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The NetSuds™ Report © The February 1, 2003 Issue: Re-sending of this newsletter to any number of colleagues is encouraged provided you also cc: report@netsuds.com. In return, we will invite recipients to subscribe. Any other unauthorized re-distribution is a violation of copyright law. Subscribe to this report by subscribing to the NetSuds Report at http://www.netsuds.net/mail.htm. You can get the web version of this report at http://www.netsuds.com/report/2003/february.htm Definition: "com and .com" = Telecom, Datacom, IT or Internet In this Issue: 1.0
Heard on the Net
1.0 Heard on the Net NetSudser Ken Holec is returning to the Twin Cities from North Carolina where he has been CEO of PeopleClick. Ken is the former CEO of St. Paul-based Lawson Software and the CEO of Rochester-based Showcase. Ken will turn over the CEO reigns in March 2003 to the new PeopleClick CEO. Contact Ken at either ken_holec@att.net or 703.754.8302. Ken was one of the early Presidents of the Minnesota Software Association. NetSudser Jack Hauser, formerly with Andcor, has accepted the position of VP of Finance and Administration at VisionShare in St. Paul. You may reach Jack at either 651.645.3300 or jack.hauser@visionshareinc.com. Michael Anders is the new President and COO of Systems Consulting Group in St. Paul. He succeeds Douglas Hanson, who remains as CEO. Michael was previously with KPMG Consulting in Sydney, Australia. Contact Mike at either manders@scg-corp.com or 651.636.4470. Sanjay Jhawar is the new Entrepreneur-In-Residence at St. Paul Venture Capital, based in the firm's Boston office. He will focus primarily on the wireless communications market. Contact Sanjay at sanjay@spvc.com. NetSudser Phil Platt is the new Marketing & Membership Director at the UofM Campus Club - www.umn.edu/cclub/. You may contact Phil at either 612-625-1442 or platt@umn.edu. 1.2 Companies on the Move: MedicalSudser Mike Geatz reports that IntelliPatch closed on financing last week from a funding source in the region. For more information, contact CEO Geatz at either 612.310.5246 or mgeatz@intellipatch.com.
2.0 Jobs in the "com and .com" Market
*
Phenomenal Networks -
http://www.phenomenalnetworks.com/Jobs.htm
3.0 NetSuds and MedicalSuds Calendars - FREE POSTINGS The web calendars for NetSuds and MedicalSuds continue to grow in popularity as more and more people use them for the definitive place to find high-tech events in the Twin Cities. The calendars are free to use for both tracking events and for posting your own events. To post events, login as "guest" with a password of "guest". The Calendars are accessed at
NetSuds -
http://www.netsuds.net/cgi-bin/calweb/calweb.pl?cal=default Non-Minnesota companies conducting events in Minnesota will not be allowed to post events for free. Events posted to either of these calendars are not immediately available for viewing. All events will be marked "pending" and will be reviewed for content prior to public viewing. The January 2003 calendars are shown in section 5 of this Report. 4.0 Tidbits
4.1 NetSuds loves on-site tours! Email me if you want to show off your company. I can be reached at matt@netsuds.com.
4.1.1 Agiliti Tour
Agiliti CEO Tom Kieffer and I met at Agiliti to tour their facility on Energy Park Drive. Agiliti has consolidated their data center and offices from locations in St. Paul, Plymouth and Bloomington. Served by dual OC-12s from separate physical paths, bandwidth and reliability are hallmarks of the Agiliti data center. The other critical physical elements; power and security, are well provisioned at Agiliti. The building is a fenced facility with an electrical infrastructure designed in part with MAPP (Mid-continent Area Power Pool). Access to the building is monitored both visually and by keycard. Layers of physical security are also present inside the building via security zoning and keycards.
All employees are located in a separate section of the building in rather unique and inviting surroundings. Large, open space is the theme which lends itself to collaboration among employees. The data center is also zoned for managed services and co-location facilities. The Network Operations Center is manned 24x7x365.
Stung by a Microsoft Exchange issue years ago, Agiliti has adopted the "ITIL" (IT Infrastructure Library) standard for IT Service Delivery & Support. Leveraging it’s Tier 1 data center, Agiliti offers more than the standard managed services, hosting and co-location. A litany of their service offerings is best left to a visit to their website - www.agiliti.com. Agiliti is also offering consulting and system integration services along with the usual array of services one would expect.
