of blog toolmakers in the offing?

Developers of blogging software have been finding user-friendly ways to help readers of weblogs and other information find and collect material from a variety of sites. It's in this arena that the Google-Pyra deal may have the most implications.

More than most Web companies, Google has grasped the distributed nature of the online world, and has seen that the real power of cyberspace is in what we create collectively. We are beginning to see that power brought to bear.

Distruptive Technologies

Thu, 23 Jan 2003 18:48:06 GMT

10 Emerging Technologies That Will Change the World. dsg writes in with a link to this Technology Review article about ten emerging technologies they believe will change the world. Some interesting predictions in the bunch. Mixed in with obvious predictions like "grid computing" are slightly more obscure things like "nano solar cells". These types of articles are always popular in January, and while no one ever seems to look back and see how accurate they are, they're still fun to read just to get your mind thinking about the possibilities. [Techdirt]

I like these lists for the same reason. Here are the 10:

Wireless Sensor Networks
Injectable Tissue Engineering
Nano Solar Cells
Mechatronics
Grid Computing
Molecular Imaging
Nanoimprint Lithography
Software Assurance
Glycomics
Quantum Cryptography

In other news, we are printing cells...

Three-dimensional tubes of living tissue have been printed using modified desktop printers filled with suspensions of cells instead of ink. The work is a first step towards printing complex tissues or even entire organs.

"This could have the same kind of impact that Gutenberg's press did," claims tissue engineer Vladimir Mironov of the Medical University of South Carolina.

Datacommodity Service

Thu, 09 Jan 2003 18:19:37 GMT

IBM rolls out on-demand computing service aimed at supercomputers. [InfoWorld: Top News]

Selling processing as a utility service (one of the Datacommodities) from a grid computing architecture is finally commercialized. IBM's first customer, Petroleum Geo-Services, expects to save $1.5 Billion for a three-month-long seismic imaging project based in the Gulf of Mexico.

"Customers in some sectors want access to large-scale computing power in short bursts," said Dave Turek, vice president of IBM Linux clusters and grid solutions. "We think this supercomputing offering can change how business is done."

Aggregating peaks and valleys into a plain is a great business. Especially when customers will pay a premium for serving bursts while not having to incur capital expenses at the peak. This will be one hell of a spot market one day.

QoS vs. Open Standards

Tue, 10 Dec 2002 06:18:53 GMT

Cory on Rod Smith:

Open standards and quality of service: pick one. IBM's Rod Smith is speaking at the Supernova conference. In his intro, he cites a lot of customer demand for both open standards and quality-of-service guarantees. Aren't these antithetical? If I'm running open standards, then the software at my end of the network can be set to abide by or ignore any signals send by the software at your end (as opposed to a proprietary system where both ends are welded-shut-boxes that always and deterministically do whatever the software author thought was best). That means that even though your software requests a priority level of x and a guaranteed pipe of y, you have no way of knowing whether my software is actually delivering x and y. All you can send me is a suggestion -- not a guarantee.

Not mutually exclusive. With two clients running open systems and each buying their own service level agreements, the clients could act in a manner similar to cognitive radios with open spectrum, but that's theoretical. But what Rod was talking about was not end-to-end, but enterprise-to-enterprise (which then extends it intra-enterprise to the end, mostly machines for grid computing). This is accomplished via:

VPNs with QoS guarantees, perhaps leveraging MPLS at least in the core of the service provider network
Companies buying near wholesale IP Transit agreements with traffic specific SLAs. Each leverages multi-homing that takes into account the cost of Transit and SLAs for each provider. Or is there an open standard Im missing?

What's not open about this all yet is standardization of tiers of QoS from Layer 3 and up. But layer 2 and down is defined by ANSI (a DS-3 is a DS-3). Or is there something Im missing.

Rod Smith, IBM

Tue, 10 Dec 2002 00:41:46 GMT

Fascinating to me, but much of IBM's new commodity management model, wasn't understood enough to be explored by the audience. So the focus was from web services to the consumer in the value chain. The missing piece was data commodities to web services.

