July 03, 2003

Does 802.11 Need a "Business Model"?

Does 802.11 ("WiFi") need a "business model"? Dan Bricklin says it does not: instead, it needs user utility--which it has in spades...

SATN.org: Comments from Bob Frankston, David Reed, Dan Bricklin, and others : David Weinberger points to an article in today's Boston Globe that talks about the WiFi "Bubble Bursting". Yet another article saying WiFi is in trouble because people won't pay for access at the local coffee shop.

Sounds like the old "broadcast" mentality: Something isn't interesting or valuable unless it provides a service that a big company can charge for. It seems the fact that millions of people are buying and installing (at their own expense) WiFi for their own purposes and not just to charge others is completely uninteresting to these pundits. This is like the thinking that P2P could only be used for sharing things that would otherwise be sold mass-market. The fact that we'd want to share our own stuff is of little interest to these people. Of course, the fact that the market for "my own radio" -- i.e., cellular -- is so much bigger than broadcast is missed. The sharing of personal images with non-strangers will be huge, too, as it's been in the physical world. Millions of digital cameras are already being used with email. Likewise, me and my friends building our own "first 100 feet" and "first mile" into the Internet is more important than some big company building it and leasing it.

As David Reed likes to point out, automobiles were user financed purchases. We didn't turn the US into an automobile-centric society with taxis owned by the railroad companies. People bought their own cars for their own purposes, be it to visit friends, go "to the country" (an important, fun reason in the early days), tend to the sick (doctors were early adopters), shopping, commuting, etc.

What matters to WiFi is that it is solving a real need that people have (such as connectivity in places that are expensive to wire, and connectivity to mobile devices in a prescribed area) and that they are buying it and using it by word of mouth. The fact that some carrier can't figure out how to make money on it has no bearing on the fact that Linksys/Cisco et al can make a profit selling equipment to people who want to buy. WiFi isn't supposed to "compete" with being a cellular carrier that provides a service, any more than GM/Ford competes with Amtrak...

Posted by DeLong at July 3, 2003 12:11 PM | TrackBack

Comments

To me it seems that the progression of wi-fi spreading should be that people buy in home units, love them for the increased freedom, and then expect or demand that freedom and internet connection when they go outside of the home.

I know that's how it is for me. I bought a wireless card for my laptop so I could be wireless at home, but now I find myself using it far more outside of the home (cafe's, school) then at home.

Posted by: augie on July 3, 2003 01:04 PM

To me it seems that the progression of wi-fi spreading should be that people buy in home units, love them for the increased freedom, and then expect or demand that freedom and internet connection when they go outside of the home.

I know that's how it is for me. I bought a wireless card for my laptop so I could be wireless at home, but now I find myself using it far more outside of the home (cafe's, school) then at home.

Posted by: augie on July 3, 2003 01:06 PM

So what's the WiFi equivalent to GM destroying the LA trolleys?

Other comparison: when Wifi is as cheap to provide as restrooms, why not? (Noting that restrooms are not free everywhere; usually restricted, if informally, to customers; stocked with a limited choice of the possible consumables; and dependent on regular maintenance.)

A while ago you described a professor-conclave in which one prof said Why don't we get wireless connectivity free on campus? and another said Awfully high on the Maslow hierarchy, isn't that? - which I thought was funny; the university is always pretty high on that hierarchy.

Posted by: clew on July 3, 2003 01:35 PM

So what's the WiFi equivalent to GM destroying the LA trolleys?

Other comparison: when Wifi is as cheap to provide as restrooms, why not? (Noting that restrooms are not free everywhere; usually restricted, if informally, to customers; stocked with a limited choice of the possible consumables; and dependent on regular maintenance.)

A while ago you described a professor-conclave in which one prof said Why don't we get wireless connectivity free on campus? and another said Awfully high on the Maslow hierarchy, isn't that? - which I thought was funny; the university is always pretty high on that hierarchy.

Posted by: clew on July 3, 2003 01:40 PM

I really don't think I pushed Post twice...

Posted by: clew on July 3, 2003 01:48 PM

Clay,

Comments is buggy. News at 11.