Agiliti is a corporate ISP in one sense but with the wide service offerings, they are truly capable of completely managing the total IT infrastructure of small, medium and large enterprises. This one-stop shopping model is the future of corporate IT outsourcing. Agiliti is uniquely positioned in this market, and rolling out new services based on the emerging “Utility Computing” model that IBM, HP and others are promoting. For more information, contact Tom at tom.kieffer@agiliti.com. 4.2 Email Advertising The Business Journal reported that their daily email news reaches 5000 Twin Cities executives. The MHTA claims a little over 2000 people on their email list. Not bad but still a great deal less than the NetSuds and MedicalSuds email lists which reach 7200+ (yes, the lists are growing). The NetSuds email lists are double-opt-in and concentrated on professionals in the communications, IT and Internet markets. The MedicalSuds email lists are double-opt-in and concentrated on professionals in the medtech, biotech and life sciences markets. So, rather than spend your advertising dollars on any other email lists in the Twin Cities, consider the NetSuds and MedicalSuds lists. Contact matt@netsuds.com or 612.279.2154. 4.3 Ex-Governor Secures Venture Funding What's an ex-Governor to do if he doesn't run for US Senate or President? If you are North Dakota's ex-Governor Ed Schafer, you get some venture funding - $7M - and start a venture which plans to improve the high-speed and wireless reach of rural communities. For more information, see www.extendamerica.com/news.htm. 4.4 BizPathways Matches Entrepreneurs to Resources BizPathways (www.bizpathways.org) is an online tool that points entrepreneurs to local resources they may find useful in starting and managing their enterprises. So, if you are in Dakota County, for example, and want to learn how to write a contract, the Contract Law section of BizPathways provides some brief definitions and will point you to organizations, tools, and events in Dakota County that can help you learn about contracts - from a contract law class at the Dakota County Technical College to lawyers in your area that focus on business issues. We match users with resources by profiling registered users and customizing their access to include specific resources. We also have interactive business plan templates and a business-building checklist that users can access to create, store and retrieve documents in a secure environment. Registration for BizPathways is currently free for users as well as resource providers. BizPathways is an initiative of Minnesota Rural Partners (www.minnesotaruralpartners.org) with a grant from the US Department of Commerce (www.ntia.doc.gov/top/). Visit BizPathways (www.bizpathways.org) to become a registered user or to get listed as a resource (https://www.bizpathways.org/BizPathways/WelcomeSP.aspx). 4.5 Minnesota Venture Capital Conference - May 19-20, 2003 The 2nd Annual Minnesota Venture Capital Conference - www.mnvcc.com - will take place May 19-20, 2003 at the Radisson UofM. Last year's conference had 250 attendees which included 22 formal venture presentations, 50+ investors representing over $20 billion dollars in managed capital and many opportunities for businesses of all sorts to reach customers and partners. This year's Conference is co-hosted by US Senator Norm Coleman and will feature presentations from emerging technology companies, panels and speeches by investors and industry visionaries, exhibits and lots of networking opportunities. The Conference will also include many educational aspects so that you can learn the business of tech/medtech start-ups, financing, etc.
Potential sponsors
should send an email to
sponsor.inquiry@mnvcc.com to learn about sponsorship opportunities.
4.6 UofM Carlson School Business
Plan Competition From
NetSudser Anders
Davisson,
adavidson@csom.umn.edu Carlson School business plan competition for entrepreneurs Entrepreneurs and visionaries can turn great ideas into real businesses,
thanks to the Gopher the Gold University of Minnesota Business Plan
Competition. The three winners of the 2003 Gopher the Gold competition will receive a
total of $50,000 in equity and services with which to start their businesses.
