On-Demand Software

InfoWorld has a special report. “Although the on-demand model is still evolving, many of the problems that scuttled the first round of ASPs have been or are being solved. Web services have helped make customization and integration easier. Identity management is bridging user provisioning between provider and enterprise. And various technologies much of them developed by a handful of ASP survivors are making hosted provider platforms more reliable, scalable, and secure…Such advances lead many to identify on-demand software as the next big thing, although the number of current deployments is tiny compared with the software market as a whole.”

Verizon’s Broadband Plans

Knowledge@Wharton writes:

On Oct. 21, Verizon announced that it would expand its fiber-to-the-premises (FTTP) service to homes in Virginia and parts of Delaware, Maryland, Massachusetts, New York and Pennsylvania. The service is already offered in California, Florida and Texas. The goal for Verizon – one of the original Baby Bells with annual sales now topping $70 billion – is to reach one million homes and businesses with the new technology by the end of the year and two million by the end of 2005. SBC Communications – another former Baby Bell, which dominates the southwest and western part of the U.S. – is planning a similar rollout to offer video service in 2005. According to a report in the November 17 New York Times, SBC will pay $400 million to Microsoft for software that can be used to deliver TV programming over high-speed lines.

FTTP, based on the same fiber-optic technology used in telephone networks, offers speeds up to 20 times faster than current digital subscriber line and cable technology. Here’s why: Current telecom broadband connections – known as digital subscriber lines (DSL) – are slowed by the traditional copper wiring used for telephone service. Although a connection may start on a fat fiber-optic pipe, it ultimately goes onto a slower copper wire before entering a household. It’s like connecting a fire hose to a straw. Verizon’s plan to run fiber-optic cable directly to homes would connect a broadband fire hose to a home, enabling video on demand. Its broadband Internet access services will offer download speeds of up to 5 Mbps (megabits per second), 15 Mbps and 30 Mbps for a bundle of services at a base cost of $34.95.

“DSL was a lame technology because it was fiber going to copper wire,” says Wharton business and public policy professor Gerald Faulhaber. “The connection is only as strong as the weakest link. I’m surprised DSL did as well as it did. At least the telecoms leveraged DSL to get into broadband.”

The big question is not whether Verizon, which is spending $800 million on the FTTP rollout, can install super-fast broadband pipes, but whether it can bundle video with Internet access, local and long distance phone service and wireless to poach customers from cable providers. “In the big picture, everyone in telecommunications will have to provide a full bundle and compete in TV and voice,” says Wharton legal studies professor Kevin Werbach.

the company’s FTTP efforts could reinvent video service. With a fiber-optic pipe running into homes anything is possible, especially at speeds that could reach 30 mbps to 100 mbps, says Klugman. Indeed, the way consumers get TV might change. Consumers could pick and choose channels and access independent networks produced by amateurs armed with video cameras over the Internet. “Once the pipe is fat enough, you have convergence and can deliver anything,” says Werbach. “For instance, I pay Comcast for 200 channels, but I’d be more than happy to have constant access to two or three channels and pick a few on demand from there.” In one regard, Verizon could relegate video to just another part of a big bundle. “If you think of video as part of a vast stream of content from commercial and amateur sources, TV may look different.”

Renewable Energy

O’Reilly Network suggests that it is the next opportunity for Silicon Valley:

The basic technology required to translate solar energy into heat and electricity has existed for decades (centuries in the case of wind power). Solar electricity can be produced by means of photovoltaic arrays (based on the photoelectric effect discovered by Albert Einstein) or by using conventional heat engines whereby solar energy is used to power a turbine. Solar heat is simpler still, requiring only a blackbody and a mechanism for storing and transferring heat.

The basic technology has been built and proven, and even without further investment, some forms of renewable energy, such as wind electric, are nearly breaking even with fossil fuels. They are actually cheaper when the real costs of fossil fuels are taken into account.

Global spending on energy represents a significant percentage of gross economic activity, especially when multiplier effects are taken into account because some form of electrical, mechanical, or heat energy is consumed in every stage of the production and delivery of a product or service. Per-capita energy use worldwide will increase as advanced technology and automation spread to developing countries. Gross usage will also increase as a result of population growth. We are already seeing early signs of competition for fossil fuel resources by first- and second-world countries. While timing the market is risky, it is reasonable to predict that demand for energy is not going to decrease in the years ahead, while available supply is not going to increase dramatically.

This may present an opportunity for the Bay Area technology industry as the computing industry matures and becomes a commoditized consumer product business.

IDC’s 2005 Predictions

Here. In the list:

  • In the infrastructure software world, systems vendors like IBM, HP, Sun, and EMC will continue to buy up companies, large and small, to fill out their software portfolios and create a complete dynamic infrastructure platform. Likewise, independent infrastructure software players like Microsoft, CA, and Novell will spend 2005 expanding their offerings through mergers, acquisitions, and alliances. According to Gens, The interesting question is: Are these two communities that have depended on each other for success headed for a showdown? And will Dell, which has stayed largely out of the software game, be forced to follow IBM, HP and the others?

  • In the $100 billion application market, it will become clearer that competition is moving away from developing the killer app. Instead, applications software vendors like SAP, Oracle, and PeopleSoft, and middleware vendors including IBM and BEA, will continue jockeying to define and own the killer application platform.