On Demand

Responsive in real-time
Variable cost structures
Focused on differentiating
Resilient, Global

Drivers for Next Gen Biz Apps: inter-enterprise, integration & QoS. Coordinating decentralization

Requirements:

Integrated
Built on open standards - what's new is standard process is quicker
Virtualized
Autonomic

Question of QoS tiers for commoditization. This is not an issue, IMHO -- there are over 150 grades of West Texas Intermediate Crude WTI -- the largest oil commodity contract. I doubt anyone in the room gets commoditization, but they will.

Great questions in the summary slide:

What if integration costs went to zero?
What if IT disolves into the fabric of a company?
What happens when integration decisions happen at <web service> deployment time or connection time... or business contract time?

The real opportunity is accelerating the Innovation-Integration cycle.

Floor questions:

Tom from UCB asks for examples of web services that delivers business value today. WebBeacons took an internal app and ASPed it to eliminate 15 people who manually proceessed their trucking procurement 3 days to 4 hour turn around time, reduced cost by $1m. e2open, UDDI and SOAP, now up to 600 companies integrated.
Dave Winer asks about Patents again. IBM has not patented what's in SOAP.
Follow Marc's question on patents, IBM asks startups they work with to adhere to open standards (which costs them considerably) -- reasonable answers.
Isen: IBM had the world by the short hairs, but is now relatively decentralized. How do we help Microsoft change like IBM did?
- language change
- connected with customers to get their view of the issues

Waves and Things

Mon, 09 Dec 2002 00:12:56 GMT

Mitch Ratcliffe puts the Next Big Thing list in perspective...

While I can appreciate the focus that a "big thing" lends to folks with a business degree, the broader and more flexible approach to decisions about resources afforded by a historical perspective tell me that it is the Next Long Move, a trend that pulls people and organizations along new paths, that provides the richest opportunities. Trends are based on collections of things, not any one thing... A focal point-like "big thing" makes you subtract everything from the picture that doesn't fit. [RatcliffeBlog]

Schumpeter's Business Cycles (1939) proposed a three-cycle model of economic fluctuations or waves. Squeezing a fourth cycle between his second and third, we get...

Kitchin inventory cycle (3-5 years)
Juglar investment cycle (7-11 years)
Kuznets infrastructural investment cycle (15-25 years)
Kondratieff long cycle (45-60 years)

For Schumpeter, three Kitchins make up one Juglar and six Juglars make up one Kondratieff. Fitting in the Kuznets, we presumably have two or three Juglars to one Kuznets and three Kuznets to one Kondratieff.

Right now we are at the beginning of the next Juglar investment cycle. I believe what Mitch calls a Long Move is a Kuznet wave, a major adoption of new infrastructure that impacts all facets of humanity. We are in the middle of a Kondratieff wave, that of IT.

The next Kondratieff wave is what Zack Lynch is blogging about, the Neurotechnology wave. Zack speaks in waves, so if you want to learn more about the concept and history of waves, follow his posts.

I agree with Mitch that Things are not enough to base an cash or time investment decision upon, larger trends, or waves, need to be taken into account. However, I like lists of Things to be sure Im not missing any I need to invest time to understand. And when you find something that interests and makes sense for you, understand the wider context -- and go for the Juglar Jugular.

Next Big Things

Sun, 08 Dec 2002 16:59:10 GMT

John Patrick's list of five candidates for the Next Big Thing. [Werblog]

	Autonomic computing
	Blogging
	Grid Computing
	Web Services
	WiFi

John is about right, IMHO. I have been trying to think in non-Next Big Thing terms, but would add: Social Software, Personal Systems, and more to come. The good thing is we will be talking about 3 out of 5 at Supernova, with the other two in the hallways.

The Gravity of Decentralization

Fri, 06 Dec 2002 18:57:25 GMT

Designing business architectures (models & systems) is an increasing challenge. Centralized business architectures are a legacy of the industrial era. But the recent downturn has revealed new decentralized systems that promise to enable new business models and evolve the old. We are just beginning to explore the practice of decentralization and the new gravity it creates.