Ian

Posted by: Ian Whitchurch on July 3, 2003 04:19 PM

Am I missing something?? Cars don't go far without roads. Roads cost money. WiFi doesn't go far without a carrier. Don't carriers cost money??
The road builders (theoretically) got money from gasoline taxes. But carriers have no equivelant. Unless they charge more to the Cafe proprietors. Profit from selling eqiupment works until saturation. Ask Best Buy.
I think the market will work, but you won't get any Bill Gates out of it. 46 billion and counting.

Posted by: Phil Doring on July 4, 2003 07:31 AM

Cars don't go far without roads, and who lobbied for roads and who built the roads?

Posted by: dahl on July 4, 2003 07:41 AM

Can wireless continue to spread rapidly without broader institutional support? I love wireless, but I am unsure how well growth continues.

Posted by: bill on July 4, 2003 09:12 AM

http://news.com.com/2008-1082-1008450.html

What strikes you most about what's become of Ethernet since your memo 30 years ago?

What Ethernet is today is more than a packet format or media access algorithm--it is a business model.

How so?

I was hoping you'd ask that. There are four business models out there today. The first is the vertical model exemplified in the 1980s by the IBM monopoly. The second, which dominates today, is the horizontal model dominated by AOL, Cisco, Intel and Microsoft. They are also monopolies, I might add. The third is the Linux/open-source business model. And the fourth is the Ethernet business model.

It's based on de jure standards with proprietary implementations of those de jure standards, and it is unlike open source in that competitors don't give their intellectual property away. The competition is fierce, but there is a market ethic that products will be interoperable. And the standard evolves rapidly based on market engagement in such a way to value the installed base. There is a heavy value placed on sustaining and maintaining the installed base. That's the Ethernet business model.

http://www.economist.com/science/displaystory.cfm?story_id=1795821

The first reason is simplicity. Ethernet never presupposed what sort of medium the data would travel over, be it coaxial cable or radio waves (hence the term “ether” to describe some undefined path). That made it flexible, able to incorporate improvements without challenging its fundamental design.

Second, it rapidly became an open standard at a time when most data-networking protocols were proprietary. That openness has made for a better business model. It enabled a horde of engineers from around the world to improve the technology as they competed to build inter-operable products. That competition lowered the price. What is more, the open standard meant that engineers in different organisations had to agree with each other on revised specifications, in order to avoid being cut out of the game. This ensured that the technology never became too complex or over-designed. As Charles Spurgeon, author of “Ethernet: The Definitive Guide” puts it, “It always stayed close to the ground. It addressed problems customers came up against, not problems that networking specialists thought needed to be addressed.” That, coupled with the economies of scale that come from being the entrenched technology, meant that Ethernet was faster, less expensive and less complicated to deploy than rival systems.

Posted by: kenny on July 4, 2003 12:24 PM

July 5, 2003

Searching for a Dial Tone in Africa
By G. PASCAL ZACHARY - NYTimes

ACCRA, Ghana — The Internet bubble has long since popped in the United States, Europe and Asia. But in parts of Africa the Internet is serving as a powerful force for change, primarily by allowing companies and individuals to make international telephone calls far less expensively than through conventional channels.

Calls in and out of sub-Saharan Africa have long been among the world's most costly, strangling business opportunities and burdening ordinary people. Services have been tightly controlled by government-owned telephone companies, many of which are rife with corruption and incompetence. Governments also imposed high tariffs on international calls, seeing it as a lucrative source of revenue.

But now, thanks to what is called voice-over-Internet, phone alternatives are flourishing, sharply lowering costs and expanding opportunities for business and consumers in some of the poorest places on earth — even as they pose a competitive threat to government-sanctioned telephone companies.

Sending telephone calls over the Internet is gaining ground in Africa because it makes possible a range of new services, linking the sub-Saharan to the world's major industrial centers in ways unimaginable only a few years ago. And better digital connections, mostly via satellite, are raising the hope that Ghana — the most peaceful country in a West African region besieged by civil wars and ethnic strife — may become the regional hub for an information-technology industry....

Posted by: jd on July 5, 2003 11:42 AM

http://www.nytimes.com/2003/07/05/business/worldbusiness/05VOIC.html

LINK to the Wireless in Africa article -

Posted by: jd on July 5, 2003 01:41 PM
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