The annual business plan competition is designed to encourage the growth of
innovative business ideas and entrepreneurial ventures at the University and
in the local business community. Competing business plans must be submitted by March 24th, 2003, and the
winners will be announced on April 14 at the judging presentation. Each
participating team must have a University of Minnesota student, staff or
faculty member as a partner. 4.7 NetSuds Awards Carlson School Slot at MNVCC For the second year, NetSuds will award one of the presentation slots at the Minnesota Venture Capital Conference to the winner of the UofM Carlson School Business Plan Competition. 4.8 URLs For Sale Contact matt@netsuds.com if you are interested in purchasing any of the following URLs: broadbandcopper.com | broadbandrouter.com | exadc.com | internetanimal.net | internetanimal.org | mn-ra.org | selfprovision.com | startpark.com | harveyboys.com Contact Gary Elfert, gary@mninternet.com if you are interested in purchasing any of the following URLS: directprofit.com | gotvolunteers.com | mncable.com | mndsl.net | mninternet.com | namebasics.com | nameparking.com | searchtwincities.com 4.9 Name That Dog With four young boys who love dogs, I knew it was just a matter of time. The stars came into alignment on this deal, too. First, we found the right breed. Next, we found a breeder close to my brother-in-law, the veterinarian. Third, the breeder's husband is Internet savvy; which means there is a 24x7 webcam of the growing puppies! So, check out www.kizmar.com and click on the PuppyCam. Email me at matt@netsuds.com with suggestions on the names for the little female Vizsla with the white collar. I'll add them to the kids' names and we'll pick one out and announce it in a future NetSuds Report. 4.10 Networking Works In the past few months, many "People On The Move" items have appeared. One was an announcement that Nancy Harrower had left Retek and started New Venture Communications. That short announcement resulted in a phone call from a prospective client who turned in to an actual client. For more information, contact Nancy Harrower at nancyharrower@attbi.com. 4.11 Q4 Commercial Real Estate Report From NetSudser Brian T. Fogelberg, 952.924.4609, bfogelberg@cbre.com http://www.netsuds.com/docs/q402realestate.pdf 4.12 Minnesota International Business Development Conference - May 21-22, 2003 The Minnesota International Business Development Conference - www.ibdconference.com - will take place May 21-22, 2003 at the Radisson UofM. Various international chambers of commerce, the UofM, the Minnesota Depart of Trade & Economic Development and other partners are cooperating to create a business event exploring international business. The Conference is co-hosted by US Senator Norm Coleman and will feature presentations from technology companies, panels and speeches by international business experts, exhibits and lots of networking opportunities.
Potential sponsors
should send an email to
sponsor.inquiry@mnvcc.com to learn about sponsorship opportunities.
5.0 Schedule of Events You can also try our new online calendar by clicking here for NetSuds and here for MedicalSuds. 5.1 Minnesota
6.0 2003 Outlook for Venture Capital Is Brighter By Dee Power and Brian Hill,
copyright 2003 all rights reserved worldwide
"I believe the economy is turning around and there is a lot of capital on the sidelines waiting to be placed into good opportunities." "NASDAQ will improve"
Overall the trend for the last few years has been upward. VCs
rated the environment in 2001 as worse than 2000 with an average
Now Is The Time 7.0 NetSuds CEO Roundtable - Next Roundtables starting in April NetSuds is opening up another group of CEO Roundtables in April. The first meetings of the 3 CEO Roundtables occurred January 21, 22 and 23. We will be initiating another Roundtable in April 2003. If you are tech or medtech CEO and want to join us in April (the first session is free), contact matt.noah@netsuds.com. A synopsis of the CEO Roundtable can be found at www.netsuds.com/ceo/ It is repeated here as well. NetSuds CEO Roundtable Membership Only CEOs of tech and medtech companies are allowed to join the NetSuds CEO Roundtable. If you are a VP, CxO or President, you are not welcome unless you also hold the CEO title. Perhaps we will start a CFO, CTO or COO Roundtable but until then, we are only interested in the top dog, the CEO. If you are interested in becoming a member, contact matt.noah@netsuds.com. Membership is not automatic. There must be an available spot open in the roundtable. You must have employees. Your company must be incorporated. Your company must be a tech (communications, IT, Internet) or medtech (medtech, biotech, life sciences) company. You must pay a yearly fee in advance. You may not send substitutes to the Roundtable. Roles Unlike the days of knights, kings and Camelot, there is no king of the NetSuds CEO Roundtable; only a facilitator; Matt Noah, CEO of NetSuds.com, Inc. Knights are replaced by CEOs and the table won't be quite round. Schedule The Roundtable will meet 10 times per calendar year. Exact dates are not decided upon at this time. Each meeting will last between 1 and 2 hours starting at 7 am. A facility convenient to the majority of Roundtable members will be chosen. Breakfast will be served.
