We kicked off the Spring VARVision® Event with a keynote panel titled, "Channel Insights" with the intent of bringing up issues that resellers and vendors needed to have top of mind as they head into the second half of the year. From we heard at the end of the panel, the discussions proved beneficial. And, needless to say, we had some exciting discussion. On the panel were; Glen Jodoin of Green Pages; Paula Passey, Intel LANDesk; Darrek Porter, Oculan and Michael Haines, of Gartner.

Lead Management is always a controversial topic and some opinions were pretty direct, perhaps best summed up by Jodoin: "We don't want to have a level playing field." He believes that if a vendor knows their business and has the right systems they can evaluate each qualified lead and direct it to the most appropriate channel partner. The partners who continue to do a good job for the vendor will get "more than their fair share" of sales leads.

Celestix offers VARs the opportunity to extend best of breed network security solutions from Check Point and other leading developers to small-medium enterprise customers. Celestix offers a strong partner program including integration support, demo skus and frequent web-based seminars. For more information contact Phil Alexander, VP of Sales at phil@us.celestix.com or (510) 668-0700 x212.

ViewWise from Computhink is a document imaging package for ANY professional environment and supports drawings and revisions making it excellent for architects as well.

Actiontec Electronics, a small 143MM manufacturer who has labored in the background while producing clients including IBM, Compaq, Dell, Gateway etc., has produced wireless access points, modems and routers.

Executive Software debuted Diskkeeper 7.0 disk defragmenter, Sitekeeper compliance tracking, Undelete 2.0 and Disk-Alert early warning disk flagging package

InFocus, which owns 46% of the market, unveiled a TRADE-IN program allowing you to take advantage of aging presentation equipment as well as a software program allowing monitoring of all presentation devices as assets on the network.

Quantum showed off their new SuperLoader, an autoloader tape appliance and their Guardian 1.4 Terabyte NAS appliance. I can see this product doing very well among the storage-oriented resellers.

Secure Computing showed off their new security cards for remote access.

Unibrain showed off the first and only Firewire NAS supporting digital video, according to them.

Westbrook Technologies also showed off their document management solution - a nice product.

Interested in the winners of the VARVision awards? See the end of the web page to see all of the winners. Want to see some photos from the event, click here…
http://www.visionevents.com/vv/Awards/spring02.htm and …

Then there are the "non-product" stories (not those) that makes events like VARVision so valuable. Here's one of those comments: "I always come home feeling empowered. There is such a great group of people there to bounce ideas off of and chat about different ways to do things. And it goes without saying that Michael (from Gartner) is a phenomenal speaker; you can't help but learn from his lectures. I always meet fantastic contacts at these events and learn so much about other business options. I feel honored to be a part of such an amazing
Event," said Wendy of MachSpeed.

Amy Welch of Green Pages, added, "Attending the event serves a dual purpose, I learn about new product and technology offerings from vendors through the one-on-one format, what channel programs are working and why these programs are successful. To compliment meeting these new partners and understanding their offerings and channel programs, I had the opportunity to network with existing partners, strengthening the relationships we already have in place. The message was clear that solutions is a "must" focus to be a successful VAR moving forward. But more importantly, you have to focus on your core competencies and be the best at your chosen competencies vs. being mediocre in several solutions. Some of the driving competencies across many solutions providers include Storage and Security. Another key - don't be afraid to walk away from a "deal" that doesn't fall within your competencies. Because while you are expending your resources on that "deal" to make your bottom line, a real opportunity that fits within your competencies will fall into your lap. The opportunity that falls within your focus will present you with a solutions sale yielding higher margins, but your resources will be allocated to the other "deal". By accepting orders that don't fit within your competencies, you become your own competition, and you'll lose." Truer words never spoken.

Mark your calendars! The VARVision Fall event will be co-located with System Builder Summit™ on September 3-5, 2002 at the Hilton San Francisco, San Francisco, California.

Thanks to Amy from Green Pages, Alan Prefer from Atec Group, Joseph from Superior IS and Wendy from Mach Speed. You get a free subscription to ChannelMedia - SMB and some other lovely parting gifts. Any other attendees who wish to share their thoughts on the fabulous event that was VARVision - Orlando - please send email to keithn@telocity.com.

