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McNealy Says Telcos Falling Behind in Net Race
Posted by
CmdrTaco
on Thu Feb 28, 2008 09:25 AM
from the also-low-on-gas dept.
from the also-low-on-gas dept.
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."
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Submission: Sun's McNealy: Telcos falling behind in 'Net race by Anonymous Coward
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No way! (Score:5, Insightful)
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Oh for the love of.. (Score:5, Insightful)
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I have explained to every telco that either you become a destination site, or the destination site will become a telco
I didn;t actually RTFA but I'm going to have to, just to see how in the hell a web site will become an ISP.
I think the telcos have to make sure they don't get marginalized to being just bit providers and bandwidth providers
That's exactly what an ISP is supposed to be!
WTF is wrong with that guy, besides being a lying asshat who will say anything to sell his company's crap?
Re:Oh for the love of.. (Score:5, Insightful)
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Re:Oh for the love of.. (Score:5, Insightful)
The only way to make a profit will be to own the pipes.
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Historical parallels (Score:5, Insightful)
The difference is, I think, that security through diversification and outsourcing requires a fairly mature business environment with many players to choose from. If you're the bakery who's considering eliminating your delivery department and going with an outside vendor for that purpose, you'd want to make sure there were many choices of delivery services, so that you're not tied too closely to one. If lots of choices and diversity don't exist, it might make sense to keep it in-house. Since Internet services are a relatively immature business environment, and a large content-provider like Google has few backbone providers to choose from, it makes sense that they're looking to secure their position by bringing things in-house.
What's ironic is that the one thing that the telcos absolutely oppose -- network neutrality enforced by legislation -- would probably remove much of Google's incentive to build out backbone capacity. If the telcos were forced to provide nondiscriminatory service, suddenly there's no risk for Google of being extorted. With the disappearance of that risk also goes the impetus to be their own backbone provider. (I think there are historical parallels in the early 20th century with the passage of the Interstate Commerce Act and its accompanying regulation of goods transport, although the waters are muddied by the power that the transportation and industry cartels held in the ICC and in government.)
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Re:Historical parallels (Score:5, Interesting)
The result is that data providers are now at the mercy of pipe providers. Without net neutrality, it will pay to be a pipe provider. You can extort fees from data providers so that they have access to users at the end of the pipes.
What I foresee is the return of free ISPs, and maybe Google will be one of them. They will pay for all that (probably wireless) infrastructure through deals with data providers who want access to all the people who connect to the internet through Google. The laws allow "pay to play" and that's how Google would be paid for providing their ISP service. I think this could work and I want it to happen, because US ISP's are dicks and they deserve to die.
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It wasn't regulation that killed them. (Score:3, Insightful)
It was considered a reasonably good business practice until fairly recently
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Good insight and gr
McNealy: Just Be Evil (Score:5, Interesting)
I think that he is referring to long term and big sites. Honestly it's not too unreasonable. If Comcast is fucking me up the ass and I can get my internet from Google why wouldn't I?
The problem with that thinking is that his proposed *solution* is what's causing the problem in the first place, pretty much exactly as you lay it out. If the carriers stop screwing people, Google wouldn't have anything better to offer as a carrier. The message should be "if you don't stop being a bunch of dicks, someone will step in and kill you." McNealy's message, on the other hand, is basically "Since people want to get away from you because you're a bunch of dicks, you could become even bigger dicks, get a monopoly on all the media, and give people no recource but to do business with you."
Which seems like better business - make people want to use your service, or try to get a monopoly so people have to use your service? Problem with the second choice is that 1) only one company can "win", and 2) people don't want canned content anymore, so you can't win at that anyway.
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Re:McNealy: Just Be Evil (Score:5, Interesting)
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Re:McNealy: Just Be Evil (Score:4, Insightful)
you need to do something valuable to justify you being a bunch of dicks
Right, that's what it all hinges on. I'm betting - and I think the subtext of his message supports the notion - that their method of offering something valuable is to buy somebody else who's currently doing something valuable, locking it up, and probably crippling it. Like if Google didn't own YouTube, one of those clowns could buy it and try to make it an "exclusive". That's not value, that's still being dicks.
Now if they want to actually offer something new that people would want, that would make me see things differently. But I'm betting their thinking is more along the lines of Verizon's craptastic V-cast junk.
But that still makes me wonder why it wouldn't just be easier to just stop being dicks in the first place. But that concept seems completely alien to these guys.
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Perhaps he's referring to Google, which is on one level nothing more than a search engine and set of related Internet services, but whose problems with connectivity have lead it to increasingly take control over how its packets are delivered. It's buying dark fiber, it's bidding on spectrum, it's experimenting with Wifi networks.
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Yes, this is stupid. Companies have their own internal telephone system, and some of the larger ones have their own connection between sites, but the telcos are still around.
What kind of crack is this guy smoking? Crack: the super ultimate kan ban SCO edition. Become a member of AOL: get yours now!
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He's telling the telcos that if they don't adapt, they aren't going to be carrying calls. Folk will buy bandwidth and use one of the above as their telco.