This post explores key benefits of cost and risk reduction:

Capital Expense: Smart Build vs. Dumb Build
Operating Expense: Centralized Complexity vs. Decentralized Service
Market Risk: Centralized Liquidity vs. Decentralized Standardization
Operational Risk: Centralized Security vs. Decentralized Defense

Identifying these benefits should help understanding how to achieve balance between centralized and decentralized gravitational forces.

Capital Expense: Smart build vs. dumb build

Centralized infrastructures (bandwidth, storage & processing) require significant up-front capital investment, justified by "smart build." They rely on "smart" forecasting of capacity requirements to determine what to build in advance of immediate delivery (spot markets). But in absence of forward markets (like futures, only over the counter) to lock in future prices and quantities, and only rudimentary vehicles to pre-sell capacity -- determining requisite supply is done without market data. In addition, IP traffic, which drives investment in capacity to support it, is notoriously bursty and diverse. Sheer complexity and absence of market data make forecasting and planning an art rather than science.

Also, centralized infrastructures rely heavily on economies of scale in both system economics and business models. The upgrade path isn't granular, at best its at the line card level for routers and servers. In the economics of bandwidth builds rights of way and spectrum licenses are the largest costs. This cost is also the largest speculation of future capacity, both in the lag time until monetized and the volume of capacity it represents. Spectrum speculation also relies on the pricing of an intangible asset, driven by market participants compelled to bid to maintain competitive in a market they already sunk significant costs in. Spectrum speculation recently resulted in $150 billion of spend – before the investment of another $150 billion in tangible asset infrastructure; larger than the addressable market.

The second largest cost, digging the trench are the largest costs, compels telecoms to lay as many fiber strands in the trench as they can. Remaining dark. Supply and demand cannot be balanced, and excess capacity inventory is a service requirement. The result is continual glut or failure to meet customer demands. This is fine when capital markets appreciate excess capacity inventory, but otherwise its punishing model.

Dumb builds of decentralized infrastructure do not rely on central planning/forecasting. Capital risks and burdens are pushed to the customer: forecasting individual requirements, upgrade/migration paths and up-front investment. Intangible assets that only serve the purpose of creating barriers to entry for competitors, such as spectrum speculation, can be avoided costs through models such as Open Spectrum.

In addition, decentralized infrastructures can be more granular. Manufacturing of equipment for these infrastructures remains centralized, but there is less risk in the model. Forecasting a diverse network's requirements is several orders of magnitude greater in complexity than forecasting customer units. Manufacturing systems are also built to take advantage of economies of scale, scope and speed. Capital markets understand the mature model of manufacturing capacity & inventory to more adequately assess inherent risks.

Operating Expense: Centralized Complexity vs. Decentralized Self-Service

Centralized business architectures cannot scale when it comes to providing service. Centrally planned automation of functions and processes become rapidly obsolete in a turbulent environment. Inevitably to maintain service, people are thrown at the problem. And people don’t scale. Large centralized IT administration, network administration, customer support centers result in large Sales, General & Administration costs (e.g. 25% of revenues in the telecom industry). What’s worse, service is significantly impersonal and these jobs strain the limits of satisfaction, creating a dysfunctional cycle of quality degradation.

Decentralized business architectures empower customers to serve themselves and provide communities of support. Obviously this results in less cost and enables scale. But the power of self-service, whether for purchasing, provisioning or support cannot be overstated. Provided self-service is simple, providing otherwise internal information to the customer as well as control instills trust and satisfaction.

Market Risk: Centralized Liquidity vs. Decentralized Standardization

As we learned in developing the first B2B marketplaces, liquid emerging markets take time to develop. Marketplaces and market makers must bear significant risks to establish a market. Despite the benefits by design, providing centralized alternatives to the entropy of existing relationships is an inorganic development. Before centralized markets take hold, competing standard alternatives arise in decentralized fashion. Over the counter markets of buyers and sellers with existing relationships transact directly at first.