Purpose CEOs need resources to assist them in executing their duties and leading their companies. Boards of Directors and upper management are not always the best or most independent resources upon which to draw. The CEO Roundtable exists to provide CEOs with an independent resource of wisdom and shared experience. Your key 'take-aways' from the Roundtable will be accelerated learning - so as to avoid common and uncommon pitfalls -, an expanded network of advisors and colleagues and tools to enhance the productivity and value of your enterprise. Content First, networking among the CEO members of a Roundtable is the best and richest content. Second, the Roundtable facilitator will schedule subject matter experts of interest to the CEOs. Examples include intellectual property, branding, sales, engineering, marketing, finance, compensation, human resources, M&A, etc. Format Meetings will consist primarily of 2 elements. First, "content" will be presented and discussed. Second, "discussion" of common problems and solutions will take place. The facilitator will lead both elements or assign elements to certain CEOs. Confidentiality Roundtable meetings are completely confidential. Nothing said in a roundtable discussion, short of illegal activity, leaves the meeting. This allows each CEO to feel comfortable discussing issues and subjects he may not feel comfortable speaking about with others. 8.0
Build Predictable Revenue In Your
Organization In recent years, organizations have gotten better at analyzing financial statements, refining manufacturing procedures, reengineering business systems and improving marketing effectiveness. CEOs have strengthened their balance sheets with better asset management, reduced their inventory and cost levels with just-in-time methodologies, and increased direct mail and advertising effectiveness through thorough testing and reporting methods. But one area where additional improvements still can be made is the sales organization. Smart companies are scrutinizing their strategic sales management plans, taking a closer look at everything from their pipelines to their forecasts. They are also taking a closer look at lifetime values, cost of sales, market share, sales processes and salesperson effectiveness. The reason is simple: All organizations, regardless of whether their sales are shrinking or growing, are under pressure to create a sales distribution organization that generates predictable, consistent, profitable results. Interestingly, I see many VAR organizations that are struggling. They often lack both a strategic and tactical sales plan. Before you get too deep into your 2003 strategic plan, ask yourself what kind of sales-management plan you have in place. Such a plan must include an amalgamation of the organization's goals, individual salespeople's desires and objectives, and a common set of measurement factors that ensures all parties are focused on the right activities for generating success. So, where should you start? Focus on creating business plans for individual salespeople that define and bring together their goals with those of the corporation, and that coordinate activities with planned marketing programs (see "Planning Pointers," above). Sales-management planning systems dramatically refocus a sales manager to future business instead of past results. While most SFA/CRM or manual sales-management systems can enhance the effectiveness of a sales organization, they generally measure past activities and current sales funnel values. While this information is a must for all sales teams, the systems fall short by providing a rear-view mirror methodology to management. A properly designed sales-management planning system changes all of that. With a sales-planning tool, a sales manager can monitor expected performance; coach, mentor and provide a viewpoint of past performance; and measure results against the salesperson's desired objectives. In addition, such a tool helps a salesperson and sales manager, who are looking at planned activities far enough ahead, to ensure that consistent activities are in place to build pipeline values that will provide enough prospect opportunity to exceed individual quotas or personal goals. Like any new organizational change, the rollout of such a system must be carefully planned and explained to all salespeople. Ideally, salespeople should attend a group meeting with all members of their team, along with key members of the management team, including a CFO and any vice presidents of marketing and production. Last, it's wise for each salesperson to present a business plan and account plans to his/her peer group and management team. We recommend that these meetings be serious events that incorporate some aspect of fun. The power of these personalized plans is actually realized when the plan is measured against actual performance. This is when salespeople get it. They recognize what it takes to achieve their personal and professional goals, and they see how creating better planning impacts performance.
Forwarded by NetSudser Justin Chapweske, Onion Networks, justin@chapweske.com NEC @ Shirky.com, a mailing list about Networks,
Economics, and Culture, Published periodically / # 2.1 / January 7, 2003 To understand what's going to happen to the telephone companies this year thanks to WiFi (otherwise known as 802.11b) and Voice over IP (VoIP) you only need to know one story: ZapMail. The story goes like this. In 1984, flush from the success of their overnight delivery business, Federal Express announced a new service called ZapMail, which guaranteed document delivery in 2 hours. They built this service not by replacing their planes with rockets, but with fax machines. This was CEO Fred Smith's next big idea after the original delivery business. Putting a fax machine in every FedEx office would radically reconfigure the center of their network, thus slashing costs: toner would replace jet fuel, bike messenger's hourly rates would replace pilot's salaries, and so on. With a much less expensive network, FedEx could attract customers with a discount on regular delivery rates, but with the dramatically lower costs, profit margins would be huge compared to actually moving packages point to point. Lower prices, higher margins, and to top