I know Embarq has received not a cent more than their minimum for DSL + a phone line from me in years, yet I make hours of calls each day, most of which are international. Every call is by VoIP and is routed on a lowest cost basis.
Unless telcos adapt, it
I'm guessing he has a server supplier in mind? (Score:5, Insightful)
How kind for pointing this out.
Re:I'm guessing he has a server supplier in mind? (Score:4, Insightful)
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AOL (Score:4, Insightful)
Yahoo (Score:3, Interesting)
he is quite right (Score:5, Insightful)
Re:he is quite right (Score:5, Funny)
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incidentally, the linked article talks about sending 16.4 tpbs(pirate bays per second) so its gotta be good.
Re:he is quite right (Score:5, Informative)
You already can: http://en.wikipedia.org/wiki/PRQ [wikipedia.org]
The ISP is owned by The Pirate Bay guys.
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Only because telcos aren't doing their job (Score:5, Insightful)
As long touted, the Internet is designed to work around breakdowns and bottlenecks. Current telcos ARE breaking links and implementing bottlenecks
Funny thing is, if the telcos would just focus on getting packets from point X to Y quickly and cheaply, and pass that speed and savings on to the customer, they would make more money and not have to consider going into businesses they're not suited to.
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At the moment, as I understand it Comcast has a near monopoly in the US and so doesn't yet face that kind of competition, but it will happen
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The older telcos are scrambling because owning twisted copper pair lines is no longer enough to ensure a profitable revenue stream - there are several other ways into people's homes now: co-axial, satellite, wireless, powerlines, and fiber.
Yes, it does matter. The examples you provided have varying speeds of 0s and
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Part of the problem is also we don't have a great infrastructure in place to handle all the new services coming online. The bandwidth crunch is what companies are fighting agai
Still need those damned wires (Score:5, Insightful)
For all of Google's and other "destination sites'" talk about buying all this wireless spectrum, the fact is that wireless will just never be able to match wired for speed or quality (a 20-year-old corded phone still sounds better than even the best cordless or cell phone). You just can't get around the fact that a wire (fiberoptic or copper) still has to be laid out there for the best results. And no "destination site" is going to be laying that line anytime soon.
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Maybe you should try telling that to Google. [slashdot.org] I bet they'd be pretty surprised.
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Stick to your core (Score:5, Interesting)
Retailers do not build major roads to facilitate reaching their stores.
Road-building contractors do not go into the retail business.
For a _few_ businesses, expanding into infrastructure construction may be required - but only to jump-start the market, at which point they need to get out of the infrastructure business
Electricity, natural gas, etc. providers have largely given up their infrastructure business.
Internet backbone service providers simply do not have what it takes to go into the content/destination business. It's simply not what they do, and others do it far better so long as there is sufficient infrastructure to support them. Google may be getting into the infrastructure business, but only to boost infrastructure capacity to match where they want to go in their core business; when Google gets the infrastructure to where they need it, they will have to let go of the infrastructure business because, simply, it's not what they do.
Re:Stick to your core (Score:5, Interesting)
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Lately they have been doing quite well I thought. They made a decent profit last four quarters in a row [theregister.co.uk].
McNealy is a shitty CEO, and should have been canned a long time ago.
Er, you know that Jonathan Schwarz [sun.com] has been the CEO of Sun for quite some time now?
Re:Stick to your core (Score:4, Insightful)
True, but the bigger ones certainly have a hand in what gets build where and with what money. Wal-Mart frequently gets involved in legislation and appropriations to get government to pay for roads to/from their shipping centers and retail outlets. For example, the 2005 federal highway bill [progress.org] - "The federal highway bill contains $37 million for widening and extending the road in Bentonville, Arkansas that is the main access point to the headquarters of Wal-Mart Stores Inc." The key is that they don't build the roads themselves. They simply lobby their reps in Congress (and the state legislatures and local boards/councils) to get funds to build and widen highways that are important to their retail and shipping businesses.
A similar story played out in my neck of the woods, when Wal-Mart offered to put forward some funds upfront to get a state/local project going to widen a portion of NH state Rt. 28. This would've improved access to their existing store in Salem, NH, as well as a planned SuperCenter in Derry. Eventually, the plans were put aside after Wal-Mart walked away from the new building plan, but millions in tax dollars and tax incentives to Wal-Mart were on the line due to this highway building project.
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Exceptions are rare (Score:5, Interesting)
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.
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Other way around (Score:5, Interesting)
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.
Arg. (Score:3, Insightful)
This is rather like the phone company cutting off your calls to inform you of all the great 900 numbers you could be calling instead.
Destination becoming ISP ... (Score:3, Insightful)
"Some" people are way ahead [google.com] of the curve [slashdot.org] on being an internet of its own [news.com], but not only the telco wired land [slashdot.org].
After all, the network is the computer [sun.com] ... BHWAHAHA ! ;)
Bandwidth is a commodity (Score:3, Insightful)
eg. mail is still a cost for, and from, most ISPs yet you can get a better a/c than they offer free from GMail.