The role of decentralization in market development is the creation of standards for transactions as a bridge to centralized mature marketplaces. Creating standardized definitions of price, quantity, quality and contracts for goods accelerates over the counter liquidity and creates pockets of price transparency. As the market unfolds, conversations drive convergence of standards and invites participants organically.

Physical liquidity grows and demands risk management in the form of forward and futures markets. These markets demand centralization for both price transparency and liquidity to prevent manipulation The point of describing how market emerge in decentralized form and then transition to centralization – but this process is important to understand in the tech industry as it transitions to datacommodity industry through the adoption of utility models.

Operational Risk: Centralized Security vs. Decentralized Defense

Similar to the challenge of scaling service is scaling security. The diversity of threats and complexity of managing them makes large scale centralized security untenable. Like fighting the adaptive threats of Spam through designing new filters, centrally designed security solutions fail to keep up with environmental changes. Further, security requires expertise and there is a limited pool of human capital to provide it. As companies scale their openness to the environment to take advantage of Internet infrastructure, so to scale the demands to secure. The problem is if the costs to insure security run in parallel and even past the value of what they protect, innovation and infrastructure will be hampered by the security overhead.

Countering the trend of security overhead are emerging autonomic security solutions, for example those of Sana Security. Inspired by the design of the immunity systems in our own bodies, they provide a complex adaptive system that adapts to dynamic threats.

While security systems designers scramble to meet this escalating challenge, many would do well to reassess their fundamental design approach. The unfortunate fact is that the prevailing method of security systems design contains at least one fatal flaw: It assumes that system designers can adequately anticipate and create appropriate responses for every type of security breach possible within the system.

From an article by founder Steven Hofmeyr…

It's only human to think that we've anticipated all of the ways the systems we design can be compromised. After all, if we designed the system, then we must know it inside and out, right? The truth is that that vast majority of engineers and analysts cannot possibly predict the wide variety of viruses, worms and hacker attacks that could cripple their systems in the space of a few minutes…

To counter hackers' ability to stay one jump ahead of system designers, security managers are beginning to move beyond firewalls and IDSs [intrusion detection systems] to incorporate a set of technologies known as adaptive detection and response (ADR) systems. These systems deploy highly sophisticated monitoring agents to track operations at targeted file and operating system levels (similar to the way that the human body monitors its own layers of systems). Unlike IDSs, which look for known system and network threats, ADRs first build a complete profile of normal system operations, then continually monitor for any change in the underlying patterns of the system or network.

Now decentralized architectures cannot be applied everywhere, but the decentralized autonomic approach to security certainly has a prominent role in reducing risk and enabling scale.

Balancing Business Architectures

As the tech industry undertakes its fundamental shift to utility service, the gravity of decentralization is breaking down centralized industrial era structures. The Frontiers of System Economics are being explored. System architectures previously focused on economies of scale and speed increasingly shifts to realize scope and span. Business models undertake a similar shift.

The cost reduction benefits of decentralized architectures, as pointed out by Kevin Werbach are too prominent bottom-line benefits to be ignored. So too are the benefits of risk reduction. The challenge in truly understanding the right balance between centralized and decentralized business architectures is that we are just beginning to explore the top-line benefits of decentralization. The top-line benefits of centralized forms of scalable enhancement of existing revenue and generating new lines of revenue are well known. But the top-line benefits of decentralization will have to be the topic of a future post.

Supernova

Fri, 29 Nov 2002 15:19:27 GMT

I am attending Supernova, the most interesting conference I have seen in years, put on by Kevin Werbach & Jeff Pulver.

Unified by the theme of Decentralization, its on most of the technologies and business models that have made me an optimist again -- weblogs, web services, collaboration, P2P, grid computing & WiFi. I look forward to seeing old friends and new ones, let me know if you are going.