it all off, the customer would get their documents in 2 hours instead of 24. What's not to love? Abject failure was not to love, as it turned out. Two years and hundreds of millions of dollars later, FedEx pulled the plug on ZapMail, allowing it to vanish without a trace. And the story of ZapMail's collapse holds a crucial lesson for the telephone companies today. The Customer is the Competitor ZapMail had three fatal weaknesses. First of all, Federal Express didn't get that faxing was a product, not a service. FedEx understood that faxing would be cheaper than physical delivery. What they missed, however, was that their customers understood this too. The important business decision wasn't when to pay for individual faxes, as the ZapMail model assumed, but rather when to buy a fax machine. The service was enabled by the device, and the business opportunity was in selling the devices. Second, because FedEx thought of faxing as a service, it failed to understand how the fax network would be built. FedEx was correct in assuming it would take hundreds of millions of dollars to create a useful network. (It has taken billions, in fact, over the last two decades.) However, instead of the single massive build out FedEx undertook, the network was constructed by individual customers buying one fax machine at a time. The capital expenditure was indeed huge, but it was paid for in tiny chunks, at the edges of the network. Finally, because it misunderstood how the fax network would be built, FedEx misunderstood who its competition was. Seeing itself in the delivery business, it thought it had only UPS and DHL to worry about. What FedEx didn't see was that its customers were its competition. ZapMail offered two hour delivery for slightly reduced prices, charged each time a message was sent. A business with a fax machine, on the other hand, could send and receive an unlimited number of messages almost instantaneously and at little cost, for a one-time hardware fee of a few hundred dollars. There was simply no competition. ZapMail looked good next to FedEx's physical delivery option, but compared to the advantages enjoyed by the owners of fax machines, it was laughable. If the phone network offered cheap service, it was better to buy a device to tap directly into that than to allow FedEx to overcharge for an interface to that network that created no additional value. The competitive force that killed ZapMail was the common sense of its putative users. ZapPhone The business Fred Smith imagined being in -- build a network that's cheap to run but charge customers as it if were expensive -- is the business the telephone companies are in today. They are selling us a kind of ZapPhone service, where they've digitized their entire network up to the last mile, but are still charging the high and confusing rates established when the network was analog. The original design of the circuit-switched telephone network required the customers to lease a real circuit of copper wire for the duration of their call. Those days are long over, as copper wires have been largely replaced by fiber optic cable. Every long distance phone call and virtually every local call is now digitized for at least some part of its journey. As FedEx was about faxes, the telephone companies are in deep denial about the change from analog to digital. A particularly clueless report written for the telephone companies offers this choice bit of advice: Telcos gain billions in service fees from [...] services like Call Forwarding and Call Waiting [...]. Hence, capex programs that shift a telco, say, from TDM to IP, as in a softswitch approach that might have less capital intensity, must absolutely preserve the revenue stream. [http://www.proberesearch.com/alerts/refocusing.htm] You don't need to know telephone company jargon to see that this is the ZapMail strategy. Step #1: Scrap the existing network, which relies on pricey hardware switches and voice-specific protocols like Time Division Multiplexing (TDM). Step #2: Replace it with a network that runs on inexpensive software switches and Internet Protocol (IP). This new network will cost less to build and be much cheaper to run. Step #3: "Preserve the revenue stream" by continuing to charge the prices from the old, expensive network. This will not work, because the customers don't need to wait for the telephone companies to offer services based on IP. The customers already have access to an IP network -- it's called the internet. And like the fax machine, they are going to buy devices that enable the services they want on top of this network, without additional involvement by the telephone companies. Two cheap consumer devices loom large on this front, devices that create enormous value for the owners while generating little revenue for the phone companies. The first is WiFi access points, which allow the effortless sharing of broadband connections, and the second is VoIP converters, which provide the ability to route phone calls over the internet from a regular phone. WiFi -- Wireless local networks In classic ZapMail fashion, the telephone companies misunderstand the WiFi business. WiFi is a product, not a service, and they assume their competition is limited to other service companies. There are now half a dozen companies selling wireless access points; at the low end, Linksys sells a hundred dollar device for the home that connects to DSL or cable modems, provides wireless access, and has a built-in ethernet hub to boot. The industry has visions of the "2nd phone line" effect coming to data networking, where multi-computer households will have multiple accounts, but if customers can share a high-speed connection among several devices with a single product, the service business will never materialize. The wireless ISPs are likely to fare no better. Most people do their computing at home or at work, and deploying WiFi to those two areas will cost at worst a couple hundred dollars, assuming no one to split the cost with. There may be a small business in wiring "third places" -- coffee shops, hotels, and meeting rooms -- but that will be a marginal business at best. WiFi is the new fax machine, a huge value for consumers that generates little new revenue for the phone companies. And, like the fax