Slashdot Mirror
McNealy Says Telcos Falling Behind in Net Race
BobB-nw writes "Telecommunication companies need to go beyond just providing bandwidth and look into acquiring Internet destination sites that are heavily trafficked, says Sun Microsystems Chairman Scott McNealy. "I have explained to every telco that either you become a destination site, or the destination site will become a telco," McNealy said at a news conference at Sun Microsystems' Worldwide Education and Research Conference in San Francisco on Wednesday."
First they need to actually provide bandwidth, not just throttle their heaviest users back.
Do you think he'd be willing to let telcos with their huge amounts of cash buy some hardware from him?
How kind for pointing this out.
Wait, wasn't this AOL back in the day?
Companies such as Yahoo, Google and others are already moving into the pipeline, further making telcos more and more irrelevent to the core business of the internet. I easily imagine the telco's, cable co's, even RIAA/MPAA becoming fringe players in the future, as information truely takes on a new dimention. It is evolve or die time.
Karma Whoring for Fun and Profit.
For all of Google's and other "destination sites'" talk about buying all this wireless spectrum, the fact is that wireless will just never be able to match wired for speed or quality (a 20-year-old corded phone still sounds better than even the best cordless or cell phone). You just can't get around the fact that a wire (fiberoptic or copper) still has to be laid out there for the best results. And no "destination site" is going to be laying that line anytime soon.
SJW: Someone who has run out of real oppression, and has to fake it.
This is rather like the phone company cutting off your calls to inform you of all the great 900 numbers you could be calling instead.
Slashdot Burying Stories About Slashdot Media Owned
Not a good scenario. Imagine Verizon giving more bandwidth to their search engine than to Google's, more to their auction site than eBay's, more to their SuperPages site than to AutoTrader. Sad. And sadder, I can't imagine the telco-lapdog FCC caring about it.
Yahoo, Google, etc. are going into the telco business because the telcos are not doing their job. Instead of facilitating customers' needs and making usage easy, pleasant and efficient, they are trying to squeeze every penny out of customer pockets with screwy billing plans, bandwidth & destination throttling, etc. - practices which hinder the services which customers want and which Google, Yahoo et al want to provide.
... so the businesses that suffer are taking advantage of the Internet's core purpose: distribute data efficiently around problems.
As long touted, the Internet is designed to work around breakdowns and bottlenecks. Current telcos ARE breaking links and implementing bottlenecks
Funny thing is, if the telcos would just focus on getting packets from point X to Y quickly and cheaply, and pass that speed and savings on to the customer, they would make more money and not have to consider going into businesses they're not suited to.
Can we get a "-1 Wrong" moderation option?
"Some" people are way ahead of the curve on being an internet of its own, but not only the telco wired land.
After all, the network is the computer ... BHWAHAHA ! ;)
Quidquid latine dictum sit, altum videtur
eg. mail is still a cost for, and from, most ISPs yet you can get a better a/c than they offer free from GMail.
The solution of course is, not to have an auction for the latest, soon to be extinct, DotBomb 2.0 bauble (Facebook I'm looking at you), but rather to develop a useful portal for your users,
Integrate Webmail and WAPmail, offer file hosting/backup facilities, offer file sharing facilities, offer community building facilities and generally cater your service to your user base so that they see you as providing their favourite car rather than just a road, (c'mon it's /. I had to stick in a car analogy)
In short it isn't enough just to offer connectivity any more, though if you're selling 16.4Tbps you may have an advantage for a while.
"Linux is for noobs"-The new MS fud strategy
In 1999, when I started working for a big telecom equipment company, in Finland mobile phones had a market penetration of about 45-50% (most adults) but pretty much every household had a fixed line as well. In only 3 years almost everybody discontinued their phone subscription - everybody has at least one mobile phone, including kids aged 7 or older. Let me repeat: 3 years.
Things change very fast in the world of telecommunications.
So could it happen that companies like google, yahoo etc. become partly telecoms? Will, what google is trying to do, become a megatrend? I don't have a magic sphere, but from what I can see, I'd say it's more likely than not. And if/once this ball starts rolling, the telcos better have a good strategy or they'll be wiped out or "considerably diminished".
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
Way to go McNealy, if we mix content and transport there won't be any network neutrality.
If anything, there ought to be anti-trust legislation preventing the same company to own transport and content, and preferable not "enabling technology" (browsers, operating systems) either.
It is ridiculous for every major content providor to be a telco, it costs huge amounts of money to buy or build an infrastructure and support it. If every major content providor (100s of them) wanted to run their own network there is not enough physical space to run the cables to do so. If the 3 biggest powers in the tech world, MS, Yahoo, or Google can't even do it, what the hell makes you think anyone else is going to? And even if all of them build their own networks, the 99% of the rest of the internet is going to need an open network to use, so we will still need the telcos.