And the line up can't be beat:

Jeremy Allaire, CTO, Macromedia
Marc Benioff, CEO Salesforce.com
Sergey Brin, Co-Founder, Google
Andy Chapman, EVP, Narad Networks
Nick Denton, CEO, Weblog Media
Cory Doctorow, Evangelist, EFF
Ann Thomas Manes, Author and Former CTO, Systinet
John Hagel III, Consultant and Author
Dan Gillmor, Columnist, San Jose Mercury News
David Hagan, President, Boingo Wireless
Duncan Davidson, CEO, SkyPilot
Morgan Guenther, President, Tivo
Mike Helfrich, VP of Applied Technology, Groove Networks
Meg Hourihan, co-author, We Blog: Publishing Online with Weblogs
David Isenberg, Principal Prosultant, Isen.com
Karl Jacob, CEO, CloudMark
Dan'l Lewin, Corporate VP, Microsoft
Mike McCue, Chairman, TellMe
John Parkinson, CTO, Cap Gemini Ernst & Young
Yatish Pathak, Founder, SOMA Networks
Howard Rheingold, Author, Smart Mobs
Bill Robins, CEO, Stencil Group
Martin Rofheart, CEO, Xtreme Spectrum
Sean Ryan, CEO, Listen.com
Doc Searls, Linux Journal
Clay Shirky, Shirky.com
Dave Sifry, Co-Founder, Sputnik
Narry Singh, VP of Marketing, CommerceOne
Rod Smith, VP of Advanced Technology, IBM
Dave Winer, CEO, Userland

I am blogging the conference, but don't expect to be the only one.

The Autonomic Udell

Tue, 26 Nov 2002 18:18:02 GMT

If there was ever a set of metaphors subject to potential marketing its the biological:

Being and nothingness. Jon Udell: "'[A]utonomic' for IBM has become what '.Net' is for Microsoft: an umbrella marketing term that encompasses everything and nothing in particular." Good analysis by Jon as usual. I think both MS and IBM are onto the Next Big Thing, but they can't figure out how to explain it. The marketing efforts make the confusion worse. One can only hope that the companies listen to the technology and the markets as they go forward, rather than letting the slogans define what they build. [Werblog]

IBM has provided an 8-point definition of autonomic computing and if it sticks to it and journalists like Jon Udell remain vigilant, the value of these functional concepts are less like to dilute.

As grid computing takes hold, autonomic computing plays a vital role in enabling scalable service. Without complex adaptive systems, patterned after biological theory, managing the sheer number and interplay of elements, applications and policies becomes untenable. As processing, storage and applications move towards the domain utility service they would experience the same complexity constraints as utility bandwidth service.

Telecom carriers have been in the business of transforming utility elements into services for some time now. And in absence of adaptive systems they have experienced systemic failure. At the network element level, the vast majority of inventory records are inaccurate, despite advances in auto-discovery, leading over 85% of customer orders failing to achieve straight through processing to the point of provision. As a result, network and service management is largely a manual process. People don't scale well. And failure to automate results in high SG&A costs and an unsustainable business model. Autonomic computing uses decentralized agents to adaptively manage a system, and in contrast to centralized management, scales.

Back to marketing abuse. Last week I recieved a press release from Cloudmark claiming they cracked the Genetic Code of Spam. Essentially, Cloudmark uses collaborative identification of spam, the spam message is inspected for common semantics (a "spamGene"), which are aggregated as "spamDNA" and fed to a Bayesian classifier which determines when a message is blacklisted.

I was about to slam them, but called my friend and life science expert Zack Lynch for some fact checking. It is a stretch to call Cloudmark a complex adaptive system, let alone "evolutionary." And its a little rediculous to say they have cracked the genetic code. However, if you assume that the people enlisted for spam identification, those on SpamNet, are acting as autonomous agents and you buy into Bayesian statistical qualification as evolving, the metaphor holds to some degree.

From a business model persective, decentralized user feedback also enable the model to scale. These individual users experience vendetta-like satisfaction for pressing the "Spam" button, gain spam protection and enhance the enterprise solution. As the spam wars escalate, competitors with centralized management like Brightmail may experience diseconomies of scale.

Immersion at the Edge

Fri, 22 Nov 2002 20:00:34 GMT

In September, Sony released its VR headset for the Playstation 2 in Japan. Price point: $500.