The solution of course is, not to have an auction for the latest, soon to be extinct, DotBomb 2.0 bauble (Facebook I'm looking at you), but rather to develop a useful portal for your users,
Integrate Webmail and WAPmail, offer file hosting/backup facilities, offer file sharing facilities, offer community building facilities and generally cater your service to your user base so that they see you as providing their favourite car rather than just a road, (c'mon it's /. I had to stick in a car analogy)
In short it isn't enough just to offer connectivity any more, though if you're selling 16.4Tbps you may have an advantage for a while.
This "stuff" can change extremely quickly (Score:5, Insightful)
Things change very fast in the world of telecommunications.
So could it happen that companies like google, yahoo etc. become partly telecoms? Will, what google is trying to do, become a megatrend? I don't have a magic sphere, but from what I can see, I'd say it's more likely than not. And if/once this ball starts rolling, the telcos better have a good strategy or they'll be wiped out or "considerably diminished".
Is this really true? (Score:3, Informative)
I don't live in Finland, so I can't speak from personal experience, but your statement is at odds with news reports [cellular-news.com]. As I understand it, while cellphone penetration is very high in Europe, so is landline penetration. IIn both Europe and the US, about 80 percent have a cellphone. And a comparable percentage have landlines. In the US, many of my friends have tried dropping their landlines
Please muzzle this imbecile! (Score:4, Interesting)
Second, I don't want any of these skeevy telcos acquiring popular web sites, because it is inevitable that they will ruin them. Here's why:
A hypothetical company XYZCom, who provides my residential broadband connection, buys out and operates Slashdot. They now control both ends of my internet experience. What's can stop them from automatically charging me a nickel every time I hit "Reply" ? Nothing, it's incredibly easy for them and they can trivially word something in their contract to that effect. Then XYZCom decides it is unprofitable to serve outside users, restricts Slashdot to telco members only. I get burned, everyone leaves Slashdot and go post mindless drivel on Kuro5hin, world collapses under the sheer weight of inflated art-school dropout egos. Then the best part is when the telcos whine to the guv't about being so poor since Slashdot died, and get some new bill passed to defraud the general population even harder. Lather, rinse, repeat.
Besides, it just feels wrong to give the telcos even more power. That's like getting mugged by some wigger, and handing the little suburban faux-thug a bigger knife with which to threaten you. We already have few defenses against these corporate sellout behemoths, we don't need to be giving away our beloved internet.
So why is AT&T doing the exact opposite? (Score:5, Insightful)
I think scott is just talking out of his anus and is afraid he is going to sell less servers to the telco's to provide all these media services.
in business it's usually not a good idea to get into too many things that aren't related because you lose focus and start being bad at everything. very few companies are like GE that can compete in many fields successfuly
Oh geez not portals, NOT AGAIN. (Score:5, Insightful)
Goddamn, someone needs to kill this guy before any execs fresh to the job pick up on this idea. I say fresh to the job because any old hand will have seen this before. Portals. The days when the idea was that the web started at your ISP's home page. When every ISP had a newsfeed, poorly implemented, with no depth, but a ISP portal had to have the news, and so they bought the cheapest feed they could, implemented it badly and put it on the front page.
Filled offcourse with all sorts of content you could buy from the ISP, but not the actuall content that actually is bought on the net, PORN. Hell, I worked for one ISP were they had special code for the frontpage that would only display the porn links during the late hours. Not that it really worked, because invariable the ISP content sucked compared to what was available on the real net. McNealy? The 1980's called, they want their AOL back.
The problem is that it sounds so logical. If you do not provide food services on your train stations dear transport company, then someone else will. It forms quit a bit of income, all those stands, often at least partially owned by the train company itself. It used to be they even provided pretty decent service.
Ever seen a gas station that just sold gas?
So why doesn't the same go for ISP's selling content? Because the train station example has one simple advantage. LOCATION. When I travel by train it is easier to use the supplied services at the station then go outside and get food there.
The same does NOT go for ISP's. I can switch between content sides at the press of a button, there is absolutly no reason for me to visit my ISP's newsfeed when I can go straight to the source. Why should I buy music from my ISP when iTunes is just a click away? Why should I use their branded search engine when google is just a click away?
IF ISP's had a form of lockin it makes sense, say that visiting the BBC news site cost me money and my ISP's Reuters newsfeed was free then I could easily see that some people would choose the inferior but cheap option.
Just a couple of minutes from Arnhem train station was a fast food shop with really good self-made snacks, cheaper as well, compared to the concesion stand at the station itself, but still, because it is hassle to walk the detour the crappy snacks at the station fetched a higher price.
The idea itself works, it just doesn't work for the Internet.
The older people among us know this, because it has been tried. In fact many a customer got so fed up with it, that entirely new companies jumped in the market ADVERTISING with the fact that they offered JUST internet access and nothing more.
And lets face it, it is a lot easier for the ISP's. If they sell music then they got to haggle with record companies, invest in servers, deal with complaints. If they don't sell music, they collect for the transmission of the music their customers get from whatever company is wiling to risk it. You know, my ISP EVEN gets its money when I pirate music. Let iTunes worry about what the record labels will do next, my ISP just transmits the data and gets paid for it.
No McNealy, you sometimes seem almost clever, but this article marks you as just another tie without a clue.
You are trying to sell portals. No thanks.
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