Internet World – Spring 2000

[Start Tape 1, Side A]
JOHN PATRICK: Good afternoon. It’s great to be here with you. Let’s start off with a little sound check.
[music]
JOHN PATRICK: Ah, I could listen to that all day. By the way, if you don’t know what that was or how to get it, how to set it up and build your own play list and enjoy digital music, I suggest that you talk to your kids and they will give you a complete briefing on how to accomplish this. But I’d like to talk to you about the future of the Internet. A lot has happened since I first spoke at Internet World in December of 1994. In some respects it seems like everything has happened, that everybody is connected, that we’re sort of almost finished.
With what’s going to be the impact of the Internet for the [unintelligible] we’ve only just begun. The number of people actually doing something on the Internet right this very second as a percentage of the world’s population rounds off to zero. There’s nobody connected. Well maybe one or two percent, or maybe three percent of the way that the Internet will mean to you and to me and to businesses, governments and educational institutions. You haven’t seen anything yet, compared to what we’re going to see. Every day we pick up the papers or magazines or our favorite web site and we read about the transformation from an economy to an e-conomy. In fact, many CEO’s that I’ve talked to around the world said, I’ve had enough hearing about this. But the fact is we are at the very beginning of that as well. Open systems are changing the game in a pager sort of way, and I’m going to give you some further comments about the role of Linux and open system software and how I believe that will be very profound. Once again, we haven’t seen anything yet compared to what we are about to see.
The power of a click. In so many ways the Internet is about the massive transfer of power from institutions to people. Now of course I do not mean this in the sense of energy in any way. No, I mean the empowerment of people who have the ability to click a mouse, or move [unintelligible] to express their desire to engage in entertainment, e-commerce or education. Those enlightened organizations that listen to this power of the people will be greatly successful.
And the last part of the big picture is that the next generation of the Internet is well under construction, and I suspect that many of us think about the next generation of the Internet as something that’s going to bring us this incredible speed, and in fact fast, is one of the characteristics of the next generation of Internet but there are six other very important aspects, characteristics which describe this next generation of the Internet which is evolving right now. You see here on this collage a representation of those seven characteristics and I’d like to comment some more about them. By the way, you can visit our portal for the NGI and learn more detail about our vision of this at IBM.com/NGI.
So let’s talk about it. The first of course the Internet will be fast. Now if, like me, you were in a hotel room last night and you connected at 21,600 bits per second and were relieved to get that much speed you may wonder how someone could stand here and say that we will soon be awash in bandwidth. But the reality is there are some powerful technological and competitive forces at play right now which are accelerating every day causing this role-out of bandwidth galore. We have telephone companies who have now mastered this digital subscriber line technology. They’re rolling it out in communities around the world. This provides broadband. By the way, broadband is a fancy word that means fast. And once you have fast, that means you can have video and when telephone companies can deliver video, that provides a threat to cable companies, and cable companies look at this and say, well not only can we do that too, but we can deliver telephony over our cable and in fact by only using a tiny percentage of the bandwidth available, we can deliver you digital telephony. It will be crystal clear and give you as many lines as you would like to have, and of course this is a threat to telephone companies. And then meanwhile along comes companies like Windstar and Intelligent and [unintelligible] and many companies who are delivering very high capacity broadband through wireless and optical technologies, threatening both the cable companies and the telephone companies. So I would say we have Adam Smith’s invisible hand at work on bandwidth. And this is a very good thing.
Now, what’s going to happen is the bottleneck is going to move away from the modem back to the server. People are actually going to need really, really big powerful servers. At IBM we kind of like this part of the problem.
[laughter]
JOHN PATRICK: The other that’s going to change is that content will be closer than you think. If everyone in this room were to go to Yahoo this afternoon, they essentially would get the same page. Most of the content doesn’t change. So why isn’t the content a large proportionate of it broadcasted from satellites down into Internet service providers, who in turn move it out to distributors, cashing proxy servers who are perhaps the top servers in our homes, or perhaps the little green boxes on telephone poles that in the future may contain smart disc drives providing the content closer than we think.
And the second characteristic is that the Internet will be always on. Of course the Internet today is not always on unless you’re lucky enough to be using a cable modem or DSL or even better yet, being a student at the university having always-on service. Most of us in fact have to use this wonderful technology called the dialer, and we click on this dialer and [interposing]
[laughter]
JOHN PATRICK: Oh well, is anybody going to miss this? I sort of doubt it. Now, not only does the frustration go away, but some very subtle but profound things happen when they’re always on. When you don’t have to log on but you just are on, you’re propensities to do things on the Internet change dramatically. Your proclivity to go check the weather, the news, the sports, the stocks, the [unintelligible], to educate, to entertain, become quite different than they are today because you’re already on, you just touch the mouse and the screen pops up and you’re on. Pretty soon logging on to the Internet will be as old fashioned as ring me up an operator was not so many years ago.