Just a couple of years ago, similar motion-sensing stereoscopic headsets cost ten time that amount. Microsoft's Xbox Live kit ($50) includes audio headsets. If the future isn't fortold by porn, it is by gaming. As Moore's Law drives down the cost of Immersion devices at the edge, new possibilties emerge and the barrier becomes content creation. That's why I am so fascinated by Tele-Immersion, where the content is created by scanning an existing environment.

Now I always thought Tele-Immersion was a way off from getting outside the lab. But considering the deployment of Gigabit Ethernet in Metro Area Networks, recent advances in Grid Computing and the falling cost of potential edge devices -- we may be closer than we think.

IBM's Autonomic Computing Products

Thu, 21 Nov 2002 14:23:32 GMT

I.B.M. Releases Self-Fixing Computer Software. Autonomic computing is a major component of IBMs On Demand Computing initiative, the part that keeps systemic costs down. Their first releases are functions in their DB and App Server products. Look for similar advances to flow down the stack to support Grid Computing.

``All the IT staff does is define these business rules and the systems will then perform to those rules and make sure all the right things happen,'' said Miles Barel, IBM's director of autonomic computing. In addition to setting itself up and running, autonomic computing includes enabling systems to run in the most efficient manner and stay running, fixing itself when something goes wrong.

Grid-enabled Tele-Immersion

Wed, 20 Nov 2002 18:53:58 GMT

Utilizing a grid computing architecture of distributed processing, UPenn computer scientists have been able to achieve real-time Tele-Immersion [Science Daily]. They can to scan, process and present a room in real-time to enable virtual presence:

When they make their first public demonstration of tele-immersion at this week’s Super Computing 2002 conference in Baltimore, computer scientists will also attain another first: a “network computer” that processes data at a location far removed from either input or output....

“Shifting the computing from 10 processors at Penn to 1,240 parallel machines based in Pittsburgh will speed data processing 75-fold, turning tele-immersion into a true real-time technology,” said Kostas Daniilidis, an assistant professor of computer and information science at Penn. “It now takes our tele-immersion system roughly 15 seconds to scan, process and display the entire volume of a typical room. With help from the Pittsburgh Supercomputing Center, that time will shrink to 200 milliseconds.”

The most far-out crazy idea of Internet 2 is finally becoming a reality, or should I say, a virtual reality. Distributed Immersion as an application has the potential for changing more than how we communicate -- but how we learn, train and design.

On Demand Innovation Services

Wed, 20 Nov 2002 16:11:27 GMT

IBM Research to offer consulting services. Big Blue unveils On Demand Innovation Services unit [InfoWorld: Top News]

Initially, the On Demand Innovation Services will be limited to four areas, IBM said: Advanced Analytics, modeling scenarios to solve emerging problems; Business Process Transformation, aligning business strategy with IT investments; Information Integration, and Experimental Economics.

IBM research is the largest R&D unit that files the most patents. Making R&D customer-facing is more than an attempt to grab more services dollars. It gives researchers to real world exposure to large scale distributed architectural challenges to advance their grid computing initiative.

Fri, 15 Nov 2002 18:22:59 GMT

Sun springs for software maker. The company says it will acquire Terraspring to further its N1 initiative to provide businesses with increasingly autonomous computer systems. [CNET News.com]

Profiting in a Datacommodity Industry: I

Fri, 01 Nov 2002 19:45:24 GMT

While I am working on a whitepaper on the larger subject, a comment on my post of IBM's announcement [also see their whitepaper: Living in an On Demand World] prompts me to elaborate:

Recently prominent IT companies (IBM, Sun, HP, Microsoft) have announced developments in utility computing, grid computing, virtualized data centers and web services. The importance of these new models cannot be overstated – they are enabling a new phase of networked computing for efficient management of Datacommodities.

