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Q&A: Net’s potential big, IBM strategist says

The dot-com meltdown really wasn’t about the Internet, but about bad business plans, John Patrick says. Meanwhile, he’s dreaming up tomorrow’s Net.


© St. Petersburg Times – Tech Times,
published November 5, 2001

“I’m not a believer in the convergence of the PC and the TV. Some people are. Certainly, there will be people who choose to have WebTV or who choose to do their e-mail on a regular TV that’s PC-enabled. But I don’t think most people will. I actually see them diverging, where TV is headed upscale from an entertainment point of view.”
— John Patrick
IBM’s vice president of Internet technology
[Photo: IBM]

TAMPA — The dot-com meltdown says more about poor business plans than it does about the future of the Internet, says John Patrick, who has played a key role in IBM’s online strategy.

In the past two years, about 500 online businesses failed, says Patrick, IBM’s vice president of Internet technology. But that pales in comparison with the more than 50,000 business bankruptcies that occur every year in the United States.

“It was never reasonable for a company to come up with an idea, put dot-com on the end of it and then get a market capitalization of billions of dollars with no business case that had any odds of being a success,” Patrick said. “That was unreal, that was not the real world.”

The meltdown has not diminished the Net’s potential, Patrick says, but businesses that fail to use it effectively are at risk, particularly as consumers become more demanding of electronic services.

Patrick, 55, has been called a visionary and even “chief dreamer” about the Net. He’s leading a task force on the next generation of the Internet, as well as serving as chairman of the Global Internet Project, made up of executives from international companies working on development of the Internet. His first book, Net Attitude: What It Is, How To Get It and Why Your Company Can’t Survive Without It, is due out this month.

Patrick, whose resume includes a master’s degree in management from the University of South Florida, lives in Ridgefield, Conn. He made a return visit to the Tampa Bay area recently and talked to Tech Times about his work and the Net. Here are edited excerpts:

Q. How do you view the evolution of the Internet from what you saw in 1993 to what you see in 2001?

Patrick: Probably the biggest difference is the reliability. I can remember using the Web in 1993. It was a real chore to get it to work at all. To be able to install the software, you had to be a technical aficionado. Just to get connected and get to any Web page was a big deal. And to stay connected was a big deal. And even though the Web, even at its earliest stage, allowed big pictures and sound, for all practical purposes, it really wasn’t multimedia because it was so slow.

It has turned out that surfing, which is the generic layman’s term for selecting a document in a server somewhere through a hyperlink, has become like a natural human trait that we didn’t know we had. Tens of millions, and actually now hundreds of millions, of people have learned how to do this with essentially no training. It’s just intuitive.

Q: About 5 percent of Net users have high-speed connections. Is there a critical mass that needs to be reached before the Net really becomes efficient in delivering multimedia?

Patrick: Five percent is a really key number. I wrote about this in my book, that 5 percent is about the answer to all questions about the Internet — 3 to 5 percent. What percentage of the world’s population is actually doing something on the Internet right this minute? Three to 4 percent. What percent of the available bandwidth, as you say, does the average person use? Three, 4, 5 percent. And what percent of mobile devices are actually Internet-enabled devices? About 5 percent. It’s a long list of things; the answer to all of them is 5 percent. So the question you’re asking is when do we get over the hump? I’m not sure anybody knows . . .

I think we’re at the point now where people that have DSL and cable modems expect more. They expect more creative content. Frankly, they’re going to expect more speed, and the technology’s capable of more speed. And as the competition heats up between cable and DSL, which is happening now, that’s good, and that will drive the price down and the speed up.

Q. What kinds of things are people going to expect? Is it your view, IBM’s view, that people are really going to sit at their PCs and watch video?

Patrick: I’m not a believer in the convergence of the PC and the TV. Some people are. Certainly, there will be people who choose to have WebTV or who choose to do their e-mail on a regular TV that’s PC-enabled. But I don’t think most people will. I actually see them diverging, where TV is headed upscale from an entertainment point of view. RCA-Thompson has a technology called LCOS, liquid crystal on silicon. It’s a very high resolution television. HDTV is 16 by 9 (a width-to-height ratio resembling a movie screen), and there’s a recent development whereby you can get surround sound from two speakers due to some acoustical inventions that basically fake out the human mind into thinking that the sound is coming from all around. That’s where TV’s going.

PCs are evolving also, and now you can get very high-quality, flat-panel displays. Now, are people going to watch TV on that? Well, they can and some people will, but most people won’t. On the other hand, I think they will take courses. They will take advantage of customer service and when they say “Help” on the screen, up pops a person, not a little 1-inch by 1-inch window but I mean a real (person), like television.

Q. What have we learned in the first eight years of the Web from commercial Web sites?

Patrick: Basically it’s about the transfer of power from institutions to people. Of course, I’m not talking about anarchy or people marching in the streets or Tiananmen Square. I’m talking about the power of a mouse click. And with that click, people make a statement: “I want to do business with you.” Or: “Don’t like what I just saw and we’ll do business with somebody else.” “I want to learn about a car before I go buy one.”

Now, at the same time that people have all this power, they’re expecting a lot and, in many cases, not getting it. And that’s what my book’s about. There’s a lack, in some cases, of technology, but in a lot of cases, there’s this attitude problem where you still find sites that say, “For more information, call us 9 to 5 Monday to Friday” or “Click here” and then it says “Fill out this form and fax it to us.”