The other change will be that we are always on, we will begin to think of the Internet as capable of delivering not just web pages and things that we know about today, but providing the delivery of other things. For example this little job of Acquit [phonetic] is delivering to my desktop, the real time weather situation at Andy Stanford Clark’s house. Andy is a colleague of mine, he lives on a small island off the coast of the United Kingdom. The isle of Wight, and delivered to this little outlet is real time weather information and that information of course provides everything you’d like to know about the weather being pushed through a message to you in technology that we’ve been prototyping.
You might also use the Internet for things that we don’t use it so much for today. For example, you’re driving to work. Perhaps you’re on the train and all of a sudden you realize, oh gee, did I close the garage door? Did I remember to put down the blinds? I was supposed to put down the blinds so that the sun doesn’t bleach out our furniture. Let me check, huh, the blinds are still up. I click on my phone and down go the blinds, and it’s possible of course because we’re always on.
Now, the third characteristic is the Internet is going to be everywhere in the next generation of the Internet. Today the Internet is not everywhere, the Internet is where we are. It’s where our PC is. It’s actually not where we are, it’s where our PC is. But it would be nice if it were everywhere, and in fact we’re going to see dramatic changes along these lines coming this year and next year. Today probably 98% of all web pages are delivered through a browser on a PC. Ten years from now that may be less than 50%.
Now, am I suggesting that the PC is going to diminish in importance or decline in numbers? Not at all. I cannot personally imagine giving up my think pad or my other PC’s. On the other hand, many people will begin to use new kinds of devices whereas today everyone goes to the weather underground to look at this page through their browser on the PC, tomorrow people may want to see it on a television and for this television on the screen here 95% of the time it’s a television, but 5% of the time it’s a browser. Other people will chance to see that same page on their pager. Now I’ve taken a little liberty here with that weather underground page and [unintelligible] and sort of scrunch it down so it fits on the pager. Of course more likely it will be the use of transcoding technology. The transcoding technology is utilized to look at a page, figure out what the real content is, what makes sense, what’s important on this page and to deliver that particular content in a clever compact way to a small device such as the pager. Other people will choose to use their personal digital assistant.
And you know for many people, I would say actually for quite a few millions of people, this little IBM work pad or palm pilot will be the only computer that they will ever need. For millions of people this is it. It’s has color, it has lots of storage, it has persistent connection to the Internet, it has a browser. Why would that not be adequate for many people? Probably for no one in this audience, but for many millions of people, that will do the job. Other people of course will choose their phone as their web access device. And we don’t see it quite as dramatic here in the U.S. as in other parts of the world which is an interesting phenomena. Frankly I think it’s possible this year and next year that Europe may leap-frog America in terms of Internet usage and users because of the phone. I am quite certain that this summer people will be traveling in Europe on trains, paying their bills, trading stocks, shopping on their phone. The wireless access protocol is emerging as a very important approach in the short term I believe we will see that soon by XHPML over the next few years as a device independent [unintelligible] languages, but the important thing is that the mobile phone is emerging as an important browser. In fact I just came back from Japan where I saw what was happening with teenagers. Teenagers of course in Japan have been leading the way on many new ideas over the past some years and right now they’re enjoying the I-mode phone which was release by NTT Gokomo [phonetic]. Gokomo now has five million users in the span of less than a year. They believe they’ll have ten million by the end of this year. These are people who probably don’t own a PC, or certainly don’t use it as much as they use their I-mode phone. The teenagers are sending little pictures of themselves back and forth. Small black and white bit maps which they deliver from phone to phone. And then of course there’s the kiosk. There are so many people in the world who don’t have access to a personal device no matter how small or inexpensive it may be and the public kiosks will be a way in which people will be able to step up to a standard space Internet kiosk on the street corner, in the jungle, in trenches, in schools, in government buildings, on the plant floor. People taking a web break instead of a smoke break and these kiosks will become a very important part of the overall picture for the web.
And then there’s a whole new range of devices. This an Internet radio, the Cabango [phonetic] Internet radio. It’s one of what I believe will be an explosion of devices that we might think of as information appliances. You plug in an RJ-11 cable or an RJ-45 Internet cable into the back of this radio and it has a volume control on the left, it has a tuning knob on the right, except that the tuning knob instead of being restricted to what’s within 30 or 40 miles, will get thousands of radio stations from all over the world. Now these information appliances have an interesting characteristic that many of us are not [unintelligible] to. You turn it on, it works. You turn it off, it stops. It doesn’t give you messages like halt, you failed to properly shut down.