network, the WiFi extension to the internet will cost hundreds of millions of dollars, but it will not be built by a few companies with deep pockets. It will be built by millions of individual customers, a hundred bucks at a time. VoIP -- Phone calls at internet prices Voice over IP is another area where a service is becoming a product. Cisco now manufactures an analog telephone adapter (ATA) with a phone jack in the front and an ethernet jack in the back. The box couldn't be simpler, and does exactly what you'd expect a box with a phone jack in the front and an ethernet jack in the back to do. The big advantage is that unlike the earlier generation of VoIP products - "Now you can use your computer as a phone!" -- the ATA lets you use your phone as a phone, allowing new competitors to offer voice service over any high-speed internet connection. Vonage.com, for example, is giving away ATAs and offering phone service for $40 a month. Unlike the complex billing structures of the existing telephone companies, Vonage prices the phone like an ISP subscription. A Vonage customer can make an unlimited number of unlimited-length domestic long distance calls for their forty bucks, with call waiting, call forwarding, call transfer, web-accessible voicemail and caller ID thrown in free. Vonage can do this because, like the telephone companies, they are offering voice as an application on a digital network, but unlike the phone companies, they are not committed to charging the old prices by pretending that they are running an analog network. Voice quality is just one feature among many True to form, the telephone companies also misunderstand the threat from VoIP (though here it is in part because people have been predicting VoIPs rise since 1996.) The core of the misunderstanding is the MP3 mistake: believing that users care about audio quality above all else. Audiophiles confidently predicted that MP3s would be no big deal, because the sound quality was less than perfect. Listeners, however, turned out to be interested in a mix of things, including accessibility, convenience, and price. The average music lover was willing, even eager, to give up driving to the mall to buy high quality but expensive CDs, once Napster made it possible to download lower quality but free music. Phone calls are like that. Voice over IP doesn't sound as good as a regular phone call, and everyone knows it. But like music, people don't want the best voice quality they can get no matter what the cost, they want a minimum threshold of quality, after which they will choose phone service based on an overall mix of features. And now that VoIP has reached that minimum quality, VoIP offers one feature the phone companies can't touch: price. The service fees charged by the average telephone company (call waiting, caller ID, dial-tone and number portability fees, etc) add enough to the cost of a phone that a two-line household that moved only its second line to VoIP could save $40 a month _before making their first actual phone call_. By simply paying for the related services, a VoIP customer can get all their domestic phone calls thrown in as a freebie. As with ZapMail, the principal threat to the telephone companies' ability to shrink costs but not revenues is their customers' common sense. Given the choice, an increasing number of customers will simply bypass the phone company and buy the hardware necessary to acquire the service on their own. And hardware symbiosis will further magnify the threat of WiFi and VoIP. The hardest part of setting up VoIP is simply getting a network hub in place. Once a hub is installed, adding an analog telephone adapter is literally a three-plug set-up: power, network, phone. Meanwhile, one of the side-effects of installing WiFi is getting a hub with open ethernet ports. The synergy is obvious: Installing WiFi? You've done most of the work towards adding VoIP. Want VoIP? Since you need to add a hub, why not get a WiFi-enabled hub? (There are obvious opportunities here for bundling, and later for integration -- a single box with WiFi, Ethernet ports, and phone jacks for VoIP.) The economic logic of customer owned networks According to Metcalfe's Law, the value of an internet connection rises with the number of users on the network. However, the phone companies do not get to raise their prices in return for that increase in value. This is a matter of considerable frustration to them. The economic logic of the market suggests that capital should be invested by whoever captures the value of the investment. The telephone companies are using that argument to suggest that they should either be given monopoly pricing power over the last mile, or that they should be allowed to vertically integrate content with conduit. Either strategy would allow them to raise prices by locking out the competition, thus restoring their coercive power over the customer and helping them extract new revenues from their internet subscribers. However, a second possibility has appeared. If the economics of internet connectivity lets the user rather than the network operator capture the residual value of the network, the economics likewise suggest that the user should be the builder and owner of the network infrastructure. The creation of the fax network was the first time this happened, but it won't be the last. WiFi hubs and VoIP adapters allow the users to build out the edges of the network without needing to ask the phone companies for either help or permission. Thanks to the move from analog to digital networks, the telephone companies' most significant competition is now their customers, because if the customer can buy a simple device that makes wireless connectivity or IP phone calls possible, then anything the phone companies offer by way of competition is nothing more than the latest version of ZapMail. 10.0 Knowledge-based industrial clusters blossom in state (Wisconsin) as activity blooms
Thanks to MedicalSudser William
Hoffman -
hoffm003@maroon.tc.umn.edu - for alerting
me to this article
By JOHN TORINUS, Milwaukee Journal Sentinel, Dec. 7, 2002
Lest anyone think that talk, not action, was the essence of the Wisconsin Economic Summits, let it be known that activity is picking up sharply in the knowledge-based industrial clusters.