Standing Still Has Its Consequences
By Mike Haines, Gartner

Mike Haines, principal analyst at Gartner/Dataquest IT services Led a stimulating workshop designed to help VARs or SP's understand important issues related to organizing and compensating services sales forces for optimum success, and to help build a strategy to effectively change sales organizations and compensation programs where necessary.

To paraphrase Haines the key takeaway is,"Standing still has its consequences!." He explained,"VARs understand that as with any business issue, there are severe risks for inaction. Failure to regularly assess and change the structure and objectives of the sales organization and the sales compensation program can have a number of negative ramifications. If the selling strategy does not focus the right sales forces and selling methods at each buyer segment, if tools are not implemented and used, and if compensation is not in line with company objectives, selling costs can be far above where they could and should be. Without proper segment targeting and without the effective usage of tools that can improve opportunity management and organization-wide collaboration in the selling effort, a significant portion of viable sales opportunities will be lost (along with related profits, resource utilization and market share). In addition, inefficiency can translate into a disgruntled sales force, resulting in costly and disruptive turnover. Finally, inaction by a service provider can reduce the image of the company in the marketplace, and the level of trust that clients place in their service provider.

To learn more about SP program contact Haines at Michael.haines@gartner.com.

ACP - There's $$$ For You in Refurbished Products
Since 1976 Advanced Computer Products (ACP) has created new markets for excess, class B-goods and refurbished inventory. ACP has the ability to remarket your products into 3rd tier and offshore markets thereby protecting the integrity of your present distribution channels. Give us an opportunity to show you how we can solve your inventory problems. Whether finished goods, work in process or component parts we can help. ACP has all the inventory solutions! So when your inventory problems arise give ACP a call.

Contact us: (714) 558-8822 or email David Freeman dfreeman@acpsuperstore.com.

NEWS

Best of VARVision Awards™

NEWS

Small Business Vision™ (SBV) Central September 25 - 27

Research shows that small businesses in North America are one of the few markets actually spending more on technology solutions in 2002. One of the most cost-effective, targeted and proven ways for vendors and resellers to take advantage of this incredible opportunity is through an executive Gartner Event called Small Business Vision™ Central.

Small Business Vision™ (SBV) Central will take place September 25 - 27 in Chicago, IL.

SBV Central specifically focuses on alliances between regional VARs and key
technology vendors who have solutions geared towards the 10-99 seat client.

Here's what vendors and resellers had to say about the business-intensive format of Small Business Vision East: which took place earlier this year:

"I accomplished more in one day than in months of phone calls and e-mail, and this is the message that I will deliver to every one of my new prospects and clients. Your event is not an expense - it's an investment!" -- Kenneth G. Beam, The VAR-City

"I think the small group setting of the whole event was outstanding! The boardroom sessions were just the right amount of time and I enjoyed the Gartner presentations and Business Central in the afternoon." -- Todd Huffstickler, VANN Data Technology

"This was a great opportunity to expose interested VARs and qualified prospects to our company's product offering and strategy." -- Adam Lerner, MicronPC

"This was an excellent opportunity to meet with Vendors to better understand, not only their product offerings, but also their strategic direction and channel programs." -- Andy Swenson, Integration Specialists, Inc.

In boardroom style presentations plus one-on-one meetings, vendors and resellers will talk about how to utilize solutions, maximize partnerships and generate revenue on both sides. In addition, participants will gain up-to-the-minute insight from Gartner analysts, and meet with them one-on-one to discuss current trends.
If you are a reseller working with small businesses in the Central region, please go to http://www.visionevents.com/interest/ to apply for qualification to this strategic event.

If you are a vendor with a compelling small business solution, please contact Charlene DeCesare, 603-471-4203, charlene.decesare@gartner.com or go to http://www.smallbusinessvision.com/contact/index.asp to request more information.

NEWS

Using SSD to speed up your SAN
By Craig Harries, Vice President, Product Marketing - Imperial Technology

Fibre Channel is the standard for SAN connections, but even with 2 Gbps speeds, transaction processing applications still encounter performance bottlenecks in the SAN that are storage-related. The SAN bottleneck is not the network, it is the inherent limitations of rotating disk drives. Specially configured Solid State Disk systems designed for shared use on a SAN will accelerate I/O performance. SAN-enabled SSD responds to the bottleneck problem by creating a performance pool that is allocated to changing application requirements in the SAN which affect performance.