Storage, Processing and Bandwidth will trend towards commoditization while Software and Services will trend away from it. The technical standardization of Mbs, MIPS, Mbps, & MHz demanded by customers to reduce their technology risk and for vendors to realize production economies create the characteristics of physical commodities. Storage, Processing and Bandwidth can be considered Datacommodities. The turbulence of the business environment and consumer tastes, on the other hand, requires constant change. Software trends towards commoditization as well, specifically towards standard protocols and components. But the custom assembly of these components, adapting systems to this environmental change is the domain of software and services, a trend away from commoditization.

The Tech Industry has always resisted commoditization, by creating new overlays, bundles and marketing tactics. But a fundamental change has occurred that compels a new strategy of embracing commoditization. A critical mass of Datacommodities have been standardized as fungible physical commodities and made accessible through communications infrastructure and standard protocols. Since this mass exists, there is no going back. This also comes at a time where customers have greater power over vendors to unbundled solutions than before. And new network, data center and web services management systems that virtualize underlying commodity components allow them to aggregate bundles according to their requirements at any given time. With component commodities accessible and bundling shifted to customers, this customer-driven commoditization is a reality the industry must face.

Although it seems counter-intuitive, there is the potential for even greater profit in the Tech Industry than before, but it requires change. Providers of technologies that are trending towards commoditization need to adapt their business models to that of lean infrastructure providers while providing new value added services such as risk management. Providers of software and services need to adapt to leverage underlying commodities while changing how they serve their customers.

IBM's Commodity Managment Model

Thu, 31 Oct 2002 18:17:28 GMT

There is some real substance behind IBM's new campaign. Palmisano outlines IBM's $10 billion initiative [InfoWorld: Top News] See the presentation.

This marketing genius can viewed from a few functional perspectives:

1. MarCom: Great teaser campaign ("Humor translates as confidence, and that works well with I.B.M. these days," the Ad Man said) that works well in today's pessimistic environment. Even better positioning of "on-demand computing" as a natural evolution of computing to satisfy business requirements in a turbulent world.

IBM’s Definition of an On-demand Business: An enterprise whose business processes

– integrated end-to-end across the company and with key partners, suppliers and customers –

can respond with speed to any customer demand, market opportunity or external threat.

2. Product Marketing: realizing an integrated commodity management model

3. Product Management: standards-based integration (for span), virtual management (for scope), utility aggregation (for scale) with spot purchasing (for speed).

IBM has presented a compelling case for how their vertically integrated model will function in the commodity tech industry. They have embraced inevitable, what I think is the sea change after the bubble:

Storage, Processing and Bandwidth will trend towards commoditization while software and services will trend away from it. More on that tomorrow, this is getting fun.

Scope & Span: Web Services, Loose Coupling & Functional Commoditization

Tue, 22 Oct 2002 18:21:58 GMT

The trend towards component-based software and web services is an evolution of software to realize economies of Scope and Span.

App Servers have embraced J2EE (and MS embraced its .NET) and development frameworks have evolved to support component-based software development. XML standards provide further functional defintions of component commodities. Components can be functionally repurposed with minimal transaction costs, realizing economies of Scope and significant risk reduction

Web Services goes beyond scope by leveraging XML standard interfaces and common Internet protocols to realize span in distributed architectures. With standard definitions and interfaces, essentially becoming commoditized, components can be efficiently sequenced with low transaction costs to realize Economies fo Span.

The value of this model is the functional commoditization. Functional, in that the technology can be repurposed at a low transaction cost. Commoditization, in that it has a standard definition and interface. Add a contract and business processes to the underlying functionality and commodity and you have a service. Functional commoditization is another way to describe Loose Coupling.

We are a long way from the vision of portfolio management of distributed software components. Unlike managing a portfolio of financial securities, technology assets posess systemic characteristics. A portfolio of technology assets realizes diversification benefits from both being diverse and the properties of Scope technologies. The combinatorial value of Span technologies realizes network effects within the portfolio.

Today's evolution in software architecture towards Service Oriented Architectures marks a shift from more static systems that emphasized Speed and Scale towards dynamic systems that realize Scope and Span. The shift is made possible by the adoption of standards, but is driven by change requirements of competitive turbulence.