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Wednesday, January 8, 2003
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Clay Shirky gets it right, I think in predicting and analyzing the the future of WiFi and the imminent crash of traditional phone services. (Crash, not demise. Old services rarely vanish. You can still send telegraphs...I think.)
To understand what's going to happen to the telephone companies this year thanks to WiFi (otherwise known as 802.11b) and Voice over IP (VoIP) you only need to know one story: ZapMail. The story goes like this. In 1984, flush from the success of their overnight delivery business, Federal Express announced a new service called ZapMail, which guaranteed document delivery in 2 hours. They built this service not by replacing their planes with rockets, but with fax machines.
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ZapMail had three fatal weaknesses.
First of all, Federal Express didn't get that faxing was a product, not a service. FedEx understood that faxing would be cheaper than physical delivery. What they missed, however, was that their customers understood this too. The important business decision wasn't when to pay for individual faxes, as the ZapMail model assumed, but rather when to buy a fax machine. The service was enabled by the device, and the business opportunity was in selling the devices.
Second, because FedEx thought of faxing as a service, it failed to understand how the fax network would be built. FedEx was correct in assuming it would take hundreds of millions of dollars to create a useful network. (It has taken billions, in fact, over the last two decades.) However, instead of the single massive build out FedEx undertook, the network was constructed by individual customers buying one fax machine at a time. The capital expenditure was indeed huge, but it was paid for in tiny chunks, at the edges of the network.
Finally, because it misunderstood how the fax network would be built, FedEx misunderstood who its competition was. Seeing itself in the delivery business, it thought it had only UPS and DHL to worry about. What FedEx didn't see was that its customers were its competition. ZapMail offered two hour delivery for slightly reduced prices, charged each time a message was sent. A business with a fax machine, on the other hand, could send and receive an unlimited number of messages almost instantaneously and at little cost, for a one-time hardware fee of a few hundred dollars.
There was simply no competition. ZapMail looked good next to FedEx's physical delivery option, but compared to the advantages enjoyed by the owners of fax machines, it was laughable. If the phone network offered cheap service, it was better to buy a device to tap directly into that than to allow FedEx to overcharge for an interface to that network that created no additional value. The competitive force that killed ZapMail was the common sense of its putative users.
Then he shows the analogy: WiFi devices are like fax machines: to be purchased and installed, one node at a time, by end-users not big providers. The wireless network will emerge as a grass roots infrastructure (like the humongous fax network we don't even notice).
And because ubiquitous internet plus Voice over IP means is a grassroots, lowcost, alternative to phone service, traditional telco services are in big trouble. Its not just that an alternative technology is better. Its that they are not even in a good position to sell that technology.
What isn't Shirky doesn't make explicit (so I will here) is that there are huge synergies between ubiquitous WIRELESS internet and VOIP which will just add fuel to the fire.
9:32:07 AM 
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Academic Googling.
Steve Hitchcock, Arouna Woukeu, Tim Brody, Les Carr, Wendy Hall and Stevan Harnad, Evaluating Citebase, an open access Web-based citation-ranked search and impact discovery service. A preprint released this month.
"Google, the most popular search engine among Web users, has built its success on a tool borrowed from the scholarly community: citation analysis. Google treats links as citations, and ranks search results on the basis of the number of links to Web pages. Citebase is a new citation-ranked search and impact discovery service that returns Web-based citation analysis to its roots by measuring citations of scholarly research papers. Citebase can be used to rank papers by impact, and like Google it does this for pages that are openly available on the Web, that is, papers that are freely accessible and assessable continuously online by anyone who is interested, any time. Other services, such as ResearchIndex, have emerged to offer citation indexing of Web research papers. In the first detailed investigation of the impact of an open access Web citation indexing service with users, Citebase has been evaluated by nearly 200 users from different backgrounds. This report analyses and discusses the results of this study, which took place between June and October 2002. It was found that within the scope of its primary components, the search interface and services available from its rich bibliographic records, Citebase can be used simply and reliably for the purpose intended, and that it compares favourably with other bibliographic services. Coverage is seen as a limiting factor, and better explanations and guidance are required for first-time users." [FOS News]
I was one of the 200 evaluators and I must say I was pretty impressed. Of course, coverage is the key issue for this technology to come into widespread use. I believe physics is the only area that is well-covered at present. [Seb's Open Research]
9:14:50 AM
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Blogmapping. Ross has three good posts about a social network mapping project he's doing jointly with Valdis Krebs. By now surely my readers have all heard about it - he got blogged to death. Two more thoughts: some people link more consistently to others, which indicates closer relationships. The strength of ties could be reflected in the visualization, perhaps using node proximity or thickness of lines. And a better blog map might be built out of the blogging ecosystem dataset, which I believe is available for download. [Seb's Open Research]
9:13:36 AM
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Fine Art Photographers Pinhole Photography
 "To simplify these cameras as much as possible I made them out of the 11x14 inch photo-paper itself. There is no film in the camera because the camera is the film. Like a salad bowl made of lettuce leaf, and consumed with the meal, the camera doesn't exist after its utility is fulfilled. There is no machine. It is more of an arrangement than a thing." [via Kottke, via Boing Boing Blog]
[The Shifted Librarian]
9:11:57 AM
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Customer-Owned Networks. A great article by Clay Shirky comparing the current telecom industry's efforts to offer additional services to FedEx's attempt in the 80s to offer a fax service called "zapmail". What FedEx didn't understand was that faxing was a product, and not a service. Most people realized this and simply went out and bought a fax machine, rather than paying FedEx to fax for them. The customers were the company's own competitors, and they were the ones who built and owned the "fax network". FedEx thought they needed to spend millions of dollars to build out their own fax network, when end-users did it themselves. Fast forward to today, and you see the telephone companies making the same mistake in misunderstanding what will happen with both WiFi and VoIP. Shirky makes the point that if the residual value of the network is captured by the user, then they should also be the builder of the network. Definitely worth reading. [Techdirt Corporate Intelligence: Techdirt Wireless News]
9:04:52 AM
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Making Pay Phones Pay. A couple weeks ago we had an article about the death of the pay phone. Now, Fortune is talking about why companies that run pay phones should be turning them all into WiFi hotspots. The infrastructure is there (or almost there...) to just turn the phone lines into DSL broadband lines, and add a WiFi router. Most payphones are in high traffic public areas, which are perfect for hotspots. Already, Bell Canada is doing this with some of their pay phones. The problem, though, still comes down to business model. It's still not convincing that companies will be able to make enough money off of commercial WiFi hotspots when there are an increasing number of open, free hotspots. [Techdirt Corporate Intelligence: Techdirt Wireless News]
9:02:47 AM
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Wireless Is Star Again at CES. This year's Consumer and Electronics Show in Las Vegas will unveil a host of new products for the home and office, but the focus is pretty much the same as in 2002. Wireless technology continues to grab most of the attention. By Elisa Batista. [Wired News]
9:01:06 AM
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© Copyright
2003
Jon Schull.
Last update:
10/23/03; 7:40:33 PM.
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