The SHo Six-Pack
Relentless evolution within the computer industry can be likened to the arc
of a body progressing through the vastness of the universe. The apparent
significance of any particular motion is entirely related to the degree of
perspective and scope had by the observer. To the inhabitants of a planet,
the sweep of the moon around that planet is of primary importance. But a
broader perspective yields ever more revealing information about the
relationships between bodies in the universe. This additional perspective
is vital in determining whether the perceived motion is a localized cyclical
oscillation or a forward progress that affects the fundamental fabric of the
galaxy.
For the millennium, we have decided to focus on a few of the bodies traversing
our Internet-based universe and examine six that we feel will have significant
impact on that universe.
We believe the six issues listed have the potential to fundamentally alter
the course of the Internet evolution.
- The New Info-keiretsu
- Microsoft and the Government
- Taxation and Privacy
- Bandwidth
- Wireless – Mobile, Fixed, Wireless LANs
- XML
Dominance of the Info-keiretsu
We have reached a stage in the evolution of the information-processing
industry where access to information is more important than processing
information. This shift toward access-based computing places information
delivery and those facilitating delivery at the vortex of emerging global
relationships and alliances. We believe that the rise of information-based
computing has allowed for a new strain of global keiretsu – the info-keiretsu.
When information movers partner with content creators and consumption
enablers, a grouping of vested interests based on information emerges.
When the relationships become based on integration of technology and
marketing via the Internet, and are accompanied by co-investment, the
info-keiretsu emerges.
1999 saw the emergence of several highly valued info-keiretsu. The common
themes – acquire or start Internet-based companies and have those companies
amplify each other’s businesses. Chief among these info-keiretsu are the
publicly held CMGI and ICG, and privately held divineInterventures and
IdeaLab. Perhaps the most influential of all keiretsu is the very private
Silicon Valley venture firm of Kleiner-Perkins. While on the surface, these
keiretsu appear to be very similar, they have distinct differences. CMGI
started as an investment vehicle, taking stakes in Internet companies, mostly
those focused on creating and fulfilling consumer demand. ICG is focused on
business use of the Internet, but it has approached the Internet nearly from
a pure investment perspective. divineInterventures is also focused on the
intersection of the Internet and business, but it appears to be more of a
technology and operating company as opposed to an investment company.
There are a number of other organizations that are making investments which,
when viewed as a whole, take on some characteristics of the info-keiretsu.
Softbank has made a number of high-profile investments, as has Safeguard
Scientific. But these in particular seem to be tactical, deal-specific
investments as opposed to industry shaping and synergistic decisions. Even
some of the major corporations, such as IBM, GE, Dell, Intel and Microsoft
have been making many investments in Internet oriented businesses, but again,
whether these decisions will yield a logical grouping of companies which have
symbiotic relationships of co-destiny, is unclear.
During 2000, we expect the info-keiretsu to have a major impact on the
evolution of the Internet. They will increase their dominance and influence
on the Internet landscape by controlling and operating collections of
Internet-derived companies. By doing business with each other and keeping
a major portion of their expenditures within the info-keiretsu, these
relationships amplify the value of both the component companies and the
holding company, which in turn increases the value (hence power) of the
info-keiretsu even more.
Also during 2000, the info-keiretsu will become so valuable and strong that
they will be able to manage and create the evolution of the technologies and
the industry, as opposed to simply responding to external developments.
Indeed, several years out it is not inconceivable that the influence of the
info-keiretsu will overshadow the sway of the major discreet technology
companies – Microsoft, Cisco, Intel, etc.
Part 2 - The Camel’s Nose is in the Tent –
Government vs. Microsoft
Copyright © 1997-1999 SHo Research, Inc. All Rights Reserved.
Reproduction of this publication in any form without prior written permission is forbidden.
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