I feel like the guy who missed the big party and then hears about it for years afterward. "You should have been there," people keep telling me about the now-apocryphal ITU Telecom 99 show. The booths were enormous, the parties ran until dawn, the champagne flowed like water.... Everybody admits, a bit sheepishly, that it was like Rome right before the fall. And indeed, Telecom 99 was the global telecommunications industry's last huzzah before the crash began.
Now, four years later, the survivors are back in Geneva to pitch their wares and share their current visions of the future at ITU Telecom World 2003, sponsored by the International Telecommunications Union, a global organization that coordinates telecom networks, services, and standards (see BW Special Report, 10/20/03, "The Wireless Challenge"). True, some companies, including Nokia (NOK), Ericsson (ERICY), and Alcatel (ALA), have opted to forego splashy booths in favor of lower-key meetings and dinners. But their places have been taken by a growing number of companies from the computer and software businesses, including Chinese upstarts such as ZTE and Huawei, which are using Telecom 2003 as their global coming-out party.
The most striking thing about this sprawling trade show and conference is its worldwide scope and scale. While the number of exhibitors and attendees is down from 1999, it's not exactly a ghost town, either. The floor is full, and the events are jammed with people. As a veteran of two decades of technology trade shows, I'm struck at how much more diverse and ubiquitous the telecom industry is than PCs and the Internet. Never in all my visits to Comdex and CeBit have I seen so many Africans, Middle Easterners, and Southeast Asians mixed in with the usual Americans, Europeans, and East Asians. It's enough to give one a sense of hope in the possibilities of globalization benefits still.
Here are some of the top trends I've spotted so far:
The Colossus of Redmond casts a long shadow. People often say Microsoft (MSFT) is the world's most persistent technology company. Historically, the software king has taken until version 3 of a product or technology to really get it right. But when that moment arrives, look out: From there on, it's often a quick jump to dominance.
Microsoft hasn't gotten to that point yet in the telecom business, but that'll soon change. As one analyst put it to me: "Everywhere you look in this industry, you pull open the door and find Microsoft." It's making a big push for industry-standard Windows servers in telecom -- used both for administrative tasks such as billing and customer-relationship management and also in the heart of the networks that serve content and applications over the Net and wireless networks (see BW Online, 10/13/03, "Time for New Thinking in Telecom").
It's continuing to push pint-size versions of Windows for use in mobile phones, such as the new Orange SPV E200 launched here. And it's making a big play with its .Net Web-services technology to become the glue tying together all manner of data services, from wireless e-commerce to mobilizing corporate work forces.
In his keynote address to the conference this morning, Microsoft Chairman Bill Gates observed dryly that "things were, in a sense, hyped" in the period before the crash. But since then, he reminded the audience, Microsoft has more than doubled its annual R&D spending, to $6.8 billion this year, and made a massive commitment to "bring together PCs and telecom."
"ALWAYS LEERY." Gates's vision -- no surprise here -- is to shift the terms of debate in telecom to software, where Microsoft is strongest. He sketched out a world of tightly linked interactive services -- everything from "sharing digital memories" (i.e., sending and receiving photos via handsets and the Internet) to complex workplace examples involving inventory management, logistics, and customer-relationship management.
For telecom carriers, Microsoft's push is a double-edged sword. They mistrust the software giant because of its power in the PC business. "People are always leery of Microsoft," says Sol Trujillo, the CEO of France Telecom-owned (FTE) Orange, the No. 2 mobile provider in Europe. "I don't think that will ever change, because you can't undo the past."
Yet they're eager for new sources of revenue to counteract sagging prices and sluggish usage growth. In Microsoft, they see a magic keyhole to the world of computers and data. Gates & Co. offer unmatched programming experience, industry contacts, and a history of developing technology platforms and ecosystems. Plus, any kind of deal with Microsoft confers instant publicity: Look at how much attention Orange has garnered with the SPV phones, which contain Microsoft Smartphone software and are manufactured to spec by Taiwan's HTC.