SAN-enabled SSD connects directly to Fibre Channel SANs and is designed to deliver shared capacity to multiple applications and multiple servers in the same way as consolidated disk storage. The value proposition is therefore similar to a shared disk array, in that shared resources are more cost-effective than dedicated resources and administering a centralized asset is more efficient than decentralized resources.

SAN-enabled SSD leverages the traditional benefits of Solid State Disk technology from typical single-server, single-application environments to potentially every server and every application in the SAN. The multi-port capability of lends itself to the highly available nature of enterprise Sans by connecting to two independent 1 or 2 Gbps fabric switches or directors for up to 400MB/s bandwidth and path redundancy. Built-in utilities allow the system administrator to partition the SSD into volumes assigned to different ports, different servers, and ultimately, different application needs.

Imperial Technology is a leader in high performance storage systems with products such as the MegaRam and the newly released SANaccelerator.

RESEARCH

Preparing for a Disaster: Affordable SMB Actions
By D. Scott, J. Browning

Small and midsize businesses have historically viewed disaster recovery and business continuity as protection they don’t need and can’t afford. The reality is that SMBs can’t afford not to be prepared for a crisis.

The events of Sept. 11 were a high-profile “wake-up call” for enterprises of all sizes — but even more so for small and midsize businesses (SMBs), which have traditionally underinvested in business continuity planning (BCP; see “Business Continuity and Disaster Recovery Planning and Management: Perspective,” DPRO-100862). It doesn’t take the horrific magnitude of a terrorist attack to have an impact on business operations. SMBs must be aware that a simple virus, a single Internet connection outage or a key supplier outage is enough to derail normal operations, which could mean lost business and customers, ultimately affecting business survival.

In reaction to Sept. 11, many SMBs are assessing their business continuity, disaster recovery and security strategies to identify gaps in protection. SMBs need to evaluate their business processes and protect what is critical. This will become even more crucial by 2003, as SMBs respond to pressure from customers and business partners to do more business online. For example, SMBs should expect at least two major customers to request an e-commerce linkage by year-end 2003 and demand it by year-end 2004.

SMBs’ Ability to Cope Is at Risk Without a Crisis Plan

Despite increased awareness of the need for BCP, the sobering reality is that most SMBs will continue to underinvest in this area. Without appropriate action in BCP, SMBs will probably compromise their ability to effectively manage an emergency, crisis or incident, and consequently undermine customer, business partner and shareholder confidence in them. Gartner estimates that only 35 percent of SMBs have a comprehensive disaster recovery plan in place; this will rise to 50 percent by 2007 (0.7 probability). Fewer than 10 percent of SMBs have crisis management, contingency, business recovery and business resumption plans; investment in these plans will nominally rise through 2005 (0.7 probability).

Unfortunately, as the events of Sept. 11 fade from the forefront, so too will the urgency for BCP. Savvy SMBs, however, will act promptly to assess and mitigate the risks that endanger their business operations. Although the reality is that events such as those of Sept. 11 are possible and therefore need to be considered in scenario and contingency planning, they are not the sole or even the main reason to do BCP. It is the hundreds of comparatively minor vulnerabilities — e.g., a sustained power outage or network disruption — that pose the biggest threat because of their greater likelihood of occurring. In fact, 80 percent of mission-critical application service downtime is directly caused by people or process failures. The other 20 percent is caused by technology failure, environmental failure or a disaster. The issue is not the absolute scale of the disruption, but how disruptive and damaging the incident is for business operations (see Figure 1).

Placed in the broader context of risk management, BCP enables enterprises to understand the essence of their business — the critical business processes and resources (e.g., people, IT services, facilities and work space, equipment, and relationships with customers, suppliers and trading partners), and how such assets are essential in achieving business goals. Mitigating the risks associated with damages or outages to these resources is just plain smart business — and enables SMBs to be more agile in responding to any event and, thus, more likely to meet their business objectives. Failure to do so is risky business.