  • The consumer space will continue to be dominated by the latest digital devices, with new handheld game consoles, hard-disk drive MP3 players, and digital cameras leading the market. Broadband adoption will also make further gains as price points fall further.

  • Educating India

    Atanu Dey has yet another brilliant post – this time on how to educate India’s illiterates.

    Adult education, for instance, is a crying need in rural India. You can, of course, use a variety of means of achieve that, ranging from blackboard and chalk, to radio and TV, to PCs with literacy software. Examining the economics of the situation could well reveal that blackboard and chalk is the most appropriate means. For a total capital expenditure of Rs 500 and an operating expenditure of Rs 1000 per month, you could make 20 adults literate in 6 months. Per capita cost would then be about Rs 325 (about $7.) Let’s do the numbers if you were to use a PC. Cost of hardware and software Rs. 20,000; power supply for the PC: Rs. 20,000; trained manpower and maintenance per month: Rs 3,000. Total cost: Rs 58,000. Per capita cost: Rs 2,900 (about $65.)

    Of course, one could always use the PC for a number of uses, not just adult education. Instead of just educating 20 people, one could use it more intensively by say using it 12 hours a day and thus train 5 batches for a total of 100 people. Still, the PC method would cost Rs 70,000 and the blackboard method will cost Rs 25,000. By using the low-tech method, you save Rs 45,000. Here is an idea. Give Rs 450 as an incentive to the people: become literate for free and when you complete the course, you take home Rs 450. Total cost to the state: Rs 70,000, the same as the high-tech solution. Same expenditure but guaranteed different outcomes.

    In the low-tech scheme, you give money to the rural adults. This is an incentive to them and better still, they in turn, spend the money locally which stimulates the local village economy. They buy food perhaps which helps out the farmers. Compare that to the high-tech scheme. The money goes to the manufacturers of hardware and software, which basically means Intel, Microsoft, HP and so on.

    He also gives a framework to think about problems:

    1. First, identify the problem as precisely as you can. For instance, too many illiterate people in rural areas, for example.

    2. Diagnose the problem. This step is most often glossed over. What is the cause of illiteracy? Is it because they do not have PCs? Or is it because they don’t have teachers? Or maybe because they don’t have time to go sit in a class because they have to earn a living by toiling in the fields? Or is it because the upper caste people prevent the lower caste people from going to class?

    3. Apply the appropriate remedy that fits the diagnosis of the problem. If it was really a lack of PCs in that village that led to illiteracy, then by all means get those PCs Fedexed immediately. But the vast majority (about 99.99recurring percentage) of humanity has become literate without the aid of PCs. So it is unlikely that the lack of PCs is the cause of the illiteracy. It is more likely something else.

    TECH TALK: Tomorrow’s World: Five-in-one

    Our five-dimensional world of tomorrows commPuting utility comprises:

  • network computers as zero-management access devices
  • ubiquitous broadband wireless networks
  • server-based computing and storage grid as the underlying infrastructure
  • centrally accessible services built around hosted software and content
  • utility-like subscription-based payment model

    This utility combines the best of multiple models that we see around us:

    i-modes platform: One of the earliest successes for providing value-added services for end users was NTTDocomos i-mode mobile service in Japan. What i-mode did was create a platform for a wide variety of service providers to create and offer innovative creations through its platform to the mobile users. I-mode in turn took care of the billing and did a revenue share with the service provider. I see the commPuting utility operator as playing a similar role for software and content.

    Salesforces hosted software: Salesforce has demonstrated the success of the ASP (application software provider) model. It offers business applications on its centralised platform at prices starting at $65 a month per user. In essence, software has become a service. Extend this to the operating system and the desktop applications. Imagine Windows and Office being available for a few dollars a month off the centralised grid. Not only does this take care of piracy (akin to the way Chinese providers offer online gaming) but it also helps create opportunities for Microsofts existing developer base by offering them a way to vend their applications.

    TiVos time-shifted content: TiVo demonstrated to the world that there was another way to watch television. On-demand. Time-shifted entertainment can be extended to mean any kind of content, available whenever the user wants. In essence, any display becomes a TV screen when content is delivered off a server. Content does not have to be limited to just what the television networks broadcast, or what movies exist. Anything which can be digitized can be distributed (Netflix-style) to servers close to where the users are.

    Googles desktop ads: As the various search engines battle to deliver relevant ads to users, the ultimate prize is the user desktop. While Google doesnt yet do ads on the desktop, I believe it will do so in the near future as will the other search engines who are rapidly morphing into ad-delivery networks. The desktop offers a profiled user. And guess what in our world of tomorrow, the desktop is served from the grid, making it easier to show highly relevant and targeted ads, offering the potential to subsidise access costs for users.

    Yahoos personalisation: Every user is different. What Yahoos personalisation through My Yahoo offers is the ability to put together a page based on ones interests. This same customisation needs to be available via the grid. Think of it as my dashboard available not just on the computer but also on the cellphone. There is no need to sync data across devices, since everything is centrally stored. Alerts can be delivered via email or IM (if the user is online) or via SMS (if the user is offline). Welcome to the real-time world where everyone is always reachable.

    Tomorrow: Five Markets

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