The cluster concept was advanced at the last
three summits and, like a prairie plant, it is growing roots deep in
Wisconsin economic soil.
The biggest development on the cluster front was the recent announcement by the Medical College of Wisconsin that it intends to build an $85 million business and research center on its campus in Wauwatosa. Under the umbrella of a new Biotechnology and Bioengineering Center, the facility is destined to become a hub of high-level research and commercial spinoffs from that work. From a small base a decade ago, the Medical College is now doing $107 million in research, and that number is getting bigger. As part of the initiative, it is recruiting another 10 researchers, each backed up by as many as 10 more people. This is all part of the Biotechnology Cluster that was delineated at the recent summits and now is being headed up in the Milwaukee region by the Medical College's William Hendee. Biotech is clearly our hottest emerging cluster.
Cluster collaborations
Other mature clusters in Wisconsin also are shaping up. The Printing Cluster is working on a new relationship with the Department of Natural Resources aimed at collaborative regulation instead of the old "command and control" methodologies. The plastics industry in Wisconsin, a subcluster of the Advanced Manufacturing/Materials Cluster, also has embarked on a collaborative venture with the DNR. Plastics Wisconsin is working to support a world-class regulatory project called the Wisconsin Partnership, using knowledge developed at the Massachusetts Institute of Technology and in the Netherlands. Jeff Smoller of the state DNR wrote recently, "The Wisconsin Partnership will design and test a 'we can' approach to environmental and economic progress as a complement to the 'you can't' approach to traditional regulation." Also participating in this experiment is the University of Wisconsin-Stout and Forward Wisconsin, which markets the state's plastics industry. Meanwhile, in Green Bay, the Papermaking/Forest Products Cluster is developing its first white paper on initiatives for the biggest manufacturing sector in Wisconsin. Fifty people in and around the paper industry gathered in October and blocked out seven critical strategic concerns. One calls for a new R&D center in the state. "R&D is the only thing that can truly revolutionize the industry, and it needs to be revolutionized," says the report from the meeting. Another mature cluster in the state is Agricultural Business/Food Processing. It, too, is putting down roots. The Rock County Chamber of Commerce has launched an initial meetings of leaders in food processing for the southern part of the state.
Pataki's vision pays off
Other states are farther down the line in using clusters as the bedrock of their development efforts. Arizona has had eight clusters for more than a decade and has developed two new ones: optics and senior services. The latter is appropriate for a state that's home to many retirees with a wide range of needs, from housing to medical and financial services. In New York, Gov. George Pataki has taken clusters to a higher level. His vision is to create a series of new economy technology centers across the state. He was instrumental in getting Tokyo Electronic Ltd. to put a $300 million research and development center at State University of New York-Albany that will continue to transform that campus into a center for nanotechnology. That is the second large research center that Pataki has lured to the school's "Center of Excellence in Nanoelectronics." The 300 workers in the new research center are each expected to earn $85,000 to $100,000 a year. Drawn by the state's efforts and investments, IBM put a $2.5 billion chip factory close to Albany. Other centers of excellence that Pataki has designated are Buffalo in bioinformatics (also a strength in Milwaukee), Rochester in photonics, Syracuse in environmental systems and Long Island in information technology. Comparing Wisconsin with New York, you have to wonder why our political leaders don't articulate similar visions. Cluster activity has to be driven by industry, but it also needs leadership from the universities, a la the Medical College of Wisconsin, and from our political leaders. Political leaders in Wisconsin are mesmerized by their budget deficit problems, and they are making that job one. They've got it backward. Job one is the economy, which needs to be souped up so the revenue going to the state coffers in Madison grows. John Torinus is chief executive officer of Serigraph Inc. of West Bend. Contact him at jbt1@serigraph.com. 11.0 Through the Gate (a new monthly column) If the extraordinary business debacles of the last few years have taught us anything, it’s that it’s difficult to predict the “Next Big Thing” or the next great trend with any real degree of accuracy. With the increasing complexity and availability of information, business leaders, planners, and strategists are bombarded with data ranging from true to false, from relevant to irrelevant. And yet, the need for predictive insights has never been greater. Purpose of the Column The purpose behind this column is to offer companies in the Minnesota technology economy general information to use in leading their companies through these uncertain times; information such as where the demand for technology is within companies, what types of companies in what industries are ramping up for growth that will require technology support, where are the next pioneering opportunities, and general trends impacting our local business environment. In practical terms, who's buying and where the demand is. This column is not going to focus on the invention side of the technology question (where is technology going?) but more on the utilization side of the technology question. Where is the demand, where is the