The Show Must Go On

Gartner knows of a midsize credit union that has been struck by hurricane three times in the past decade. If not for proper planning — which included how to immediately disburse funds to its customers in the midst of crisis — the credit union would have lost customer loyalty and revenue. The foundation of its strategy is to continue serving customers despite disaster or disruption. Its plan includes a contract with SunGard for mobile recovery, which enables a trailer set up with IT services and office work space to roll up to the credit union’s site within 24 to 48 hours of disaster declaration. In the time between the event and the recovery process, it decided to trust customers’ honesty with ATM withdrawals despite short-term lack of electronic account status data, and it dispersed customer funds from its automobiles. BCP protects the critical business process — in this case, the customer relationship — and not just the “bits and bytes” of IT services. As a result, the business survives and thrives despite disastrous events.

Where to Spend on BCP When Budgets Are Limited

SMBs are uncertain how much they should spend on disaster recovery and business continuity. In a recent Gartner survey (sponsored by Gartner’s Executive Programs and the Society for Information Management), in which 23 percent of the respondents were SMBs, such spending averages from 1 percent to 2 percent of the IT budget. This coincides with Gartner Measurement’s benchmarking studies (see Figure 2).

How Much Is Enough?

The question from SMBs shouldn’t be, “How little can I spend?” BCP and risk management should be infused as part of the enterprise culture to ensure ongoing enterprise resiliency. In fact, many components of BCP cost little in terms of capital investment. However, they do require an investment in people resources and intellectual capital to think through disruptive scenarios, develop and implement action plans, and document critical resources.

Enterprises don’t want to overspend on protection. An important exercise for SMBs is to spend in the right places — e.g. to protect the most-critical business processes. SMBs should invest in a business impact assessment (BIA), which will help them in identifying and ranking business process and resource criticality, priority and dependencies, so spending can be prioritized accordingly. The BIA is the foundation of BCP, upon which investment decisions are made. For SMBs leery of tackling the project themselves, qualified consultants can help SMBs perform a BIA, for around $30,000 to $80,000, depending on organization size and scope.

Enterprise resilience and survival will require investments; they cannot be achieved for “free” (see “A Letter to the CEO: BCP Does Not Come for Free,” COM-15-1669). For practical advice on how to jumpstart your BCP program, see “Jump-Start the Business Continuity Plan: A Checklist,” TG-14-5245.

Bottom Line: Gartner estimates that two out of five enterprises that experience a disaster will go out of business within five years of the event. SMBs must anticipate how they would conduct business in the event of natural disasters, system outages, facility fires or other risks to their operations. SMBs should also appreciate the high price of downtime when mulling how much money to spend on business continuity and disaster recovery. Knowing what to do when a crisis disrupts their business will help SMBs recover faster and improve their chances of survival.

RESEARCH

Are SMBs Ready to Outsource Back Office Applications?
By R. Scholl

Business process outsourcing has primarily been implemented by large multinational companies, which turned to outsourcing as the next logical step after a large ERP implementation. SMB demand for BPO is growing.

Small and midsize businesses (SMBs) are increasingly considering business process outsourcing (BPO), which has not been tremendously popular, for back-office applications.

Gartner Dataquest defines BPO as the delegation of one or more IT-intensive business processes to an external provider that, in turn, owns, administrates and manages the selected process(es), based on defined and measurable performance metrics. Business processes that are outsourced to an external services provider (ESP) include logistics, procurement, human resources, finance/accounting, customer relationship management or other administrative or customer-facing business functions.

In November 2001, Gartner Dataquest conducted a telephone survey of U.S. enterprises of all sizes to assess demand for back-office BPO services. There were two sections to the survey: one on human resources and one on finance and accounting. The results presented here relate specifically to enterprises withrevenue below $1 billion. Though our standard definition for SMBs is made up of organizations with revenue below $500 million (see “SMBs Come in More Sizes Than Just Small or Medium,” M-14-7252), we believe the results of this study are indicative of SMB trends (see “Business Process Outsourcing at the Crossroads,” ITES-WW-MT-0103).

What are SMBs outsourcing?

The functions that SMBs outsource most are:

• Within human resources: benefits administration; payroll processing; and recruiting and staffing
• Within finance and accounting: tax management; treasury and cash management; and billing

Who is driving BPO around SMBs?

The primary decision-makers for BPO are the vice president of the business unit (finance or human resources), followed by the CFO and CEO. Because BPO decisions are closely tied to the overall operations of the company, the CIO is predominantly not the primary decision-maker and does not have the final sign-off authority on BPO contracts, although he or she will typically be involved in the vendor-selection process.