Q. Do businesses not understand how to use the Internet or are we still in the learning process?

Patrick: Compared with all other media, you would have to say that we’ve learned pretty fast. The adoption rate has been much faster than radio or TV or CB radio or VCRs or cell phones. But I do think the expectations have risen even more rapidly and so there is a lot more to do.

People do have these high expectations and they increasingly are judging a company based not on its physical presence but by its presence on the Internet. People will judge Coca-Cola or IBM or Ford or Kodak or Delta Air Lines or Florida Power based on their Web presence. And even though they may have loved some particular institution for decades, they go to the Web site and find that it’s lame, they lose confidence and that brand loyalty that’s been built up over a long period of time will disintegrate unless these organizations integrate the Web with what their existing organization is. It’s not a matter of “Yeah, we have a Web site” or even “We have a great Web site.” It’s got to be an integrated Web site so that I can buy in the store, return on the Web, buy on the Web, return at the store, make a reservation by phone, change it on the Web. And you can’t do those things, for the most part, today.

Q. Do businesses understand how fragile that relationship is with their Web sites?

Patrick: I would say enlightened businesses do, but I think many do not. That’s why I wrote this book because I really believe that there are still a lot of companies that say, “Oh yeah, we’re Web-enabled. Yeah, we have a Web site.” And it’s like completely separate from their business. You know, like this hotel we’re sitting in, you can make a reservation online. You can also check your frequent-flyer points online for multiple airlines or even the frequent stayer points that you had with this hotel. Try to make a reservation and pay for it with those points. You can’t. And you call them and they think, “Oh, well, that’s another department. Call us Monday morning — 9 to 5 Monday to Friday — and give us your credit card number and for $35 we’ll overnight to you a coupon that you can carry in to the hotel.”

It’s not just this hotel, it’s all the hotels. And does anybody think that’s normal? Now, in some cases, the companies totally get this and they’re just scrambling to implement and get the right skills and prioritize all the things they need to do, and they’re busy doing it. In other cases, I think there’s some wake-up calls yet to be had.

Q. One of the impediments for consumers is the sheer size of the Web. Where do you see the organizing of the Web going?

Patrick: Google is a terrific thing, but it isn’t really the ultimate answer. The Web was created as a publishing model. So I create a page, put it in a server, people find it, but like physical magazines, newspapers and other print-oriented things, there’s no particular identification on that Web page that gives it context. The Web is mostly about format, and Web pages all have what we call “tags,” and the tags describe the format of the page: Helvetica font, type size 10, background equals blue, that kind of thing.

And there’s a new standard for the Web called XML, another ugly technical term that our industry has so many of. But XML basically is a standard that provides a new set of tags for Web pages that don’t describe what the page looks like but rather describe what it means. For example, ZIP code, invoice number, customer number, quantity on hand, current balance, policy number, things of that nature, subject matter, company name. These labels that are not visible per se but they’re embedded in Web pages that allow servers to be able to talk to each other and that allow search engines to be much more efficient.

Q. The tech industry, in many respects, is way ahead of the public in a lot of ideas, such as the “Internet everywhere” on mobile devices. How does the tech industry explain that something’s good and useful instead of just another toy?

Patrick: The information technology industry is very good at talking to itself (laughs) and having conferences attended by its own members, and not so good at explaining the relevance of a lot of this technology to the average person. The average person really doesn’t care how it works. When you think about PCs, they are too hard to use. And I find myself sometimes just threatening to tear my hair out, and I’m pretty technical.

Specifically with regard to the Internet everywhere, again, I don’t think anybody really needs to know about 3G and CDMA and there’s a lot of alphabet soup associated with wireless devices. The real impetus here needs to be, make it useful. I certainly have no interest whatsoever in watching a movie on my phone, but I do have a large interest in knowing that my flight was diverted from Gate 6 to Gate 36. Thirty gates in Dallas is about a 2 mile walk. I have a lot of interest in that.

I do have an interest in knowing that my father’s pacemaker just went awry and I get a message on my phone over the Internet saying that Dad’s pacemaker is in trouble. I do care about where’s the nearest ATM. I do care, did that order I placed to buy 10 shares of stock at $5 a share, did that go through? So, useful transactions are the key to the mobile devices.

I think people will find it very useful to be able to get a message saying that such-and-such a restaurant is having an early-bird special, you know, and it’s two blocks straight ahead, turn left, that’s where it is. That could be useful.

— This transcript was prepared by Times editorial assistant Barbara Moch. Times personal technology editor Dave Gussow can be reached at [email][email protected][/email] or (727) 445-4228.

John Patrick

Company: IBM

Job: Vice president, Internet technology

Age: 55

Activities: Founding member of the World Wide Web Consortium; senior member of the Institute of Electrical and Electronics Engineers; a member of the advisory boards of ThirdAge Media, Space.com, IntraLinks and Neoteny.

What others say about him: Business 2.0 named him one of the industry’s most intriguing minds. Network World called him one of the 25 most powerful people in networking.

Education: Lehigh University, bachelor’s in electrical engineering; University of South Florida, master’s in management; LaSalle University, law degree.

Hobbies: Gadgets, music, running, motorcycles

Source: IBM Web site