McNealy Says Telcos Falling Behind in Net Race 168
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."
No way! (Score:5, Insightful)
Oh for the love of.. (Score:5, Insightful)
Re:No way! (Score:3, Insightful)
I'm guessing he has a server supplier in mind? (Score:5, Insightful)
How kind for pointing this out.
AOL (Score:4, Insightful)
he is quite right (Score:5, Insightful)
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.
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.
ISPs competing with their customers? (Score:2, Insightful)
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.
Re:Oh for the love of.. (Score:3, Insightful)
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?
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 ! ;)
Re:Oh for the love of.. (Score:3, Insightful)
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!
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".
Re:Oh for the love of.. (Score:5, Insightful)
Re:I'm guessing he has a server supplier in mind? (Score:4, Insightful)
Goodbye network neutrality (Score:2, Insightful)
If anything, there ought to be anti-trust legislation preventing the same company to own transport and content, and preferable not "enabling technology" (browsers, operating systems) either.
Doesn't make any sense (Score:2, Insightful)
The only way any of the big content providors are ever going to have their own network is if its a wireless one, and due to the major federal regulations and licensing costs in doing so, even Google is having a hell of time trying to get it done, and even then how much internet activity is done wirelessly, not much.
Re:Stick to your core (Score:1, Insightful)
You mean like these guys? [wikipedia.org]
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
Re:Oh for the love of.. (Score:5, Insightful)
The only way to make a profit will be to own the pipes.
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.
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.
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.)
Re:Oh for the love of.. (Score:3, Insightful)
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's hard not to see that becoming the norm over the next decade.
Re:Only because telcos aren't doing their job (Score:3, Insightful)
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 1s delivery. As a rule, it would be fiber, co-ax, wireless, satellite and powerlines. You say it doesn't matter but considering all the whining on here about how long it takes to steal (er, liberate/borrow/sample/whatever) a piece of software or song or how long ones lag times are for WoW or BF2, it most certainly does matter.
People want the fastest service at the lowest price. Period. While getting a network connection through satellite is feasible, most people don't want to pay what it costs AND still deal with the slow response times.
Which leads to. . .
What consumers are increasingly going to want is a comprehensive telecom service: phone+TV+internet.
No, consumers are not necessarily wanting to go this route but providers like Comcast and Verizon are forcing it on consumers because they, the providers, can make more money that way. If you look at what Comcast offers for their triple play, it costs, minimum, $100/month for all three services. Considering I'm paying $23/month to Verizon for a landline, I would be spending $7/month more just for the phone portion which includes long distance which I don't use (thus the $7 difference).
If I could get just the internet portion from Comcast, that should be $33/month. A very reasonable rate. But Comcast won't offer you just internet. You MUST buy all three.
Verizon isn't any better. Their triple-play is also $100/month but they use fiber rather than co-ax. I have been getting offers from Verizon for just net connection and according to their own web site [verizon.com], they offer in my area:
$43/month for 5/2, $53/month for 15/2 and for $65/month I can get 15/15. These prices do not include the cost of installation ($80), the activation charge ($20) and are based on a yearly contract. If I quit early I am charged $99 and those rates will go up after the term expires (see the fine print for details). To see what the rates will reset to, click the link 'Show More Plans' at the bottom of the list.
Unless someone like Google or AOL (AHHHHH!!!) can provide the same service at a cheaper price, the monopolies like Verzion/Comcast/TW have nothing to fear.
Re:Oh geez not portals, NOT AGAIN. (Score:2, Insightful)
Telcos are trying to make themselves the train-station. Without net-neutrality, your ISP can limit your access to the places you'd prefer to go. They can sell a lot of sandwiches if you're locked in the train station!
Re:Oh for the love of.. (Score:1, Insightful)
To wax philosophic, the road is not a destination.
More bluntly, sounds like someone does not know his ass from a portal.
Re:Only because telcos aren't doing their job (Score:3, Insightful)
Re:Historical parallels (Score:3, Insightful)
I'll be looking myself, but if you've got a reference, it would be appreciated.
Re:Other way around (Score:2, Insightful)
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.
It wasn't regulation that killed them. (Score:3, Insightful)
It was considered a reasonably good business practice until fairly recently (I'd say prior to the 1970s but you could debate this) to own as much of your critical supply chain as you practically could, and to this end you saw companies like Goodyear running rubber plantations, Alcoa (an aluminum producer) operating power plants, IBM operating chip fabs, etc.
The decline of vertically-integrated enterprises is more about flexibility and maturity of markets than regulation. You don't see Dell running its own fabs or turning out its own microprocessors, and you don't see Intel manufacturing finished computers and sending out salespeople and maintenance techs to end users, the way IBM used to. Both companies are intensely focused on what they perceive to be their 'core competency' (that the phrase itself has become a managementspeak cliche is a testament to how pervasive the idea has become) while leaving the rest to outside suppliers and vendors. This allows them to be more flexible than traditional vertically-integrated companies,[^3] but it requires the market to be relatively mature: if there wasn't a plethora of hardware manufacturers in Asia willing and capable of turning out Dell products, Dell wouldn't be able to operate the way they do.
Nobody -- besides perhaps the shareholders -- is keeping Dell from owning and operating its own chip fabs, assembly factories, or trucking networks, from owning the entire supply chain from sand and oil wells to tech support. They don't play in any of those sectors because there's no need to: I suspect there's a pretty long line of companies who want to be Dell's chip supplier, assembler, or shipper of choice. (And those suppliers have their own suppliers, eventually going all the way back to the silica or oil or whatever.) As evidenced by Dell's market share compared to IBM's (and IBM's subsequent reorganizations away from a traditionally vertically-integrated company), there seems to be merit to the whole scheme, at least from a business perspective.
[1] Having a monopoly by itself isn't sufficient, you have to have the position and abuse it; this is per some early 20th century U.S. Steel case that I can't find at the moment.
[2] You get to a vertical monopoly (as opposed to just integration) when by controlling the full supply chain you can eliminate other players in the market for the end good by driving costs down to the point where they can't compete; however since you don't fully control any single aspect of the supply chain, you have to maintain this level of performance in order to maintain the monopoly position -- you can't just rest on your laurels once it's accomplished, as you can with a horizontal monopoly. If you slack off and try to increase costs, your un-integrated competitors can reappear (subject to re-entry costs). For this reason, vertical monopolies aren't regulated to the same extent horizontal monopolies are, and some people would argue they're actually good for consumers in some situations.
[3] I think that you could argue that at the same time companies have become less focused on vertical integration as a path to success, many companies have started creeping out horizontally and looking for the other kind of monopoly. The intense specialization that modern business practice extols seems like it inevitably encourages monopolization of niche markets; vertical integration seems to encourage more competition. (Since companies with massive investments in a huge in-house supply chain want to wring profit out of it in any way possible, even if it means manufacturing some