What is the rationale for outsourcing?

SMBs state that they outsource back-office processes for the following reasons, in decreasing order of importance:

1. Reduce transaction costs, particularly in transaction-intensive processes such as payroll, accounts payable and accounts receivables. Most of the time, companies have decentralized processing with multiple systems, and the transactions are highly labor-intensive, so outsourcing enables them to centralize and automate processing.
2. Focus on their core business.
3. Improve service levels in each functional area.
4. Reduce capital costs. Reduction in capital costs comes from the transfer of assets and people to the outsourcer, particularly processing facilities.

There are other major drivers for outsourcing (see Figure 1). This survey shows that the importance of cost as a driver toward BPO is higher for SMBs than it is for larger enterprises, which also turn to BPO to transform their operations and migrate to new technology platforms. In general, BPO usually follows an enterprise resource planning (ERP) implementation in large enterprises, while in some instances, BPO can substitute for an ERP implementation among SMBs.

When they turn to outsourcing, SMBs select service providers based on the following criteria:

• Process expertise
  
• Level of customer service
  
• Trusted partnership
  
• Reference accounts

Because BPO is still an emerging market, SMBs are looking at tight relationships with their service providers and will pay particular attention to their providers’ references in the same industry. Examples of BPO providers within the SMB space are Andersen, Deloitte & Touche, Administaff (for finance in accounting), Onvoi Business Solutions, Automatic Data Processing (ADP) emerging business division, Paychex and Hewitt Associates.

Some of the reasons that SMBs might refrain from outsourcing back-office processes to external providers include the perceived high cost of outsourcing, the perceived low quality of outsourcing providers and the fear of losing control over the business process. Ironically, SMBs that have been outsourcing back-office processes for several years usually find that they have gained control over their processes because they began to manage them as a business with contractual service level agreements.

Because so few SMBs have internal benchmarks to measure the cost and operational performance of their finance and human resources business processes, the perceived cost and quality of ESPs might be skewed. Since SMBs are less able to absorb risk than large enterprises, and they lack the resources to solve potential problems created by an outsourcer. They are, on average, less willing to experiment with alternative ways of conducting back-office processes than large enterprises are.

Bottom Line: Overall, demand for BPO services is still emerging in SMBs and remains highly fragmented, as most SMBs outsource only a portion of their business processes. The main challenge of BPO for SMBs is that many SMBs have not been through lengthy ERP implementation and, therefore, do not realize the complexity of business process transformation required in a traditional BPO engagement. SMBs need a high level of customization and “hand holding” during the transition phase. BPO service providers, on the contrary, hope to provide a highly standardized solution to SMBs to generate scale and volume. To date, the delicate balance between customization and standardization has not been achieved.

RESEARCH

In the Land of Broadband, Content is King
By Mark L. Kersey, ARS Broadband & Cable Industry Analyst

The first quarter of 2002 was the worst on record for the broadband industry in terms of subscriber growth. Fresh off a stellar fourth quarter that saw nearly 15 percent industry-wide growth, to 12 million U.S. subscribers, first quarter growth slowed to just over 12 percent. A total of 13.5 million Americans have now signed up for broadband service, representing an adoption rate of a little more than 12 percent, based on 110 million US households. As a means of providing some perspective, the Consumer Electronics Association reports that 24 percent of US households have a DVD player, making it the most quickly adopted consumer electronics product in history. Twice as many households own a DVD player as subscribe to broadband service, despite the fact that both offerings have been available to the mass market for about the same amount of time.

Despite the prognostications of many industry analysts, consumer broadband service, now entering its fifth year of widespread availability, has yet to firmly prove its value to consumers. There is much blame to be spread around for this fact, and no shortage of targets on which to place this blame. There are the usual suspects: industry consolidation that has led to fewer choices for consumers as well as higher monthly prices; the Excite@Home network shutdown which has hampered cable company growth efforts; and a stagnating economy that has left many consumers with the feeling that broadband is a luxury item they can do without until we experience an economic rebound. There is no question that all of these factors have played into broadband's rather sluggish growth.

