Sunday, November 02, 2003

Telirati Newsletter #13

While this collection of predictions holds up pretty well, it also shows how little consideration I gave to mobile telephony at the time I wrote it.

Newsletter #13: Perception vs. Reality

Perception: Microsoft is a boorish, arrogant company that harms your well-being by driving alternative browsers out of the market. It also squeezes PC makers by unfairly requiring them to bundle Internet Explorer with every copy of Windows.

Reality: The browser controversy is unimportant. Microsoft’s real weakness, and how they ill-serve their customers the most, is that Microsoft is not set up to be responsive to its customers. The customers I am talking about are the computer manufacturers. They are the ones paying Microsoft for Windows. Retail sales of upgrades, while nice, are not the driving force in Microsoft’s OS revenues. Where Microsoft’s would be competitors should have tried, and either missed the opportunity or failed, is in better serving OEM customers. Little things, like not bothering to update faxing for Win98, or leaving call control out of the TAPI 3.0 object model, stick in the craw. Bigger things, like being too slow to embrace 64 bit addressing in Alpha CPUs, can break a company. Compared with responsiveness to customers, a bit of hardball when it comes to contract negotiations is insignificant. But, with competitors that, for example, failed utterly in an attempt to port OS/2 to Power PC, are other companies even able to take up the challenge of customer-responsiveness? The evidence, so far, is against it, without even mentioning Apple’s willful destruction of their licensing business. There remains an interesting battlefield, however: Windows CE vs. Palm Pilot OS. Perhaps a Java OS will rise to challenge in set-top boxes. So far, Microsoft has been able to have it both ways. TCI will integrate Windows CE and Java in their set-top boxes, which won’t be at all difficult. But other customers will not find the DIY approach acceptable. In the future, Microsoft will have to decide whether to lead or follow in Java support on the CE platform.

Perception: IP telephony will eat the PSTN.

Reality: IP telephony will have to start by taking smaller bites. One of two victories IP telephony should accrue before taking a bigger bite are in corporate infrastructure, replacing the need for two networks to each desktop, and replacing a telephone switch with none-to-node communication internally and a network-to-PSTN gateway for external communication. The other is in cable telephony, and here there looks to be direct competition with switched-circuit telephony, not only from the installed based of wire-line telephone systems, but also from the various DSL technologies, all of which treat telephone calls separately from Internet traffic. The question for cable TV providers will be whether they can exploit potential advantages of IP telephony. The possibilities include PC-based telephony applications, in-home IP-based distribution systems, and synergies with set-top-box applications. If IP telephony cannot win in the last mile, it is unlikely to win in the network. These milestones, along with the projected change in the relative size of the Internet and the PSTN will mark the point at which switched circuit telephony will become the legacy subset of a new kind of telecommunication.

Perception: It’s about Java vs. the Windows API

Reality: TCI got it right. It’s about Java and the Windows API. Microsoft got all exercised about Java because it is the most viable alternative to Windows as an application platform. Who won? Well, nobody lost, so, in a sense, Microsoft did not win utterly and completely. On the other hand, Microsoft did successfully execute a strategy that contained Java hype to the point there is really no danger that Java threatens the relevance of Win32 API and COM+. Sun, on the other hand, succeeded where IBM, Apple, and countless less significant contestants failed, and created a new platform for widely distributed applications. The other side of this happy-happy everybody wins coin is that Microsoft will end up ceding a significant segment of applications to a platform other than Windows, and Sun has succeeded in creating that platform without making any money off it. The results are sure to be galling to both parties: Java applications running on a Microsoft-developed Java VM in Internet Explorer, served from an NT servers running IIS and Exchange Server, using Active Server Pages to bridge the server end of the application into the NT environment.

Perception: Computer telephony is inexorably drawing telephony software development to a small and well-understood family of standardized interfaces.

Reality: Don’t hold your breath. In fact, there has been considerable backsliding, with Active Voice finding growth in small, unsophisticated, non-networked, non-unified messaging voice mail, and Microsoft distracted by Internet conferencing. S.100 received an explicit un-endorsement from Bill Gates, and Q.931, a potential unifying factor in telephony signaling, remains sub rosa. The reality is that computer telephony will have to undergo another generation of development, beyond even that now under way, in order to achieve its promise. Anyone interested in making a lot of money in computer telephony will have to solve problems across several technological categories. Most big companies are uninterested in doing so, and most startups, even if they see a multifaceted solution to the problem of product creation won’t get funded because they appear too unfocused.

Perception: Conventional telephony’s advantage is reliability.

Reality: Conventional telephone networks are run by the same sort of people that make urban subways a pleasure and a joy. Just yesterday I found myself unable to dial 10 digit numbers inside my area code. Evidently my CO was incorrectly programmed as part of an area code changeover, and I ended up with no combination of area code, new or old, and number that would enable me to dial a local consulting client. I was also unable to dial the telco’s service number, or even reach an operator! No, conventional telephone networks’ advantage is that, in my neighborhood, anyway, the cable operator has even fewer clues. Which leads to the following gap between…

Perception: The fight is between the people with the wires, and they are fighting over voice telephone calls, because that is where the money is.

Reality: Internet access is more important than voice. One consequence of which is that wireless technologies, even ones which cannot support voice with wireline reliability and quality, are going to compete for Internet access in some places before the cable operator can afford to upgrade to HFC infrastructure, or the telco figures out how not to make DSL marketing just a replay of their huge ISDN success. It is also no sure thing that voice is where the money is. Even before local loop competition becomes commonplace, the diminishing importance of voice telephony will put downward pressure on prices. So all the alternative access companies that viewed Internet access as a dress rehearsal now find themselves on stage in the big show. It is this flip in the relative importance of voice telephony and Internet access that will also cause the change in viewpoint that will drive IP telephony into the mainstream: voice is just another medium for the Internet. We may not come to view this as the dawn of IP telephony, but rather the rise of voice as an integrated medium in computer-based communication, which is to say the end of telephony as a distinct discipline.

Copyright 1998 Zigurd Mednieks. May be reproduced and redistributed with attribution and this notice intact.