Big War in Cyberspace. What If Nobody Wins?

Tim Byars (
Sun, 7 Apr 1996 10:48:24 -0700

April 7, 1996 [Image]


Big War in Cyberspace. What If Nobody Wins?

[F] irst came the New World. Now comes the New World
Order. The only question is: Who will create that

In the short but bloody history of computing, there have
been three great wars that determined who would dictate
the terms of successive eras. Each engendered
fundamental change in the way we compute.

[Image] Apple Computer won the first war by wresting
the fire of computing from the gods of the
mainframe and carrying it to the desktops of mere

Intel, with the help of IBM, won the next one, wresting
power from the Apple-Motorola dynasty with its X86

Then came Microsoft, which destroyed all opponents in
the war over who would breathe life into the processor.

Empires have risen and fallen, along the way packing
corporate parking lots with shiny new Porsches and
BMW's, leaving legions of programmers psychologically
lobotomized and fostering an entire industry of
late-night Chinese take-out joints catering to stressed
out engineers.

Now, the Fourth Great War has begun. Break out the Kung
Pao Chicken.

The new war is not being fought on the familiar
battlegrounds of hardware and software, but rather over
the hybrid issue of connectivity. The forces have broken
down into essentially three categories:

* Those who control the information.

* Those who control the pipelines to the information.

* Those who control the software that gets the information
to, through and out of the pipelines and onto your

Many of the great corporate powers of the old world are
amassing their legions here -- telephone companies, chip
makers, software companies and computer manufacturers.
There are a few new faces as well, including on-line
services and browser makers.

Behind the clamor and smoke of each battle lies the
assumption that the winner -- if there is one -- stands
to dominate computing as no other company ever has,
since for the first time the prize is not the hearts and
minds of technophiles or corporate buyers, but of
consumers -- the few billion potential Joe Newbies out
there with joysticks, 14.4 modems and Pentiums in the

In just the past few months, the combatants have managed
a display of cat fighting with enough deal making, deal
breaking, back stabbing and subterfuge to make baseball
owners and intelligence operatives look like rank

The most publicized scheming was by America Online,
which struck a deal to license Netscape's Navigator
browser, then days later turned around and announced a
deal to include in its software package Microsoft's
Internet Explorer in exchange for putting an AOL icon on
the next upgrade of Windows. AOL also made a deal
allowing customers of AT&T's new on-line service access
to the AOL system.

[Image] Microsoft, which used to pooh-pooh the
Internet, has now struck deals with MCI to
provide Internet access to customers of the Microsoft
Network and with NBC to provide news content for MSN.
And CompuServe, which had already licensed Microsoft's
Internet Explorer, now has a deal with Netscape, and it
recently signed an access deal with AT&T similar to the
AT&T-AOL deal.

What all the combatants have realized is that despite
their success in the old world, they cannot succeed
alone in the new one.

Consider mighty Microsoft, which eats competing software
companies for brunch. It huffed and puffed with its
Microsoft Network and even made its Internet Explorer an
eyesore on every Windows 95 desktop. It still had to
strike a deal with its former nemesis, AOL.

AT&T, which has inspired an entire genre of world
conspiracy literature, is now courting the on-line
services after realizing that having a lot of pipe
doesn't mean anything if you don't have anything to pump
through it.

In many ways, the dominant companies of the old world
are hobbled by their own success.

AT&T, for example, made billions by charging for every
minute of talk. Now, they face a new world of flat-rate
communications with the possibility of people using the
Internet to place long-distance calls.

And even the Baby Bells are scrambling, because suddenly
their business plans, long premised on the gamble that
95 percent of all customers would not be on the phone at
any given time, are collapsing as people log on to
access providers for hours at a time. In fact, some just
never seem to hang up at all.

The Bells would love to squeeze some blood from this
digital turnip and charge computer users by the minute.
But they can't afford to alienate consumers at a time
when cable television companies are poised to introduce
ultra- high-speed links at flat rates -- and local phone
access as well.

The Bells, now facing squeezed margins and competition
from every direction, thanks to the telecommunications
overhaul signed into law on Feb. 8, are scrambling to
become access providers themselves and are cutting deals
with anyone who will talk to them.

In a strange way, for the companies of the old empire,
winning may be almost as bad as losing.

The companies of the New World are hobbled as well in
this conflict. Netscape has seemed like the 900 pound
gorilla on the Net, but for all its market share, it is
after all, just a browser. While a long string of
innovations has allowed Netscape to dictate the terms of
Web site design, it lacks the power to influence much
else. As the AOL deal demonstrated, the on-line
companies, only recently declared dead, hold some of the
most valuable keys in cyberspace.

Gary Arlen, president of the new-media consulting firm,
Arlen Communications in Bethesda, Md., said that the
real power, at this point in time, belongs to companies
that are able to consolidate enough pieces of the
connectivity puzzle in one package to make going on line
simple, fast and cheap for technically unsophisticated

With its consumer savvy and recent alliance with
old-world powers, AOL now seems poised to be the agenda
setter in the connectivity war.

[Image] But even for AOL and its brethren --
Compuserve, Prodigy and MSN -- the New World
poses a threat.

They are all very expensive to use, and the future of
connectivity lies in cheap, fast, dependable
connections. Users of corporate LANs understand the vast
difference between sweating over per-minute charges and
leaving your computer on 24 hours a day, ready to roam
the world at a moment's notice.

The on-line services will tell you that people will
continue to pay a premium for structured content, but
information abounds on the Internet, and, at least now,
doesn't carry the surcharges of most on-line services.
And each day seems to bring yet another search engine or
directory service that allow consumers to structure the
Internet's wealth of information on their own terms.

If all the forces on this battlefield are so lame, who
then will win?

Hal Varian, dean of the School of Information Management
and Systems at the University of California, Berkeley,
proposes an alternative scenario: No one wins.

No doubt trillions of dollars will be made on the
Internet, and Netscape stock will rise to even more
unbelievable levels now that the company actually has
some cash flow.

But Varian observes that perhaps the era of the empires
is over -- that no single force will dictate as Apple,
Intel and Microsoft did in their times. There is simply
no component of connectivity that is so unique and
powerful that controlling it will mean domination of
connectivity -- at least not yet.

Is the difference between Netscape's Navigator and
Microsoft's Explorer really all that earthshaking?

Is the information on AOL and CompuServe so much more
compelling than all the stuff on the Internet?

Is there really that much difference between the
Internet access provided by AT&T and that provided by
some high school kid down the street -- other than the
fact that the kid probably knows your name?

Connectivity is quickly becoming a commodity, like
crackers and toilet paper. Perhaps, some companies with
unique and superior technology, like the cable or
satellite companies, will dominate for a period, but
eventually others will figure out ways of providing
high-bandwidth connections. As was the case with the
Mongols, it was only a matter of time before everyone
figured out the key: It's horses and bows, stupid.

Perhaps the age of empire, like the rule of the Mongols
and Romans, has passed. In its place is a more
diversified arena where the fire of connectivity will be
controlled by many mortal consumers, not by gods.

In Greek mythology, Prometheus stole fire from the gods
and gave it to mere mortals at the cost of having his
liver eaten by an eagle every day.

We puny mortals took fire, warmed our homes, forged our
tools and built our empires.

Whether Prometheus is very happy about his liver is
immaterial, since fire once given cannot be returned.

Fire is here to stay. Start up the barbecue.


" It isn't a very easy sport. If it were there would be a whole bunch of guys in tight pants doing it." ...Professional Skateboarder Eddie Reategui

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