Perhaps most importantly in the story of broadband's struggles is the lack - or perceived lack - of truly compelling content that requires a broadband connection. The simple fact of Internet usage today is that email remains the killer application for the vast majority of consumers. Much has been made of emerging services such as MP3 (music) downloads, video-on-demand (VOD) and interactive gaming, but very few average consumers are actually paying real money for access to those applications today. And why should they? Rather than embracing the digital distribution of music and movies, the dominant Hollywood studios and record labels have declared war on the peer-to-peer file-swapping industry popularized by Napster, and in its place have attempted to roll out fee-based services under brand names such as pressplay and MusicNet. I recently attended the cable industry's biggest tradeshow of the year in New Orleans, where I sat through a presentation by the CTO of pressplay (the music download site backed by Sony and Universal). The presentation outlined the company's pricing strategy:

• The Basic Package is $9.95 per month and provides the user with 300 streaming songs and 30 music downloads.
• The Silver Package is $14.95 per month and provides the user with 500 streaming songs, 50 music downloads and 10 CD burns (pressplay is currently offering a promotional rate of $9.95 per month for the Silver package).
• The Gold Package is $19.95 per month and provides the user with 750 streaming songs, 75 music downloads and 15 CD burns.
• The Platinum Package is $24.95 per month and provides the user with 1,000 streaming songs, 100 music downloads and 20 CD burns.

Setting aside the fact that pressplay only sells through affiliates such as Yahoo!, rather than selling its own services directly to consumers, there are a couple of key points that deserve mention. The most obvious is that the pressplay catalog only contains music from artists under contract with the labels with which pressplay has agreements in place. For now, that group includes Sony, Universal, EMI and a host of independents. While this is a good start, what it means for consumers is that to get a truly comprehensive selection of music, they will be forced to not only subscribe to pressplay's service, but also that of rival MusicNet, which is backed by Warner Music Group (a unit of AOL Time Warner), Bertelsmann (a.k.a. BMG) and EMI Group. MusicNet, like pressplay, is only available through affiliates, which in this case means RealNetworks. Consumers must go to Real.com to subscribe to the "Real One Music Pass," which offers 100 streams and 100 downloads for $9.95 per month (unlike pressplay, MusicNet does not offer the CD burn feature).

A consumer who wants a selection of all of his or her current and past favorite songs will thus be forced to shell out a minimum of $19.90 per month ($9.95 each for pressplay and MusicNet), but he or she will only be able to burn the pressplay music onto a CD for portability. In essence, MusicNet subscribers are paying ten bucks a month to rent Warner, BMG and EMI titles. Not a bad business model for the labels if they can get it, but where exactly is the value for the consumer? And how do the labels think that they will ever persuade file-swapping music traders to actually pay for digital music if they are only offering consumers such unimaginative deals?

Another technology whose growth prospects are closely intertwined with those of broadband is video-on-demand (VOD). VOD is a technology that we in the industry have been hearing about for years but has yet to really catch hold as a fee-based service. Cable companies such as Comcast and Cox Communications have recently rolled out VOD to select systems around the country, but such efforts have focused on television-based VOD. For this discussion, we are more interested in Internet-based VOD. Probably the best-known Internet VOD company is Intertainer, headed by Jonathan Taplin, a Hollywood veteran who was once Bob Dylan's road manager. Intertainer charges between $1.99 and $3.99 for movies-on-demand and $7.99 for a basic tier of TV programming with unlimited access. The company recently announced that it has signed up 85,000 customers who spend an average of $14.95 per month on Intertainer's VOD services.

The problem for video over the Internet, however, has always been one of quality. Streaming video has never quite overcome the challenge of how to improve the interminably jerky video frames that often come across as more of a slide show than a smooth video clip. Clearly frustrated with the quality of today's broadband connections, Intertainer's Taplin has vocally advocated for a government-mandated definition of broadband at a dedicated rate of 1 Mbps download so as to provide for better connections for his company's streaming VOD services. However, we believe that the problem for VOD providers like Intertainer is more fundamental to their business models. While the PC is fine for viewing short video clips or even a half-hour television program, does the average consumer really want to spend two hours watching a movie-on-demand on a screen a fraction of the size of a regular TV set? While the PC works well for the (illegal) file-swapping of new releases and yet-to-be-released movies such as the new installment of Star Wars, the economic viability of a business model built around Internet VOD remains unproven. Even if the issues surrounding quality were resolved, it seems unlikely that Internet VOD will become the true killer app for broadband.

