Running with the Renegades
By Peggy Anne Salz, Tue Mar 26 00:00:00 GMT 2002

Paul Saffo, renowned futurist and head of the Institute for the Future, talks about business models on his radar.

After all the hype that marked the mobile space last year, this year has been quiet. What trends and developments are brewing out there?

Paul Saffo: OK. Lets dive in. To me, WiFi [802.11] is, in the short run, the place where the best ideas for wireless are going to emerge. An example of this is Sky Dayton who coming in with [his] Boingo [Wireless] and trying to repeat what he did with Earthlink in the 90s which is basically a way to aggregate a whole bunch of tiny companies into something thats got a national footprint.

The established telecommunications companies will play their role as well, but I think the wireless Internet will be the domain of little companies that think outside thebox. I think the situation is very close to 1980 with computing. Back then there was a huge establishment of leaders like IBM and DEC and a band of renegades who built a new industry. I would bet on the renegades then and I would bet on them now.

The perfect symbol for this revolution I see on the horizon is the Pringles [potato chip] can antennas that people are putting up to use WiFi. Theres a guy in Aspen doing a WiFi local area network for the town and hes under pricing the local telcos and hes doing it with a combination of surplus Soviet antennas and equivalent of Pringles cans. If that spreads thats something to really watch out for.

Then theres another company called SkyPilot [Network Inc.]. Its one of probably half a dozen renegade companies that are looking at how to do neighborhood WiFi. Its not really an 802.11 company, but its got a very interesting vision and its a great blend of the pragmatic and the radical. Now, all this [WiFi] stuff is still partly a gleam in the eye of people and you have to take it with a grain of salt. But the approach to wireless they are taking can get a whole different economy going.

WiFi is a technology where there is real strength in numbers. If you had mesh routed 802.11, you would pay your neighbour to join in [accessing the network.] The more people who have that, the more nodes you have, and the more wireless bandwidth you have. Its a really interesting model and its Armageddon for traditional telecommunications [operators]. Just as an aside, there are some practical problems. The one weakness of 802.11 is power management because the way 802.11 was architected assumed that you would have it linked to main power. Nothing will drain your mobile device faster than 802.11. But we got this far and it will get fixed.

In short, 802.11 is the playpen for the people who are going to come up with the next set of big ideas. It is also a lab for the telecommunications establishment to understand what is possible and what consumers want. And these telecommunications companies should see that this is also the place where it might make sense to partner with or acquire the companies that have this wireless vision. After all, it took renegades to do email and it took renegades to do the Web.

TF: What are the services that are going to drive this Wild, Wireless Web?

PS: One huge business opportunity revolves around coming up with subsidized models. The real frontier in the short-run is figuring out an advertising model that covers the costs subsidizes the costs and doesnt tick off the consumers. Watch companies like Google right now.

Google is trying to feed an ad subsidy into their model and what they come up with will be worth trying to copy. Id also look to the magazine industry, which is a subsidized medium. This is a model where the subscription doesnt cover the cost of the paper and printing and people don't object to the ads. This is the kind of model we need in wireless.

The next big thing is definitely advertising tied to location. Now this could drive us all crazy or it actually could be helpful. I personally would like to see people have fun with location-based information and advertising. Instead of sending a message to a person Id love to send the message to a location. Imagine you're out hiking and you pass a tree and there's a hummingbird nest in it. You think thats really cool and so you leave a message at that tree so that anybody walking that way can opt in and the phone tells them, Hey, look up to the left there's a nest and then have the message expire after a few days or weeks. Well, if you have decision-based systems triangulating locations of phones or GPS you could do this.

TF: Sure, graffiti is a way we communicate and your idea turns this human need into the basis for a business model.

PS: Yeah, we have to think of not only the opportunities for wireless but are the opportunities that wireless enables? Look at geocaching. It's popular and similar to what Im suggesting here.

In geocaching people take their GPS unit and they take a cache, a little box, with some stuff in it like a logbook and a couple of artifacts. They hide it somewhere out on a trail or in the woods, record the geocache coordinates and then go to the website and give other community members some clues. A person goes out to look for the cache and when he finds it he takes an item out, puts another item in and records his name in the logbook. It's basically a sport where the people participating are the search engines.

My favorite geocache is one out in California called the Library, where people put a bunch of old books in a knothole in a tree. And this is one of the most active geocaches around. People hike out there. They take a book, they leave a book they're finished with and it's basically a really cool lending library in an oak tree made possible by GPS and the Internet. Now thats innovative! Is anybody making money off it? Of course not but that doesn't mean someone couldn't. Think about it. Here is an application that is sticky enough to draw people to give the valuable thing they have which is their time and somewhere in there is a compelling commercial proposition.

The other game I like is BotFighters, where people use SMS over cell phones to kill each other and the bullets are in effect SMS messages. You run around and capture zones by going in to them with your cell phone - and you kill other people as well and they don't stay dead, they just have to pay money to recharge their batteries. There are people spending huge sums of money on this game. I was talking to one service provider and were talking about $600 bucks a month. I know people who no longer take a plane from Stockholm to Gothenburg they'd rather take a train because then they can pass through zones and kill people on the way.

TF: So, geocaching enables a kind of wireless treasure hunt and this game is a wireless version of cowboys and Indians are you saying that successful wireless services need somewhere to speak to our human needs or even childhood experiences?

PS: I think the important thing about these examples is that these are new applications that you couldn't do before but they also satisfy old desires. E-Bay satisfied old desires to connect in a community and scratching whatever the itch is that makes people go out to garage sales. It's a hit in the Internet because it's satisfying an old desire in a new way. Geocaching gives people an excuse for a walk in the woods and something to do while they're there. Its discovery.

The one constant here is you're using the device to connect to humans and not to information. I believe the basic human instincts havent changed, but the opportunities for expression have changed a lot. And so that's where the opportunity and even the business model is. The focus needs to be to take old desires and express them in new compelling ways that people find absolutely addictive.

People are taking todays limited technology like SMS and doing some very interesting things with it in terms of experiences. Those experiences are probably fads. BotFighters will probably go the way of Tomagotchi, but you can think of those as pointers toward trying to understand advertising, for example. If this absorbs and engages people then maybe what I want to do as an advertiser is sponsor a virtual treasure hunt with your cell phone or if I'm a telecommunications company, I want to make this part of my service. But we need to treat these early and weird things as indicators of users desires that can help point us towards the much larger market opportunities.

Paul Saffo is a technology forecaster studying long-term information technology trends and their impact on business and society. Named one of one hundred "Global Leaders for Tomorrow" by the World Economic Forum, Paul serves on a variety of boards and advisory panels, including the AT&T Technology Advisory Board, the World Economic Forum Global Issues Group, and the Stanford Law School Advisory Council on Science, Technology and Society.

Paul holds degrees from Harvard College, Cambridge University, and Stanford University. However, he is perhaps best known for his role as director of the Institute for the Future a non-profit foundation that provides strategic planning and forecasting services to major corporations and government agencies.

A frequent contributor to Peggy Anne Salz is a freelance business/technology who likes to go beyond the day-to-day developments in the mobile space to grapple with the toughest issue: where the industry is going. Her work has appeared in a number of publications including Time, Fortune and The Wall Street Journal Europe, as well as Communications Week International, where she is one of the editors.