money, where is the appetite for technology in today’s economy? Over the next months, we’d like to examine the pursuit of “being at the right place at the right time” from a number of different angles: · A topic slant (eg. what industries are moving toward wireless) · A trend slant (eg. GenXers are more likely to buy their insurance online than are Boomers) · An opportunity slant (eg. Minnesota hosts one of the largest populations of foreign born residents in the US. Our city infrastructure—schools, hospitals, transportation—can't currently keep up with the language demands. A company that can provide technology to temporarily overcome the speaking barrier might consider the local government as a target customer.) While it’s true that it has become more difficult than ever to make accurate predictions about the future, it’s still important to make that attempt although the best we may end up with is a viable set of choices. Approaching the Future A company with strong leadership tries to answer the question of where to best leverage precious resources for the greatest return on investment, weighing short-term needs against long-term ones. An approach that is popular among strategists is scenario planning. From this perspective, the future is viewed as a mosaic in constant development. There is no one right future. Many, many events form the overall picture. And for every event and every reaction, a new scenario becomes possible. Many scenarios are very similar to each other in the short view, but they deviate more and more from each other the further out you go from the present. This process helps us identify the actions we want to pursue and which actions will lead to possible futures we have no wish to experience. The future becomes a set of meaningful choices we make right now, and right now, and right now. Issues Facing the Technology Industry Here is a quick compilation of trends we believe will strongly impact the face of technology this year: · Technology has moved from being a separate and unique function to one that is deeply imbedded in the very fabric of all business operations. This is changing not only how companies view technology, but what departments are measuring the value of the technology and who is paying for the investments. · Small businesses and entrepreneurial companies will continue to provide a strong growth opportunity for technology solutions. They are not already invested in legacy products or entrenched in established ways of doing things; they also have to be nimble and efficient to stay in business. · A big trend is, not surprisingly, the focus on doing more efficiently and seamlessly what we’re already doing regarding business operations that directly impact the generation of revenue. For example, using voice commands to open your contact management system on your laptop at the office and having it transmit a contact’s information to display on the cell phone. These are the tools that will gain the best reception. · Tools for collecting data in a wireless format for the timely delivery and sharing of information are becoming a large opportunity. · Decreases in travel and increased pursuit of family/work/life balance will make it more important than ever to eliminate the barriers in the same physical location place on business activities and profits. · The traditional power structure behind economic demand will shift. Speaking at a Leadership conference in October 2002, Andrew S. Grove, Chairman of Intel Corporation, summarized his thoughts on the direction of technology, “The new paradigm is communication-based rather than computing-based. The new paradigm will be very heavily dominated by the increasing portion of all intellectual property being created in digital form, stored in this platform and, therefore, ready to be transported in digital form. Those two shifts mean the people’s product lines, competencies, priorities, and economic models have to be redefined.” What To Expect from the Column Over the next months, we plan to explore the larger question of what the future holds in store for us. We’ll be soliciting the views, opinions, and insights of business owners, analysts, employees, and educators in the technology community. We will be talking with networkers, corporate leaders, politicians, and specialists around the state, providing first hand information in addition to the market research and environmental scanning our consultants perform for clients on a regular basis. Coming Up Next month’s column is going to look at not only how the rules of the game changed, but what people think is the game itself. We will be asking people how the changes in the last year have affected them, their professional goals, their families, their businesses. What are the transformations occurring at the human level? If you would like to be interviewed for this or any other topic, please send your name to info@stonegatebusinessconsulting.com or call and leave your information at 952.967.4444. Sam Zordich Sam Zordich is President of Stonegate Business Consulting, Ltd., a firm dedicated to guiding companies through strategic and organizational change. Sam brings over 20 years experience in the high-tech and financial services industries where she has owned and operated successful companies in size from startup to Fortune 100. In all cases, she has opened up significant new areas of business. Her specialties are sales strategy, competitive intelligence, and futuring. Sam received her MBA from the University of St. Thomas. To contact her, send emails to sam@stonegatebusinessconsulting.com or call direct at 612.825.6540. 12.0 Guest Writers for This Report We will consider both sponsored and unsponsored columnists and guest writers. If you are aware of others who would like to receive the NetSuds Report, ask
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