Internet Convergence 2.0 - Ten trends
The mass media has given a lot of airtime to Internet failures, the overpromise of the Internet as a transformative force in business, and to the real-world pains that businesses face in a slow- to no-growth economy. Despite this gloomy backdrop, a range of innovative trends have continued to blaze forward. Each trend is powerful on its own, but when combined with the others, we see a dynamic, mutually reinforcing convergence.
Internet Convergence 2.0 - Ten trends
The mass media has given a lot of airtime to Internet failures, the overpromise of the Internet as a transformative force in business, and to the real-world pains that businesses face in a slow- to no-growth economy. Despite this gloomy backdrop, a range of innovative trends have continued to blaze forward. Each trend is powerful on its own, but when combined with the others, we see a dynamic, mutually reinforcing convergence.
A Short History of Technology and the Web
Many people equate the rapid adoption and growth of the Internet to the introduction of the World Wide Web and Mosaic 10 years ago, noting that until then the Internet wasn’t a useful or usable technology. But the web was merely fuel for the fire of a collection of trends that were preconditions to the commercial Internet’s birth. Some of these trends included:
The widespread availability of affordable personal computers. Rapid consumer adoption of PCs began in 1994 and 1995 as price points and functionality made these viable household goods.
Low-cost connectivity. Until 1994, dial-up connectivity was largely a niche phenomenon for computer enthusiasts and business professionals. After 1994, large-scale connectivity infrastructure investments by AOL, Microsoft, and thousands of smaller Internet service providers (ISPs) provided an affordable means to get online.
Ubiquity of LAN technology. In the early to mid-1990s the local area network (LAN) became mainstream technology for organizations. Adopting LAN technologies was necessary so that corporations could connect to wide area networks. This was the building block for the Internet.
Mass-market server software. In 1994, commodity server platforms were coming into place with the introduction of Pentium-based servers, Windows NT, and a wide range of free UNIX-based software (including FreeBSD and Linux). These new hardware and software platforms made it possible for a range of companies and developers to build server software and applications affordably. Up until this time, deploying a web server (necessary for Internet adoption) was a highly priced, highly complex proposition.
Digital media creation tools. By the mid-1990s a wide range of PC software applications had emerged for creating digital media such as graphics, text, and audio. Digital media was another necessary component of the first phase of content for the Internet.
Individually, each of these trends is significant—each a force driving the growth and development of the PC and computer industry. But when combined, these trends create a growth dynamic with incredible power and thrust.
An Emerging Convergence
To an outside observer, the technology industry might look like a graveyard or minefield. It also seems to be a marketplace where everyone is on the defensive—they’re risk-averse and conservative, and they’re trying to keep costs down.
As an insider in the industry, however, I see the marketplace quite differently. Quietly, over the past several years, significant innovation has been occurring and it’s resulting in a sort of resurgence of passion and energy that feels and looks very much like the world in 1994 and 1995.
While there is no doubt that the growth dynamics will initially be more muted than they were during this past growth phase, I’m optimistic that the current set of emerging trends will usher in a new Internet. And, like the first-generation Internet, it is the mutually reinforcing dynamics of these trends that will drive new growth and opportunity.
10 Trends for Internet 2.0
There appear to be at least 10 significant trends that constitute this next-generation Internet opportunity.
Broadband
If you polled the industry a year ago, the consensus would have been that broadband had flopped and that it would take much longer to get to a high-speed consumer Internet than originally expected. In reality, the opposite is true.
2002 was a record year for broadband adoption. Industry wide growth has been nearly 80% year over year, and broadband access has become the fastest-growing component in the telecommunications sector. This adoption reflects the fact that the Internet has become central to our daily lives and because the value of an always-on, reliable connection in and of itself is compelling.
Broadband adoption is currently the number one focus for cable, DSL, wireless, and portal companies. And this adoption creates a massive new opportunity for media, software, and services delivered over the Internet. In the next year, over 50% of online US households will have broadband.
Wireless
Although many have declared it dead and buried multiple times, wireless interest and adoption is alive and well. There are reasonably priced data services in every geographical region, and mobile handset technology (hardware and software platforms) is now rich enough to deliver real consumer value. Unlike the low-quality, low-speed experience of WAP, this new world of smart phones includes multimedia messaging, integrated cameras and other digital media support, and software runtimes like BREW, J2ME and Macromedia Flash. It’s creating a wave of innovation and growth. The mobile landscape is now attractive and real.
There’s also the revolutionary growth of 802.11b devices and networks known as Wi-Fi. The level of investment, innovation, and growth in broadband wireless delivered using Wi-Fi is nearly identical to the growth in ISPs, TCP/IP, and Internet access in 1994 and 1995. Although the ultimate impact of Wi-Fi is unknown, it is creating a new set of capabilities and applications for connected software, communications, and media.
Devices
In addition to the innovation and advances in mobile devices, we’re continuing to see robust growth and adoption of other new device categories. The largest and most significant is the adoption of digital lifestyle devices such as digital cameras, camcorders, and digital music players. This creates for the potential for new sources of content and new distribution channels for media.
As broadband and Wi-Fi penetrate the home market, they are instigating a new wave of innovation around Wi-Fi devices such as wireless security cameras, Internet stereos, video phones, and even Wi-Fi–enabled music devices for automobiles.
This massive proliferation of new Internet-connected devices is driving new opportunities for application providers and media and communications companies and challenging our age-old views and approaches to consumer electronics.
