Billbarian at the Gates

Jan 8, 2002 12:00 PM, Peter Bernstein

Those of us in the analyst/industry punditry business are always in a quandary at this time of the year. Should we dissect the past year, review previous predictions, make a new round of predictions so we can write about this time next year, or just write about whatever bothers us at the moment?

In reality, rehashing the nightmare that was last year is too depressing. The bubble burst. We all know why. The reasons have been covered ad nauseum. I bowed out of the “cute” prognostication business years ago. Truth surpassed fiction, rendering the exercise perilous and superfluous. That leaves what’s bothering me as a fertile field.

Leaving aside the obvious depression over the virulent depression that continues to plague the telecommunications industry specifically, and the IT sector in general, what is bothering me is Microsoft. What bothers me most about Microsoft is that it is not bothering enough people in the telecommunications industry enough. What bothers me is that I am conflicted about writing too much about this. As a shareholder, I want Microsoft to succeed. The lack of competitor resolve will inevitably yield a greatly appreciated personal asset. As an industry professional, I want Microsoft derailed although not defanged. An uncontested Microsoft is not a good thing.

Finally, what bothers me most is that what bothers me is not what seems to be bothering policy makers and competitors. I am not worried about the past monopoly. I am concerned about the one coming.

The two most important things to control in the “E” future will be my identity and my location -- “my” being defined as me the person, work group, enterprise, community member, etc. Control the authentication of the virtual ME (“V.ME”) as it interacts with the rest of the “E” world and you win. You win because the world, despite current issues will be much more network-centric. You win because as the Gatesway/Gateskeeper you can extract tribute from ME for creating a trusted and nurturing “E”vironment that secures my digital identity and runs electronic interference for me with “E”veryone who wishes to interact with me. You also can and will extract tribute from those who you allow, according to my instructions, through. We are moving toward a permission-based world, and controlling the interface is “E”verything. Control the real-time information about where I can be found, and the keys to the value-added world of “place-based awareness” are yours.

In case you have not looked lately, Microsoft is positioning to be the benevolent next generation monopolist that controls both. As a result, they are in a position to do what everyone says is impossible, i.e., put electronic tollbooths on the Internet. Look no further than the battle between Microsoft and the Liberty Alliance over what should be the single sign-on method for strong authentication over the Internet. 

Microsoft says single sign-on should be via PASSPORT, and is implementing it first in its .NET services. A group of major corporations, including the credit card companies and Sony -- recently bolstered by the addition of AOL Time Warner (surprise, surprise) with other Microsoft baiters and haters like Sun -- says we need an agnostic standard. The problem is this is just another mechanism for letting other vendors put up digital tollbooths on the Internet. For those who believe that this oxymoronic group is out to protect the interests of consumers, I may still have a contact at a company that was looking for funding to offer high-end fragrances over the Internet for free and make their revenue off advertising.

The battle between Microsoft and the Liberty Alliance is the most important war in the IT universe. Control of strong authentication could give the winner control of my identity and location. 

Is the government involved? No! Should they be? Absolutely! A good case can be made that a non-interested third party, overseen by the government, may be our only hope.

Are the telecommunications industry giants sitting at the head of the table? No! Should they be? One would hope that it might dawn on the captains of the telecommunications industry that a value shift from the pipes to the services – the things that run over the pipes and not the division of bandwidth and speeds our industry likes to believe are services – is being marginalized as we speak.  It might even dawn on them to use their clout to get a piece of the action.

Are the alternatives to the digital tollbooths, a.k.a. “peer-to-peer networking” proponents, going to get out-muscled on this one? Yes! As Napster proved, the vendor world is not ready to cede account control to the customer. Personalization and self-activation services are not about putting the person in charge, they are about capturing personal transactions.  Oh, what a tangled Web of services we are likely to lead.

Meanwhile, the Billbarian is at the Gates.  He has: $36 billion in the bank; broadband access to the home, thanks to the AT&T Comcast deal; a misdirected bunch of regulators; and a game plan that will be difficult to derail on putting up digital tollbooths unless these silly security issues blow up in his face. It would be wise to bar the doors.

Peter Bernstein is President, Infonautics Consulting, Inc. He can be reached at pabernstein@worldnet.att.net.

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