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."

Comments

Other way around

[Telvin_3d]

Personally, I think that a law explicitly preventing internet access providers from supplying any service except the pipe would be one of the healthiest things that could be done. It would prevent conflict of interest situations and promote real competition. Similar to how the movie studios are no longer allowed to own theater chains.

Having the access and content sides of the internet separated means that things like VOIP providers get an equal playing field. The internet provider no longer has the incentive to sabotage them. In a couple years, it will keep them from messing with video download providers in the same way.

Re:Stick to your core

[NineNine]

You're exactly right. Case in point: Sun. Sun floundered every time McNealy got some stupid idea to vastly deviate from the core of what Sun is good at. Some would argue that all of these deviations from their core business is why Sun is in the trouble they're in now. McNealy is a shitty CEO, and should have been canned a long time ago.

Exceptions are rare

[dazedNconfuzed]

Yes, I was thinking of GE as being an exception when I wrote that. (Viable posting sizes do not lend themselves to detailed analysis of every conceptual variation.)

GE came into being, and largely succeeded, by having the core competency "general electric": they did pretty much anything that had to do with electricity, and that at a time when a company _could_ (broadly speaking) do anything and everything having to do with electricity (kinda like IBM and computers for a long time). They stuck to their core competency, and it worked. As the company flourished, they were able to branch somewhat into other stuff - but kept that core alive, without which all would fail.

Eventually, the "electrical stuff" business got so vast and detailed and nuanced and competetive that General Electric had to largely get out of both the "general" and "electric" parts of the business. In came Jack Welch, who managed to do something _rarely_ done: change the core competency of a business, and survive. Since GE's massive growth had branched into so many subjects (not all electrical), and had gotten so successful at some of them (again, not all electrical), Mr. Welch re-wrote the core competency to "#1, #2, or not in the business". Everything GE (no longer an acronym, just a meaningless couple of letters) was not best, or second best, at was mercilessly pruned. "Neutron Jack" got his nick for vacating life from vast swaths of the company, but leaving the buildings standing. Plastics? Jet engines? Financing? not electrical, but darn good at it - so it stayed, adhering to the new core competency. Most consumer products (tape players, radios, TVs, etc.)? electrical, but losing out to Sony and other competetors, so cut the losses, don't fight where you won't win, dump the business. Train engines? actually giant electrical generators on wheels, and the department was really good at it, so that business stayed. Hydroponic farming? not electrical, they weren't good at it, and it was dropped - you probably didn't even know they tried it. #1, #2, or get out - that became the new core competency, and on a dime GE turned mercilessly to implementing it.

Yes, companies can survive changing their core competencies. To do so, they must make the change wholesale - and _stick_to_it_. Most try but fail because they didn't really change, they just branched, got lopsided, and fell over. "Do or do not, there is no try."

To the thread's point:
Telling a telco to get into the destination website business is lunacy. They're not in that business, they didn't develop competency in that business as facilitating their core, and the suggestion they try it comes directly from failing to succeed in their core competency - switching won't help because frankly they suck at both. GE succeeded in switching from making electrics to, well, making money because they were GOOD at the original core competency, and when they had to switch they had a good tangent to switch _to_, and they _made_ the switch _totally_. If telcos want to "win", they need to get GOOD at their core competency of bandwidth delivery; if they want to switch, it must be _to_ something they're already good at, developed as a tangent to the prior competency - and they have to switch completely, without mercy.