[laughter]
JOHN PATRICK: You idiot,
[laughter]
JOHN PATRICK: you must run scan disc before you can proceed. I don’t think you’ll see that on these kinds of devices. And of course many people will have all of these devices, depending on who they are and where they are and when they are.
Let me show you a little experiment we’ve been doing with mobile phones. This is as Sprint PCS phone. We have it connected through a gateway, a standard public gateway, using phone.com whereby we can go to this little phone and key in a person’s name, I keyed in the name Patrick for example, on the phone. It does a search in L-dap [phonetic] corporate directory, we call it blue pages. It’s a directory of three hundred and some thousand people, all accessible through this interface. So I look up this person named John Patrick and I immediately see his Internet ID, I see his phone number and of course I can click and just call him on the phone, or I can send an instant message. Well let me try that. Well here’s some choices of messages I can send, call me now, call me in five minutes, help I’ve fallen and I can’t get up.
[laughter]
JOHN PATRICK: Well I’ll just say please call me in five minutes. So I send the message, okay the message has been sent and her comes the message. There’s a message on the desktop that says, please call me in five minutes and it says the cell phone number for me to call. I could then reply on that instant message to that instant message saying I’m kind of busy right now and I’ll call you later and that message will be relayed back to the mobile phone. So I believe we’re going to see this become quite important as an additional method of communication.
Now the next aspect of the next generation of the Internet is that it needs to become more natural. Arguably it’s not really that natural today. You have to really want to do this like all of us here at Internet World, but I think it’s moving forward from a couple of hundred million people to a couple of billion people and a lot of things have to change and one of them is for it to become more natural. Now instant messaging is a key component of this. I’m personally very excited about instant messaging. I think it’s much than meets the eye. Some people say, John, instant messaging, that’s just teenagers. They get home from school, they get off of the bus, they make a beeline for the PC, they get on the Internet but they don’t start up a browser, they just bring up instant messaging and chit chat with their buddies that they just got off of the bus with.
[laughter]
JOHN PATRICK: Well that’s true and it is a social phenomena in itself but I think there are bigger things afoot here. Let me click on my colleague Frank Schwitzenberg [phonetic] and send a message. By the way, I am not connected right now, I canned this to show you a few days ago. Frank, how is the weather in Heidelberg? I’m going to send this message to Frank. Now I typed that message in English, unfortunately the only language I know and it was translated on the fly to German. And then it was played. It was played using text to speech technology from hear voice, so that Frank could hear it in his native language of German. Frank now answers me in German, John is cold and rainy. John it is cold and rainy. Frank says it is always cold and rainy in Heiderberg. Now think about this. Let your mind wonder here a bit about what we have. Think about the potential that combined four ideas, instant messaging, voice recognition, language translation and text to speech playing. And what do you get when you put those four things together? You get a real time multi-lingual intercom. Think about customer service applications. Think about a person asking a question in Spanish and have that question be routed to the most knowledgeable person in that subject matter, who answers the question in Chinese and the questioner hears the answer in Spanish. That I believe is a game changer.
Now the other interesting thing about instant messaging that I think is emerging and potentially profound is something that we call buddy-botts [phonetic]. Now we’ve been experimenting with some prototypes of this in IBM where by the way, we have 228,000 instant messaging users who are talking about confidential business inside the firewall and of course including where appropriate, people outside of our firewall through the aim protocol. Now you see here in this buddy list various locations of people and the location at the bottom says buddy-botts, buddy-botts, these are not people, their software robots or software agents. I’m going to click blue pages for example, our quick click directory and I’m going to type in a message to that “person” who is Michael Nelson. And blue pages sends me a reply and says Michael Nelson works in Washington, here’s his phone number, here’s his notes ID, his Internet ID, his fax number, all the information about Mike. Now I could of course get that information in lots of other ways. I could go to a jobber outlet we had called blue pages. I could go to our intranet page but there are a lot of things where it’s just quicker, it’s just faster to use that instant messaging capability on your desktop. How about a stock quote? I should get a stock quote here. Stock quote [unintelligible]. [unintelligible] last traded at 8,542 up 1,231. Stock quote. How about portfolio? How about the weather? How about [unintelligible] a dictionary of times in the company? What is NGI? Next generation Internet. Here’s a URL, click on there to go learn more about it. How about eight-ball? Anybody here old enough to remember eight-ball? Well the Internet continues to evolve at a rapid pace. Let’s see what the eight-ball has to say. It is decidedly so.