Rich Clients
To many people, the level of innovation in client technology on the Internet has appeared to stall; HTML 4.0 and Internet Explorer seem to provide the platform for web experiences. In reality, innovation has moved steadily along, primarily led by the now ubiquitous adoption of rich client technology such as Macromedia Flash Player.
Rich client technology can transform the quality and boost the usefulness of Internet applications, media, and communications because it combines desktop-like experiences with the deployment and content-rich aspects of the web. And, in the coming year, Macromedia Central will extend this model further by providing a new client platform for the distribution and use of Internet software and media. Also this year, Microsoft will describe and promote its .NET client technology as a post-browser approach to Internet applications and content.
Web Services
Of all the trends discussed here, web services have certainly garnered the highest level of hype and interest in the industry. This is warranted, as the birth and proliferation of web services technology into the mainstream promises to radically change the usefulness of software in the world.
Within the next year, nearly 100% of new runtimes (client and server) will be SOAP-capable deployment platforms. This means that nearly any piece of code running anywhere in the world can invoke any other code on the network. This new model of application interoperability is affecting dozens of software markets. It provides the potential for new levels of productivity, integration inside of enterprises, and most importantly, it lays the foundation for interenterprise applications at a level we’ve never seen before.
Progressing side by side with the web services trend is the rapid adoption and popularity of microcontent formats such as RSS. Primarily used in the context of weblog or blog software, RSS and sister standards like RDF are driving the Internet towards well-structured, easily searchable and sharable data.
Unlike the 1.0 Internet, hacked together with logic and data isolated in stovepipes, web services and microcontent unlock the value of software and data and foster new economic models of cross-company interchange.
Real-Time Communications
The Internet is rapidly evolving from a one-way and text-based medium to a rich, multi-directional and real-time communications environment. Over the last several years, there has been mainstream adoption of real-time communications technology such as instant messaging in consumer and corporate settings. And while instant messaging may be a major driver for change, there’s a lot of focus on new platforms that enable real-time communication and collaboration within custom applications.
At the forefront of this innovation are Macromedia Flash Player and Macromedia Flash Communication Server. Flash Communication Server provides the first broadly available platform for building real-time collaborative user interfaces that incorporate multiway text, audio, and video as communications forms. Additionally, other software and online service companies such as Microsoft, Yahoo, IBM and AOL are providing their users with real-time communications applications.
Hosted Applications
The model of delivering software as a hosted service continues to gain traction. Although many dismissed this approach as a failure only a couple of years ago, rich clients’ popularity and web services’ ability to integrate hosted applications into an enterprise has promoted the adoption of hosted applications. This growth promises to transform the use of software in corporations around the world.
Big Data
Over the past several years, the price to value ratio on storage and bandwidth has improved dramatically, expanding what you can deliver to consumer PCs over broadband. PCs now have enormous amounts of plentiful storage, and, on the delivery side of the equation, it’s also economical to deliver and manage large quantities of rich media, including high-quality video. The trends on this front are only accelerating.
Paid Content
This new Internet environment is seeing the adoption of paid content as a business model for the Internet. Rich clients and broadband now make it possible to build high quality digital assets, and consumers seem willing to pay.
Unlike Internet 1.0’s “information wants to be free” mantra, people now willingly pay to download music and to subscribe for access to quality content or games and entertainment. This shift from free to paid content is dramatic and symbolizes the maturity of the Internet as a media and commerce platform.
For example, RealOne has over 1 million paid subscribers for their video on demand Internet service. And dozens of other media brands are experimenting and seeing success. AOL has made it clear that their future is in broadband-enabled, high-quality paid services. Yahoo is experiencing robust growth in premium services, and the broadband ISPs are betting that paid content will form the next wave of profit growth, expanding the current access fee-only model. To make it easy to get into the game, Macromedia Central includes a model for creating paid content services and applications.
The Software Manufacturing Economy
Nearly every new Internet opportunity is based on shifts in the how software is manufactured and sold. The people, places, frameworks, and materials used to create and distribute software are changing dramatically:
Component-based software. The rapid adoption of Java and .NET runtime and development platforms make it possible to easily design, compose, and integrate software assets.
Open source. Open source continues its forward march, giving developers access to low-cost software manufacturing and greater control over the code that applications are built upon. Because of this, application ISVs are opting for open source materials such as Apache Axis, Tomcat, Linux, and MySQL.
Global outsourcing. Economic pressures are driving software companies to rely heavily on global outsourcing for software manufacturing. When combined with open source as a material and component architectures as a design model, it is becoming easier than ever to construct complex software projects overseas.
Web services and hosted applications. Web services and hosted applications now deliver software products online, eliminating the need for packaged products. This shift redefines product sales and distribution channels for software and provides radical new economies of scale.
An Optimistic Outlook
As someone who experienced the birth and rapid growth of the first-generation Internet (“Internet 1.0”), I can’t help but see the parallels to today. A collection of disruptive trends are combining to create a new platform of opportunity surrounding the new Internet—one that dramatically surpasses the capabilities of the 1.0 Internet, but which at the same time fulfills many of its original promises.
This article provides a snapshot of how current trends work together as a foundation for a much more exciting and dynamic Internet than anything we’ve seen so far. Over the next few months, I’ll explore these trends, their mutual interdependence, and how Macromedia technologies will play a role in their growth and adoption.
August 31, 2003 at 05:24 AM in Web/Tech | Permalink
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