The only way any of the big content providors are ever going to have their own network is if its a wireless one, and due to the major federal regulations and licensing costs in doing so, even Google is having a hell of time trying to get it done, and even then how much internet activity is done wirelessly, not much.
You mean like these guys?
the cellphone companies are the same telco's that provide the backbone of the internet. for years now they tried this by selling cell phones and providing all kinds of media services for them and AT&T is now making more money being a dumb bandwidth provider to the IPhone users. there was a /. story on this last month. and the rest of the telco's seem to be following AT&T's lead.
I think scott is just talking out of his anus and is afraid he is going to sell less servers to the telco's to provide all these media services.
in business it's usually not a good idea to get into too many things that aren't related because you lose focus and start being bad at everything. very few companies are like GE that can compete in many fields successfuly
Goddamn, someone needs to kill this guy before any execs fresh to the job pick up on this idea. I say fresh to the job because any old hand will have seen this before. Portals. The days when the idea was that the web started at your ISP's home page. When every ISP had a newsfeed, poorly implemented, with no depth, but a ISP portal had to have the news, and so they bought the cheapest feed they could, implemented it badly and put it on the front page.
Filled offcourse with all sorts of content you could buy from the ISP, but not the actuall content that actually is bought on the net, PORN. Hell, I worked for one ISP were they had special code for the frontpage that would only display the porn links during the late hours. Not that it really worked, because invariable the ISP content sucked compared to what was available on the real net. McNealy? The 1980's called, they want their AOL back.
The problem is that it sounds so logical. If you do not provide food services on your train stations dear transport company, then someone else will. It forms quit a bit of income, all those stands, often at least partially owned by the train company itself. It used to be they even provided pretty decent service.
Ever seen a gas station that just sold gas?
So why doesn't the same go for ISP's selling content? Because the train station example has one simple advantage. LOCATION. When I travel by train it is easier to use the supplied services at the station then go outside and get food there.
The same does NOT go for ISP's. I can switch between content sides at the press of a button, there is absolutly no reason for me to visit my ISP's newsfeed when I can go straight to the source. Why should I buy music from my ISP when iTunes is just a click away? Why should I use their branded search engine when google is just a click away?
IF ISP's had a form of lockin it makes sense, say that visiting the BBC news site cost me money and my ISP's Reuters newsfeed was free then I could easily see that some people would choose the inferior but cheap option.
Just a couple of minutes from Arnhem train station was a fast food shop with really good self-made snacks, cheaper as well, compared to the concesion stand at the station itself, but still, because it is hassle to walk the detour the crappy snacks at the station fetched a higher price.
The idea itself works, it just doesn't work for the Internet.
The older people among us know this, because it has been tried. In fact many a customer got so fed up with it, that entirely new companies jumped in the market ADVERTISING with the fact that they offered JUST internet access and nothing more.
And lets face it, it is a lot easier for the ISP's. If they sell music then they got to haggle with record companies, invest in servers, deal with complaints. If they don't sell music, they collect for the transmission of the music their customers get from whatever company is wiling to risk it. You know, my ISP EVEN gets its money when I pirate music. Let iTunes worry about what the record labels will do next, my ISP just transmits the data and gets paid for it.
No McNealy, you sometimes seem almost clever, but this article marks you as just another tie without a clue.
You are trying to sell portals. No thanks.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Retailers do not build major roads to facilitate reaching their stores.
True, but the bigger ones certainly have a hand in what gets build where and with what money. Wal-Mart frequently gets involved in legislation and appropriations to get government to pay for roads to/from their shipping centers and retail outlets. For example, the 2005 federal highway bill - "The federal highway bill contains $37 million for widening and extending the road in Bentonville, Arkansas that is the main access point to the headquarters of Wal-Mart Stores Inc." The key is that they don't build the roads themselves. They simply lobby their reps in Congress (and the state legislatures and local boards/councils) to get funds to build and widen highways that are important to their retail and shipping businesses.
A similar story played out in my neck of the woods, when Wal-Mart offered to put forward some funds upfront to get a state/local project going to widen a portion of NH state Rt. 28. This would've improved access to their existing store in Salem, NH, as well as a planned SuperCenter in Derry. Eventually, the plans were put aside after Wal-Mart walked away from the new building plan, but millions in tax dollars and tax incentives to Wal-Mart were on the line due to this highway building project.
RW
The difference is, I think, that security through diversification and outsourcing requires a fairly mature business environment with many players to choose from. If you're the bakery who's considering eliminating your delivery department and going with an outside vendor for that purpose, you'd want to make sure there were many choices of delivery services, so that you're not tied too closely to one. If lots of choices and diversity don't exist, it might make sense to keep it in-house. Since Internet services are a relatively immature business environment, and a large content-provider like Google has few backbone providers to choose from, it makes sense that they're looking to secure their position by bringing things in-house.