So what content features will drive broadband subscription rates? Home networking, while not exactly a content application, certainly has the potential to become a factor in the adoption of broadband, particularly as the number of multiple-PC households continues to increase. Streaming audio targeted at a specific user group, such as what Major League Baseball is doing with Internet radio access to nearly all baseball games through MLB.com, could gain traction within the targeted interest group. Remote home security video monitoring could likewise gain a following among homeowners. Interactive gaming could be a real sleeper, as companies such as Microsoft have invested millions of dollars in building broadband capabilities into game consoles such as the Xbox, and video gaming is already a multi-billion dollar industry. Online photo sharing services such as Kodak's Ofoto are also gaining in popularity and are a great way to visually share moments with family and friends that otherwise might be missed.

All things considered, it is more than likely that the true broadband killer app has yet to emerge. Each of the above mentioned services will have some moderate amount of commercial success, but none appear poised to become the dominant content features that will truly compel people to sign up for broadband. Just as dial-up Internet access became widespread when people realized the value created by the ability to effortlessly communicate with other people via email and Instant Messaging, average consumers will begin to see real value in a broadband connection only when an application emerges that enables better human communication. AOL Time Warner CEO Dick Parsons recently speculated that such an application might be video Instant Messaging, which would combine the wide popularity of existing IM services with the ability to actually see the person that you are IM-ing. I'm thinking of someone like my grandmother, who has little use for broadband now but would jump at the chance to communicate with her grandchildren across the country in a manner that allows her to see as well as talk to them.

What is clear is that as long as broadband prices are increasing while the economy stagnates, it will take some extremely compelling content to jumpstart broadband subscriber growth. Over three-quarters of the country could sign up for broadband if they were interested, but only just over one in ten actually have. Without improved content, those numbers are unlikely to rise significantly in the near future, a factor that should weigh heavily in the minds of cable and phone companies that have spent billions of dollars in upgrading their networks for broadband over the last several years, but have yet to see any real return on that investment. In the final analysis, the source of and answer to most of broadband's problems today is one and the same: in the land of broadband, content is king.

Hits List of Top-Selling Software by NPD - Week of May 26 - June 1, 2002
Provided by NPD Techworld

List is based on units sold by twenty-three channel partners. For more information, please contact NPDTechworld at (703) 376-6200.

SPEAK OUT

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Jump right into the discussion and throw in your opinion with just a click…(and comments, if you like)…

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FROM THE COMMUNITY

Changing Channels: Party Like it's 1999?!
By Steve Cross

Remember 1999? What a great year. IT departments were scared about Y2K, and everyone was spending like mad. Software and hardware were selling like there was no tomorrow. Money was ample, and interest rates were affordable, if not cheap. Those days are long-gone. Ancient history.

What the hell happened? Why are companies ailing? Stock prices in the toilet? Why the recent layoffs all over tech? Answer: because the industry's business model is flawed.

Briefly, an explanation of business design: the conscious design of a business model using analytical tools, and congruency with the business' goals and exit strategy. Most companies have a business model but no business design. They never sit down and take a global, long-term view. This problem is endemic to large and small companies. This is solvable, but each company's management must challenge their own way of doing business.

Most companies have an accidental business model. Like the famous s-t, it just happens. And at some point in the future, the company has a problem. When the accidental business model hits a new reality, the splat is what you hear. Tech's splat is sounding pretty loud from where I sit.

Here's what's going on: this industry has an accidental business model that reflects annual upgrades of hardware and software. And here's the new reality: recently one of the leading sources of economic data re-stated the IT desktop upgrade cycle as 40 months. Folks, that is over three times longer than the tech industry's business model's expectation. That's a real problem, and it isn't going away anytime soon.

If I had to guess, I would say that we have another 2 years of this nightmare. Whoever is left standing in two years will have a chance at industry domination for the decade following. This is a difficult, but extremely predictable stage of a declining business model (read Adrian Slywotsky's great books on Profit Patterns). Once a tipping point is reached there will be no hope of return to the former status quo.

This is a terrific industry, one that can fix its business model and return to vibrant leadership of world commerce. But first we have to get outside that proverbial box, look seriously at business design, and fix the problem. We'd better move quick.

Steve Cross has been helping companies grow since before dirt was invented (seems like a long time). He can be reached at steve@crosschannel.com, 702-492-7472.

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