Tokyo to Las Vegas is a big leap in distance and culture. Tokyo features a risk-averse, polite culture based on tradition. Las Vegas is based on money, gambling and consumption. I visited both cities in the past few weeks and, from a technology perspective, found a reversal in my expectations. In many ways, Japans mobile, digital-driven communications culture is far ahead of the technologies on display at last weeks Interop show in Las Vegas.
Interop is much reduced in size from the glory of years past, but its on the rebound. (Gone is the old, cumbersome NetWorld+Interop name.) The shows sponsors have sufficient optimism to plan a second Interop show for New York in December. Over its 20-year history, Interop has worked its way thematically up the OSI seven-layer network stack. Gone are the days of nerdy engineers struggling for hours to get two incompatible e-mail systems to talk to each other. The shows centerpiece network structure now features super-high-bandwidth speeds; its designers have aspirations of building the real-time enterprise.
This shows theme was best exemplified by the keynote speech of Cisco Chairman John Chambers. Displaying his usual charisma and boundless, walk-through-the-audience enthusiasm, Chambers talked about the next level of business productivity through IT, which he described as “interactive-driven” technology investment. The interactive level requires an integration of the OSI stack and focuses on the application, process and management levels of enterprise technology. If the technology industry is successful in fusing the OSI stack instead of treating each level as a distinct set of products and services, productivity improvements on the order of 10 percent per year are not impossible goals for businesses to achieve, Chambers contends.
The focus on the application and process levels is a long way from the routers, switches and load balancing systems that form the historical foundations of both Interop and Cisco. And the application and process levels are areas in which Cisco is not particularly strong right now, but enterprises will never get to the higher levels unless the fundamental foundation is in place. Today the attention on the foundation layer largely revolves around security and product integration; Cisco and its competitors are paying a lot of attention to such issues.
So, for Cisco and the Interop attendees, the slow but steady method of moving methodically up the OSI stack is a conservative and predictable way of encouraging technology investment. Contrast that with Japan, where in the face of an entrenched, cultural conservatism, competitors are taking revolutionary approaches to product development and marketing. Softbank (which once owned eWEEK and our publisher, Ziff Davis) has had more ups and downs than a roller coaster. Lately, the company has been experiencing a big up while becoming a major deployer of broadband access in Japan. The company has given away broadband modems, VOIP phones and, most recently, Wi-Fi-based phones as it carves an increasingly bigger slice of the Japanese Internet access market. The applications business that Chambers and others seek wont be manifest until the devices to access and run those applications are broadly distributed. Giving the devices away is one way to force a reluctant market forward. More important, the big emerging markets of China and India will likely follow the model of giving the devices away and requiring subscription-based applications, where the real revenues will be found.
Can a business segment become so conservative that the conservatism itself propels innovation? That seems to have taken place in Japans telephony and Internet access market. The same could happen in the United States. As Chambers said, the cost of technology acquisition breaks down to about 25 percent for the product, 50 percent for support and 25 percent for physical space to house the technology. Perhaps, rather than looking at reinvesting in new integrated systems and appliances, customers will be attracted to service-based offerings, which remove all those product, support and space costs in exchange for a monthly subscription fee.
Editor in Chief Eric Lundquist can be reached at [email protected].