[laughter]
JOHN PATRICK: So buddy-botts is making the next generation of the Internet more natural. Now pied into buddy-botts are electronic meetings [unintelligible]. Now there’s a little meeting going on between a couple of my colleagues sharing a spread sheet, a spread sheet that may be using some technology that all the participants in the meeting may not have, but it doesn’t matter because the team 120 application sharing standard provides a way to allow people to share content from their desktop with all the participants in the electronic meeting who are viewing it through their browser, independent. It’s not like picture tell or any proprietary approach, it provides a way that all you need is a browser. We’re finding these meetings to be very productive at our company. We’re running somewhere between 50 and 100 of these every day. They’re able to be created on the fly from our [unintelligible] directory and what I find quite interesting about them is not just the millions of dollars of savings but the fact that these meetings tend to start on time. They end on time and you always know whose in charge and it’s quite interesting to see what goes on in electronic meetings where all the participants may be in a different location. Some at home, some at the office, some at the crown room, some at a client’s office and while that meeting is going on, if people are sharing information there’s this little back channel happening through instant messaging where people are able to say, don’t forget to ask him this. Don’t say that or whatever it might be. [unintelligible] this concept to get further into something we’re calling a video water cooler to allow our people who are at multiple locations to come together at the virtual water cooler so to speak, at lunch time and just have a chit chat to increase team camaraderie and a sense of presence and belonging to the team.
Now the next generation of the Internet also needs to become a lot more intelligent and fortunately this will be possible because the structure of the content on the web will become much more organized. Today we have about a billion web pages that are more or less just random in a sense in that the tags underneath the covers of these pages describe what the pages look like. Bold, Helvetica, ten point, blue [unintelligible] formatting information but with the introduction of XML we have a new approach to be able to apply tags to web pages, in fact we’ll be able to separate the content from what the page looks like and to be able to tag this content with identifiers that are meaningful in a business context. Things like customer number, last name, organization name, postal code, quantity on order, policy due date, things of that nature and this allows for search engines to be much more intelligent.
I think actually the intelligence of the web will be manifested through portals of various kinds. Of course we have the all purpose portals, these will continue to be important around the world for movies, for people who aren’t just sure what they want to have. For people who want to utilize the general purpose portal as sort of a hub or communication center for many aspects of their lives but I think there are many more people actually who will be interested in specialized portals. Places like E-Chemicals. You know actually some people wake up in the morning, they rub their eyes, they go ahh, chemistry. They don’t give a hoot about the LA Times or the Wall Street Journal, they want to get E-Chemicals and talk about chemistry. They want to talk to their friends. They want to talk about transactions that are going on. They want to learn from each other. They want to collaborate, and they want to do deals. Real money changes hands in these trading hubs that are popping up in almost every industry facilitating a way for people with common interests to be able to have a very intelligent approach to what they’re doing.
Then of course there are community portals, places like Blackberry Creek, started here in California that might be interesting for six to ten year olds. Tripod for 18 to 30 year olds. High Village for 30 to 45 year olds for example and of course Third Age for people who are say 45 to 102. This is where 70 year olds go to find a date, at Third Age. A lot of interesting things are happening here at this site. If you notice in the lower right corner when you get interested in stock market trading, up comes new trade. And when you get interested in PC’s up comes IBM. Now, why is it new trade is IBM? Why isn’t it Charles Schwabb or Fidelity and Gateway or Dell? And the answer is because New Trade and IBM made a deal with third age media. A preferential but non-exclusive arrangement whereby companies advertise on their site and in return receive some [unintelligible] to be able to place content there and perhaps have an e-commerce link back to that advertiser’s site.
You know I’ve recently learned a new technical term on the Internet. It’s a term called hangin out. Are you familiar with this technical term? Do you have any teenagers at home? They go out of the house and you say, where are you going? Nowhere.
[laughter]
Well what are you going to do? Nothing. And then some hours or in some cases perhaps days, they come back and you say where have you been? Nowhere.
[laughter]
JOHN PATRICK: Well what were you doing? Nothing. You must have been doing something. Well I was just hangin out. So people hang out these days and they hang out on the Internet and they hang out at these life style destinations. They hang out at the Harley Davidson Motorcycle site. They hang out at Internet.com. They hang out at a lot of places and so the answer to the question of if we build it will they come? If we create this great portal for our company and everybody will come to it, I say, well maybe not because there’s a billion pages on the way to ten billion pages so reach out and build relationships with the places that your constituency hangs out and that’s where you want to be hangin out and create those links to bring them back to what you have to offer.
One of the major challenges of companies today, of all sizes, whether it’s ten people or half a million people, it’s being able to know what you know. If the 5% most knowledgeable people in the organization could transfer what they know to the 5% least knowledgeable people in the organization, what a tremendous impact that would have on the effectiveness and the profitability of that organization. In fact it’s been estimated that there is a knowledge deficit of between five and six thousand dollars per employee because of information in the organization that is not known by others. Even in a small company this becomes a significant amount of money and in fact the answer to this is the creation of knowledge portals within an organization. They create knowledge windows into the content, not only of the Internet but in all the data bases that a company has so that a person working on a particular project can go find out who else might be working on some related project. And of course [unintelligible] computing becomes the ultimate in intelligence for the web by having the ability to not only analyze a billion chess moves per second, but being able to analyze it so your mouse clicks per second and bring real intelligence from it.