HOW MUCH PIE? The real question, Trujillo and others say, is whether Microsoft can play by the rules of the telecom world even as it's subtly working to replace them with a more PC- and Internet-like business model. To the extent that Microsoft makes good on its pledge to help operators make more money from data services, it will be welcomed into the party -- if not warmly. But if Microsoft tries to own too much of the pie, the industry will shut it out, no matter how compelling its technical claims. After all, other companies are also out there working to provide mobile middleware, graphical handset software, and integration of the Internet and wireless domains.
One interesting example: Redmond officials brag that the ability to download new capabilities into a Microsoft-powered handset is a big plus for operators because it will reduce customer turnover and the frequency with which people replace their phones. Those are both costly items for carriers, which shell out billions of dollars every year subsidizing handsets and spend as much again on customer acquisition.
As you might expect, such a scenario isn't particularly popular with handset makers like Nokia, Motorola (MOT), Sony (SNE), Ericsson, or Samsung, which rely increasingly on replacement sales to keep their businesses growing. Carriers may end up agreeing with handset makers, since hardware upgrades -- to color phones, camera phones, game phones, and so on -- are big drivers of increased revenues.
The question is: Do people buy phones like computers, where they expect to upgrade and change the product over a longer lifetime, or like consumer electronics, where the configuration is fixed and you simply buy a new model when you want to move up? The answer is still unknown, but even Microsoft concedes that physical upgrades have to happen sometimes. "You can't download a camera," jokes Mike Wehrs, director of technology and standards for Microsoft's mobility division. It remains to be seen how enthusiastically consumers will embrace programmability in mobile phones, which they'll have to for Microsoft's mobile dreams to come true.
Hype is back. You would think people would have learned from the bubble. But nooooo. The tech industry's knee-jerk tendency toward hype is undimmed. What's more, some of the very same people who talk about needing to absorb the lessons of the crash -- among them, that consumers want to buy solutions, not technology -- just can't help themselves from indulging in a little pie-in-the-sky.
Gates's keynote was marked, as always, by the obligatory demos. (Microsoft events seemingly cannot exist without them.) It was all gee-whiz and cool, but I found myself wondering, as always, how hard it would really be to make all this stuff work well and how many people would care enough to try. Notwithstanding any lip service about listening to customers or meeting market needs, Microsoft is still driven by the art of the possible.
Meanwhile, a couple of Asian companies are going where no one has gone before with absurdist visioneering. Japan's giant NTT DoCoMo (DCM), in a midday press conference, said its strategic objective is to build "ubiquitous society." Whew, that's a relief! Clearly one of society's biggest problems is its lack of ubiquity.
PUSHING INFO. Just to keep things even, Korea's SK Telecom (SKM) proclaims on its booth that it's in favor of "Ubiquitous world." Obviously, ubiquitous is the word du jour. But what does it mean? Is this an interplanetary shot across the bow -- a new kind of intergalactic manifest destiny?
Even Orange CEO Trujillo, who's trying to reorient the successful mobile provider around improving the "customer experience," uses props to make his point. He brandishes a Handspring Treo to show how Orange's network can "push" information to customers. Then he holds up an SPV phone to demonstrate how great it will be to get e-mail messages read aloud to you while commuting in your car.
Help! I don't want that. In the immortal words of Greta Garbo, "I want to be alone." After being barraged with spam all day at the office, do these people really think I want to give up the few minutes of peace and quiet I enjoy during my commute to receive yet more messages? Especially read to me by a computer?
MORE SOBRIETY NEEDED. Perhaps I'm alone in this thinking. No doubt, some consumers and business people find such scenarios enticing -- and are even willing to pay for them. But I think I smell a bit of desperation. Most of the tech and telecom companies don't really know what customers want (though Trujillo says Orange spends a lot of time and effort on market research), and so to rev up sales, they keep on shoving out technology instead.
Lots of talk is going on here about how the industry is more sober and honest than it was in 1999. But it all makes me wonder: If they're not careful, the rising hype wave could engulf them again. By Andy Reinhardt at ITU Telecom World 2003. Follow BusinessWeek's exclusive telecom coverage, only on BusinessWeek Online