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Digital Values and the Internet

By Frank Greenhalgh

Virtual Value
During the last six months the stock market capitalization value of Microsoft exceeded that of all other companies in the US. The two largest companies that Microsoft passed were General Motors and General Electric. The fact that Bill Gates could take his company's entire product line and store it in a two-suiter should not go unnoticed. The value of Microsoft is its intellectual property, not its material or manufacturing facilities. The entire product line is a group of ones and zeroes lined up strategically on a bunch of CD-ROMs.

The valuation of Microsoft is still a fair one. Maybe Microsoft doesn't own factories but it does provide the world with an array of application and operating system products that are very desirable and highly profitable. With billions in the bank Microsoft is the envy of any company. On the other hand some companies have evaluations that are based on hope.

Amazon.com, the online bookseller, is more greatly valued than Border's Books and Barnes and Noble (with thousands of bookstores full of millions of books) combined.

YAHOO, the number one online search engine, is more greatly valued (on paper) than The New York Times Company or even Archer Daniels Midland ("Supermarket to the World"). Yet YAHOO's capital equipment is a few rented T3 telecom lines and a bunch of servers. The value of Yahoo is in the search engine software, and being the first number one Internet search engine.

Is this crazy? Maybe yes, and maybe no. The world is now totally connected. Amazon online has been able to offer an inventory of books (and now CDs) that far exceeds that of any single bookstore. Most of the books are not even in the Amazon warehouse, but are located in each publisher's warehouse. Your book order at Amazon is sent instantly to the book publisher. The publisher wraps up the book, puts your address on it, and within hours of your order, UPS picks it up. One to two days later it arrives on your door.

Amazon gets its money from the credit card company in two days and pays the publisher every 46 days. The market is betting that this concept will allow Amazon.com to become a major bookseller without the inventory, overhead and cash outlay of its competition.

YAHOO, the number one search engine provider on the Internet, gets millions of hits a day. Each surfer is presented with banner ads on all the YAHOO pages. YAHOO will also gladly steer you to a vendor if you need a car or a computer or even a hammock. The fortunate vendor will gladly pay YAHOO for these customers. A definite money maker when the Internet reaches maturity. Or is it?

The street is betting that eventually everyone will have Internet access and will do a great deal of shopping there. Actually this is becoming true right now. Twenty five per cent of the trades on Wall Street are now done on line. Similar numbers have been reported for auto sales and travel arrangements. This is happening when only about 30% of all the US has Internet access. When everyone has it will these inflated Internet values prove justified?

The first question is, Will everyone have it?
The second is, Will it still be the same Internet with the same market leaders?

The answer to the first question is Yes. Everyone will be connected to the Internet. The obvious value will force industry to insure that it happens.

The answer to the second one is still in the prophecy state with the telecom world leaders debating which vision will succeed. Technically, it will not be the same Internet. The present www (World Wide Wait) is too slow for what is coming. The next Internet will provide high quality video and audio streaming into you home on to your desktop. Or maybe in your kitchen.

Bandwidth
The given in the equation is that any Internet of the future will have to have a much higher bandwidth. But whose? Will the cable companies provide it? I saw a fiber optic cable being installed on my street this summer by my local cable company. They will soon be offering a 500K+ connection to the Internet. Cisco Systems, Lucent, et al are developing DSL (Digital Subscriber Line) systems that will allow your local phone companies to put you on the Internet at 1 MHz. Bandwidth will be necessary to provide instant downloads, run applications at remote servers and watch CNN or a movie clip on your browser.

The Browser of the future
Will the Netscape and Microsoft browser war still be valid? These browsers are still software for a computer. What if the browser of the future is not a computer? Today you can browse with web TV. Tomorrow's browser will probably be your telephone.

The Internet-Phone
Located in the kitchen or den, the Internet-Phone will become the obvious browser base. It will be connected 24 hours a day to the Internet. It will resemble a laptop with a hand receiver attached. All telephone calls will be made digitally over the Internet. You will press the "Locator" button and locate the name of the person you wish to call on the screen. This could be from a personal database or an online directory. Click on the person's name on the screen and you will be at that person or business's home page. There you will be given choices. Do you want to ring for an ear to ear conversation? Just leave a voice mail message? Type an email message? The speed convenience and power will be tremendous.

The phone will also contain a "Shop" button. When pressed a screen of choices will appear (similar to a Yahoo list) inviting you to shop for everything from clothes, to automobiles. You will be able to then go to catalogues such as Bloomindales, Eddie Bauer, Sears Roebuck and shop on line. The high bandwidth will permit you to see a video fashion show of the articles you might wish to purchase. Travel agencies will be able to show videos of the spots they wish to send you.

What else? How about a banking button and a utilities button to allow you to pay your bills with simple transfers from one to the other. Press your Portfolio button and see what your stocks and bonds are doing. Buy or sell on line. This phone will do it all.

What won't it do? It won't make you wait endless minutes to boot up. It won't crash and have to reboot. No floppy or hard drive to fail(it might have a small inkjet to take notes on). It will not be an office computer it will be your Internet-phone connection.

Why Does This Make Sense?
The Personal Computer has proven to be a wonderful invention. It has played many rolls and despite its great acceptance, it still has not found its way into 70% of the nations homes. The original reasons for home computers have been for games, word processing and niche applications (greeting cards, database, reference). The single largest attraction for the PC today is the Internet. Why must it be available only on something as complex and daunting (to some) as a PC? It doesn't have to, and it probably won't. The phone makes the most sense as it will simply be a modern replacement for what is already in your home. It can be designed to be both a standard telephone and a high speed surfing engine. It will change the landscape of the industry. Your tech support will be provided by the phone company.

Who will control your browser?
The phone or cable company providing this wonderful device will also be providing the software and the directories and search engines it links to. This machine will not require a Windows operating system and therefore will use a newly designed browser. Certainly Microsoft, Netscape, Sun and Oracle will willingly provide browser technology, but the phone provider and you yourself will have the final say on where the phone takes you. Maybe that is why Wall Street is also bidding up the telecom companies and betting on their future growth as a provider of the telephone in your kitchen.

About the Author

Frank Greenhalgh has been working in power supplies and systems for 38 years. He has many impressive accomplishments and patents. Over the years he has made significant contributions to Trio Laboratories where he held the position of Chief Design Engineer and was then promoted to Vice President.

He co-founded CEAG Electric Corporation (now ABB CEAG) and developed the first mainframe power system using the droop paralleling concept. He has written numerous articles and columns, presented papers at the milestone PowerCon convention and consulted for ABB CEAG and other companies. Recently his accomplishments include the development of two Web sites, www.fgl.com with the Power Corner and www.amityville.com. Frank is presently functioning as "Director of Technical Sales" for Toritsu Tsushin Kogoyo Corp.