Now of course the Internet needs to become easier. It needs to become easier to use but I’m also talking about easier to building things for the web. It’s becoming very sophisticated today what people are attempting to do. Frankly I find it amazing what gets done inside of a browser, and really the browser wasn’t necessarily intended for that, it was really intended for browsing, a natural trait that we all have that we didn’t know we had until recently. It’s not really built for transaction capabilities. Now there are amazing things you can do with a browser and when bandwidth becomes ubiquitous and reliable and consistent and fast, then of course many things will be done in the browser, but in the meantime and perhaps over the long term even, new approaches may become very important. I want to show you an example of what I mean. We’ve been experimenting with some prototype technology along these lines. Let me show you what I’m talking about. Now this is my file explorer in Windows and it has of course all my directories. I click on think pad and there’s my C drive and my D drive and I open up my C drive and there’s all my folders and I open up the folders and I have files and so on. But you’ll notice down here, EDO auctions it says so I open up that folder and EDO is a real company like EDO.com. It’s like e-day, it’s an auction company and I see these various things here that are available, collectibles, let me click on bears and I open the bears folder and what’s going to happen if I were connected is it would bring up that page with what’s available in the auction for bears. Now this is within the file explorer, this is not with the browser.
Now let me show you in fact let me go to my search bar here and you see I have a new capability in this search bar that didn’t come with Windows. I type in the word bears and I do in fact bring up that page about bears. Now the significance of this is not that it can be done, a really good C-Plus programmer could do this. This significance is that we did this with Java script and so people who are entry level programmers, and frankly people who don’t even consider themselves programmers actually now have the ability with this prototype technology to be able to do some things that otherwise would be extremely difficult to do.
Let me show you one other thing here in the spirit of showing you some things. I’m going to bring up an auction tool bar. You see this auction tool bar at the top of my think pad here and you see things that are flashing. This is real time data simulated here this afternoon. But real time data coming from that site being manifested in a tool bar at the top of the display and I can move these items around, I can right click on this tool bar and I can auto hide or always on top are all the things that are characteristic of the Windows environment, but I’m doing this simply by writing Java script. This is a new prototype technology called sash [phonetic] that some of you might be interested to learn more about. It’s on our [unintelligible] site. Now the other thing that’s going to make things a bit easier is the emergence of the teleweb and here’s a [interposing] so I’m watching the TV and I’m looking at this ad and I start to get interested in this so I pick out my channel and I click on it and boom, I’m at the web page of this particular product and I start getting interested in this and the next thing you know, I bought one. And of course that’s exactly the idea.
Now what about Linux and open source? Why do I put this in a category of easy? Well there’s something really important going on here with Linux. I’ve seen it happen three times over my short three decades in the information technology industry. In 1981 I saw a phenomena of the PC industry where venture capital and lots of smart people gravitated into PC’s and a lot of grass root activity was happening and some people said, this isn’t real. But of course it was and about ten years later in the early 90’s I saw the same thing. You saw it too with TCTIP and you saw venture capital and lots of smart people and lots of start-ups flow into TCTIP. And it was grass roots and some people said, this isn’t for real. And then just a few years later in 1999, we really started to see some significant things happening with Linux. We began to see lots of venture capital, lots of really smart people that we know from around the industry, showing at Linux companies. We began to see sophistication raise it’s head in the world of Linux. We began to see a company like IBM contribute some real hard core mission critical serious [unintelligible] into the Linux community as open source. We saw just three weeks ago the 24th largest super computer in the world being announced at the University of New Mexico built on 256 dual processor next finity servers running Linux and a lot of technology to be enable to be possible to manage this environment. This kind of technology is going to be needed for e-business. Remember we’re only two or three percent of the way into what the web is all about and scalability we haven’t seen anything yet compared to what’s going to be needed. So is Linux going to replace all the other operating systems next week? No, but is Linux really serious? Is this a game changer? Is this a disruptive in the positive sense of technology? There’s no question about it. There’s a [unintelligible] that Linux and other open source software is a cult that it’s 90% culture, 10% serious. It’s just the opposite, it’s 90% discipline and high quality. That’s why people are interested in this. It’s a community. It’s not because it’s free, it’s because it’s there’s a community behind it that’s committed to it was able to add new capabilities and functions and support and we will see over the next few years, tremendous improvement in the mission critical capabilities of Linux, and frankly it levels the playing field, it provides a way to be able to eliminate a lot of porting that goes on today. We are short of skills in this industry, we all know that, estimates recently saying 600,000 people short. One of the reasons we’re short is because a lot of that resource is spent porting from this platform to that platform, that platform to this platform. So if we had a world where we could develop on links and then run on Intel 32, Intel 64, Power PC, run in the environment of our choice, that would be a very powerful [unintelligible]. You know frankly I just love it when some of our competitors are saying who needs Linux? Sun said who needs Linux, we have Solaris [phonetic], it’s better. Microsoft says who Linux we have Windows 2000, it’s better. And you have IBM saying, I think we all need Linux. You know only the greatest sinners know how to really repent.