What's ironic is that the one thing that the telcos absolutely oppose -- network neutrality enforced by legislation -- would probably remove much of Google's incentive to build out backbone capacity. If the telcos were forced to provide nondiscriminatory service, suddenly there's no risk for Google of being extorted. With the disappearance of that risk also goes the impetus to be their own backbone provider. (I think there are historical parallels in the early 20th century with the passage of the Interstate Commerce Act and its accompanying regulation of goods transport, although the waters are muddied by the power that the transportation and industry cartels held in the ICC and in government.)
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
An even better analogy, IMO, is the strict regulation of natural gas pipelines. If I own a natural gas pipeline, I have to pay the same rates as everyone else to move my gas. I can't give myself a price break or priority access. We need something like this for internet backbone providers. Vertical integration can and will be abused. It's just a matter of time.
It's turtles all the way down!
you need to do something valuable to justify you being a bunch of dicks
Right, that's what it all hinges on. I'm betting - and I think the subtext of his message supports the notion - that their method of offering something valuable is to buy somebody else who's currently doing something valuable, locking it up, and probably crippling it. Like if Google didn't own YouTube, one of those clowns could buy it and try to make it an "exclusive". That's not value, that's still being dicks.
Now if they want to actually offer something new that people would want, that would make me see things differently. But I'm betting their thinking is more along the lines of Verizon's craptastic V-cast junk.
But that still makes me wonder why it wouldn't just be easier to just stop being dicks in the first place. But that concept seems completely alien to these guys.
This is incorrect. Horizontal monopolies -- dominating most of the business in a particular sector (e.g. Standard Oil, Microsoft) can run you afoul of the law if the monopoly position is used to restrain trade.[^1] Vertical monopolies -- owning a small piece of many different sectors in order to control the entire supply chain for a particular end product -- has never really been frowned upon except in very specific instances.[^2]
It was considered a reasonably good business practice until fairly recently (I'd say prior to the 1970s but you could debate this) to own as much of your critical supply chain as you practically could, and to this end you saw companies like Goodyear running rubber plantations, Alcoa (an aluminum producer) operating power plants, IBM operating chip fabs, etc.
The decline of vertically-integrated enterprises is more about flexibility and maturity of markets than regulation. You don't see Dell running its own fabs or turning out its own microprocessors, and you don't see Intel manufacturing finished computers and sending out salespeople and maintenance techs to end users, the way IBM used to. Both companies are intensely focused on what they perceive to be their 'core competency' (that the phrase itself has become a managementspeak cliche is a testament to how pervasive the idea has become) while leaving the rest to outside suppliers and vendors. This allows them to be more flexible than traditional vertically-integrated companies,[^3] but it requires the market to be relatively mature: if there wasn't a plethora of hardware manufacturers in Asia willing and capable of turning out Dell products, Dell wouldn't be able to operate the way they do.
Nobody -- besides perhaps the shareholders -- is keeping Dell from owning and operating its own chip fabs, assembly factories, or trucking networks, from owning the entire supply chain from sand and oil wells to tech support. They don't play in any of those sectors because there's no need to: I suspect there's a pretty long line of companies who want to be Dell's chip supplier, assembler, or shipper of choice. (And those suppliers have their own suppliers, eventually going all the way back to the silica or oil or whatever.) As evidenced by Dell's market share compared to IBM's (and IBM's subsequent reorganizations away from a traditionally vertically-integrated company), there seems to be merit to the whole scheme, at least from a business perspective.
[1] Having a monopoly by itself isn't sufficient, you have to have the position and abuse it; this is per some early 20th century U.S. Steel case that I can't find at the moment.
[2] You get to a vertical monopoly (as opposed to just integration) when by controlling the full supply chain you can eliminate other players in the market for the end good by driving costs down to the point where they can't compete; however since you don't fully control any single aspect of the supply chain, you have to maintain this level of performance in order to maintain the monopoly position -- you can't just rest on your laurels once it's accomplished, as you can with a horizontal monopoly. If you slack off and try to increase costs, your un-integrated competitors can reappear (subject to re-entry costs). For this reason, vertical monopolies aren't regulated to the same extent horizontal monopolies are, and some people would argue they're actually good for consumers in some situations.
[3] I think that you could argue that at the same time companies have become less focused on vertical integration as a path to success, many companies have started creeping out horizontally and looking for the other kind of monopoly. The intense specialization that modern business practice extols seems like it inevitably encourages monopolization of niche markets; vertical integration seems to encourage more competition. (Since companies with massive investments in a huge in-house supply chain want to wring profit out of it in any way possible, even if it means manufacturing some
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."