[applause]
JOHN PATRICK: So I would in all humility say that IBM could speak with authority on this particular subject. Now the last characteristic of the next generation of the Internet is it needs to be trusted. Is the Internet trusted today? Well to some degree it is but you know we have no authentication on the Internet. Now when we see that little solid [unintelligible] at the bottom of the browser we implicitly know that our credit card number is being encrypted with a public T of [unintelligible] or Mastercard and we know that only they have their private key, only they are able to encrypt our credit card number and so we are relieved. However, we don’t really know who that server on the other end is. How do we know it’s LLBean. How do they know that we are who we say we are and the answer is, they don’t and we don’t. And the reason is because we don’t have digital ID’s for everyone and I believe this is an urgent need, to enable the Internet to continue to scale, to enable privacy, to enable real security. Now once we all have digital ID’s and really including a biometric would be the most airtight approach to this, once we have these digital ID’s we then are empowered. We have five critical things. We will have authentication, we will be able to establish we are who we say we are and our certificate will negotiate with the server to make sure they are who they say they are.
Secondly we get authorization so that a web site can say this person that, this other person can do this.
Third we get confidentiality, meaning that because we have keys we can get the key of the intended recipient we can encrypt the message to them and be confident that only the intended recipient can read that message. And both of us will know that that message was not altered. In other words we’ll have integrity, which we don’t really have today.
And number five we get non-refutiation which means that transactions can stand up in court. I didn’t ask to buy that 100 shares of stock. Oh yes you did, we have your transaction right here, it’s signed with your private key. Only you have your private key. It had to be you. So this is an empowerment. Digital ID’s are not something to fear, they’re something to embrace. We do not want to see regulation in this area of course, but we do need a very thin veneer from governments around the world to say, it’s okay to not have drops of ink on a piece of paper to make something stand up in court. It’s okay if you have an X509 decree certificate a standard for containing these digital ID’s. It’s okay, it’s just as good and frankly better than what we have today. You know you can go to a web site and buy 1,000 shares of stock if you have the money to do it, with a mouse click, but try to transfer one of their shares to a child or grandchild. You can’t do it. You have to get in your car and drive to a bank so that you can get a gold medallion signature from someone who theoretically knows you. Now the second benefit of having digital ID is that we can begin to move away from cookies. Now cookies came about for a very important technical reason and that reason is that when you click on a link you don’t make a request to a server, the server responds and then you’re finished, you’re disconnected, and if you want to go back for step two you have to present yourself again and the server still doesn’t really recognize you, so somebody said we need a way to be able to maintain what we call stake in between those two mouse clicks and so a very clever person somewhere invented the cookie and the cookie gets written by your server on your PC and so when you come back that second time the server reads that cookie, takes a bite of that cookie, reads that little serial number, hooks you up in the data base and says welcome back, let’s go on with step two. So it was a great idea but I think we all would agree that it has led to some possible abuse where the use of cookies has become in some cases, an invasion of our privacy, where the cookies has been used to be able to track our every mouse click. It has been used to maximize the distribution of advertising, not necessarily always in our best interest, so I think the cookies are going to be around for quite some time and frankly there is no web site today that’s doing things not using cookies so I’m not criticizing those who do but we must move to an environment where digital ID’s can be a preferred approach and we leave cookies in the dust. [motor noise] Well we ran over that cookie.
Now the third part of this is [unintelligible] the platform for privacy preferences. This is a new standard emerging from the world wide web [unintelligible] which will allow you and will allow me to establish the degree of privacy we want to have. Some of you in this room may want to be anonymous. That’s okay. Some of you in this room may say, you know I really like the idea of getting e-mails and personalized web pages. I like the idea of people intruding because frankly it saves me time, I’m busy, I don’t have time to shop and if somebody can make suggestions for me, I like that. Well that’s okay too. At [unintelligible] will us all to express our preferences in the browser and the browser will then be able to negotiate with the server for the appropriate level of privacy.
So this seven characteristics make up the next generation of the Internet but there’s a little additional help we need and the first is that open standards need to continue to rule. The Internet is the only thing I know that works the same everywhere, the side of the car we drive on or the width of the railroad tracks or the plugs that we put in the wall, everything is different, except for the Internet and that needs to continue. X and L is probably the most important standard today and provides structure to the web. It provides a way to tag not only data, but system elements so that things can work together more effectively. This X and L capability can be aggregated into higher levels, things like the trading partner agreement markup language which is what you can think of is a vocabulary to allow contracts to talk to each other so that the lessee and the lessor terminology means something in these web pages.
Rolling it up to a higher lever there are things like Oasis that enabled the whole semi-conductor industry to have a data dictionary in effect that allows for a common language to be spoken. We also need these standards in the wireless area. We need XHDML to take on so that we don’t have multiple approaches between PDA’s and our Cabango Internet radio and our cell phones. And lastly we need to continue to explore [unintelligible] as a community at large because the directory becomes at the center, at the core of all the things that I’ve been talking about.
Secondly the role of public policy needs to be respected and the private sector needs to provide aggressive leadership. We can’t delay. We have to anticipate things like privacy and we have to run hard and fast to step up to these issues so that we don’t have regulation that will be difficult to implement and costly to implement. There are many policy issues in front of us and we need to take them very seriously and don’t assume that somebody else is going to work on it but get in the boat. If you’re here from a company make sure your company is following these issues and participating. You can visit the global Internet project by the way, at triple.git.org.
Now what’s going to cause this next generation of the Internet to actually get built? [unintelligible] many technologies and many participants. There’s global collaboration underway from our company and many of you in the room. There truly is a partnership of academia, government, research, companies working together and in fact it’s evolving at a very rapid pace. Somebody said to me, well when do we get this next generation Internet and I say, there is no arrival date, every day we get a step closer. Well when is it going to be? Well I can’t tell you but let me ask you this question. When did the web get like it is today? Remember what the web was like in December 1994, for anyone who was here at Internet World, it was nothing like the web of today. Right? Well when did it change? Well hard to say, it just sort of changed along the way, every month there was a new technology, a new version of a browser or a Java script or screening audio, lots of things that cumulatively added up to what we think of as the Internet today and that same thing is continuing to happen to the next generation of the Internet. It’s going to mean millions of e-businesses, millions of e-businesses. I don’t know about you, I was not the slightest bit alarmed to read on the front page of the Wall Street Journal this morning that three companies had failed on the Internet, three etailers. Last I looked there was something on the order of 1,000 business failures in America every week so why is it alarming to think that three might have failed who happened to be Internet companies. Frankly if there weren’t business failures we should be very alarmed because that means that maybe this isn’t as innovative as we thought. And of course we know that’s not the case, this is a way to be innovative, this is a way to try business ideas at a much lower cost and with a much greater speed than has ever been possible before, so we know that all the good ideas will not actually turn out to be good ideas. Many of them of course will. So we will see millions of e-businesses, little bitty ones like the Italian jeweler in Verona making a fountain pen. [unintelligible] making that fountain pen for 500 years, probably didn’t do an IPO to bring this web site live. Probably had the modest market cap but is selling fountain pens every single day, 365 days a year. And then there are the main stream businesses. These are businesses that already exist, big ones, famous ones. Now what’s going to happen to them? Are they going to be the dot coms? Or will they be [unintelligible] in some way by new dot coms. I think the answer actually is that we’re going to see the evolution here of e-business around what’s really important and that is segmenting your market, setting the right price, having world class customer service, having a great fulfillment system for whatever it is you deliver. Those will be the determinants of whether a business is successful or not. I think we’ll continue to see business failures and that should not [unintelligible] us. All the ideas can’t be good and by the way, some existing companies may fail as well because they studied this too long, they couldn’t come to grips with the reach, the range, the [unintelligible] created by and the opportunity created by the Internet.
Now the biggest part of this is business to business. However optimistic you may be about retailing, and I happen to be very optimistic about it, you would have to agree that business to business is probably five to ten times bigger than what we see of business to consumer, and a lot of interesting things are happening here with these e-market places. They’re popping up in every industry where the major players in an industry get together and form a trading hub or e-marketplace and it becomes an important fundamental aspect of that industry. And by the way it will charge fees of some kind and many of these will become companies themselves, these collaborations and companies who are not part of them and who just watch this phenomena may find themselves paying fees and being disadvantaged. An interesting company was formed here recently called Commerce Quest which has created a B to B switch. It’s not a specific industry kind of marketplace, it’s a generic kind of marketplace that can allow transactions from one platform to be able to go through their switch at very high speed and reliability and be executed in a different environment and share these transactions even though the participating companies may have totally different technologies.
Now the last thing I’d like to comment on before concluding is the power of a click. I think in so many ways the most important aspect of the next generation of the Internet is this transfer of power to people and there are so many examples that I could give you where I don’t think we’re listening hard enough to people. I went to a web site recently of a California software company and I was ready to buy this piece of software. I was desperate for this piece of software. I would have paid I don’t know how much I would have paid. I clicked here to buy and up came this form. No problem Mr. Patrick, step one, print this form. Step two, fill it out and fax it to us. This is not e-business to us. Now recently I went to a hotel chain and I reserved a room and while I was reserving that room on the phone I went to the frequent stayer web site and I’m looking at my balance and I have a lot of points and I looked at a coupon in my browser that I could use for this room and I said to the person, I’d like to pay for this reservation using my frequent stayer accounts, and the person said I have no access to that information. So I said, well is this the company or is this an answering service. Oh no, no, no this is the company but this is the reservations department. I said that well how do I, I’m looking at this coupon, how do I use this to pay for this room? Oh Mr. Patrick it’s no problem at all, just call us Monday, nine to five during our normal business hours. Give us your credit card number and for just $35.00 we will overnight you a copy of what you’re looking at.
[laughter]
JOHN PATRICK: Now I ask you, is that a stick in the eye?
[laughter]
JOHN PATRICK: Now is this company uninformed, unenlightened? No of course not. We were talking here about application integration, the Holy Grail of e-business. The reservation system wasn’t able to talk to the frequent stayer system because they were incompatible. They were designed separately at different points in time on different platforms. Well what about using message queuing as a way for that reservation system to send a message to their frequent stayer system saying, hey I got this guy on here wants to reserve this room. How many points does he have? Oh he has plenty of points. Okay well deduct 30,000 points and confirm to me. Okay I did it. Thank you. Okay Mr. Patrick it’s done. So right today most of the transactions on the web are between people and servers. And what we’re going to see in the next generation of the Internet is that most of the transactions perhaps will be between server and server. Transactions we don’t see but transactions which make our life easier, which result in us standing in fewer lines. Look at this one. This is an e-mail I got from a very large financial services company. Dear Mr. Patrick thanks for your recent inquiry. Unfortunately we can’t do that by e-mail, you have to speak to a customer service representative at our customer service department. Call us Monday to Friday, nine to five our business hours. Of course if you have any other questions, send us an e-mail.
[laughter]
JOHN PATRICK: By the way, call our 800 number. I happened to be in Europe at the time and you can’t call 800 numbers from Europe. So fundamentally here there’s a decision that companies have to make and I call it accommodation. You have to decide are you going to accommodate the Internet and continue to do business the way you’ve been doing business, or are you going to embrace the Internet as your primary relationship mechanism with all constituencies while accommodating the way you’ve always done business. That’s the bottom line.
So in conclusion I would like to offer up just four very simple ideas for how to survive and thrive in the next generation of the Internet.
Number one, think outside in. Outside is where all the people are, they have the power. Walk in their shoes. Number two, think big but start simple and grow fast. In the old days we had a model of plan, build, deliver. Plan, build, deliver, 18 month cycle. Today and in the next generation of the Internet we need to think differently. We need to think sense and respond, sense and respond, 18 hour cycle, maybe 18 days in some cases. Now I’m not suggesting just throw things up against the wall, you need to build a lot of framework. You need to have an architecture, you need to have a blueprint, need to design for scalability. As I walked the floor today I saw a lot of great ideas and I was just thinking to myself, you know the biggest problem that some of these great ideas could have would be if they’re really successful because most web sites today are not built with an architecture in mind and can allow for the ultimate scalability that would be necessary in a totally connected world.
And last, we’re going to take the Internet culture. I recommend that to CEOs all over the world that every new web site, every new page should be approved by a 16 year old. They can tell you whether it makes sense, whether it looks right, whether it feels right. And if you can’t find a 16 year old, there’s another group of people that you can talk to. And that’s a group that we used to call seniors. That’s a group that you see here. As you can tell, these people are not 16 years old, but I can tell you, they totally get it. They are not in the slightest bit intimidated by technology. They are movin and groovin. They are setting the pace in cyber space. The knowers mirror is a really with it newspaper. It has no paper edition, it’s only on the web and you’re looking here at the web masters and the web monkeys and the designers and the coders and the people that are running that business.
Well in conclusion, let me invite you to my web site at IBM.com/Patrick and at that site you can find this presentation I’ve been sharing with you. You can also find little reflections there about motorcycles, Mozart and GPS and running and of course important things like micro breweries and free pubs, and even a little more important things like the public T infrastructure and meeting the expectations of people. So I definitely do invite you to this affair and also please do visit the portal for the next generation of the Internet at IBM.com/NGI.
Thank you very much.
[applause]
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