Eyes forward

One of the most strategic issues in cyber-territory today is that of "owning eyeballs" - by which is meant consumer eyeballs, focused on screens. Screens of all descriptions, including PCs, Internet appliances and TV sets. Ordinary TVs and NetTVs - because the ordinary ones lead people to the online ones, an observation not lost on the powers that be in eyeball-land.

One of the methods of owning eyeballs is by 'owning` the access devices, or rather the software that runs on the device.

Media networks have long played the game of eyeball ownership, including traditional print media, television and radio (the latter requiring a slight change of definition, from "eyeballs" to "earballs"). Portals seek to own eyeballs by developing loyalty and hopefully even getting the eyeball-owners to set their URL as the browser`s start-up address.

Information appliances seem to be getting off to a shaky start in SA, with the possible exception of the Palm Pilot and Palm III. But once they begin to take off - and I re-state my belief that the next generation of smart cellphones will be the key in this country - there will be a new generation of screens and, correspondingly, eyeballs to own.

One powerful method of owning eyeballs in the electronic media is to lock users into using your proprietary viewing device. Short of monopolising the production of such devices, the next best thing is to own, or at least control, the interface standard, by which they are to communicate. Parallel standards may exist, like VHS and Betamax, until one eventually gives up the battle. PC operating systems tend to follow a similar route, with one or two dominant standards emerging victorious - at least until the next wave arrives.

Never mind the challenge from Linux, the next battle Microsoft operating systems will face will be in the Internet appliance arena, with its own Windows CE being challenged by newcomers such as PalmOS from 3Com. This is by no means the end of the story; expect at least one new challenger to emerge before the battle is considered won.

Will most of these appliances employ Java eventually? Quite possibly, and much more too, considering the rate of miniaturisation. Expect Pentium power with 64 Megs of RAM in the future smart handheld device, although I will stop short of venturing a date for this scenario. But then again, with this kind of computing power, won`t they all be capable of running an operating system as sophisticated as Windows is today? Or will the operating systems be distributed throughout a neural network? Built out of molecular computers...

Sorry, I drifted for a moment! To come back to the real point of this column, one of the methods of owning eyeballs is by "owning" the access devices, or rather the software that runs on the device, which is more to the point.

In parallel, network owners are seeking to own eyeballs by owning the pieces of string connecting screens to content providers. In countries with tightly regulated telecommunications and broadcasting environments, these are generally controlled by state-owned monopolies or the nearest equivalent. With deregulation, convergence and the Internet come more alternative routes between devices and content providers. In time there will be multiple networks - some wired and some wireless - competing to provide the bandwidth to connect these two suckers together. Here comes the billion dollar question (actually it is trillions already) - can the future operators of these networks own eyeballs, or will they be relegated to selling bandwidth, a commodity just like petrol?

Imagine the signs on the telco shop-windows of the future - "SALE OF THE CENTURY", "DISCOUNT BANDWIDTH", "BUY TWO GIGABITS/SECOND AND GET ONE FREE"...

This scenario is admittedly futuristic, since it will take decades for the advantage of an existing landline infrastructure by a dominant operator to be totally eroded. But the time will come, however distant, when these copper wire circuits will be finally declared redundant or obsolete. When this time comes, bandwidth will become like petrol - or maybe worse - like water. Some day a bearded cyber-architect will dig up an old Dialtone article from the previous millennium, in which a soothsayer speculated that this day might come.

What will happen in the meanwhile? Can telecom network operators lock-in customer eyeballs? Cable TV companies are trying to do so overseas. Companies like AOL were, until recently, vertically integrated. What about cellphone operators? Even in an oligopolistic environment, customers still switch operators, just as easily as they switch handsets. (Which again points out that devices don`t create lock-in, only the operating systems that control them.)

In the main, it is the content owners and the operating system screen-mongers that really control the relationship. This gives us a clue as to the industry structure of the future. The mega-mergers between telecom operators and content owners (such as TV and cable networks and Web portals) is one early indicator. The $5 billion cash investment by Microsoft in AT&T must be another, along with the partnership between Microsoft and a global telecom consortium to ensure control of the next generation of operating system for Internet appliances.

Forget about content, it is now the database that is king. Databases of consumer profiles, millions of them, providing direct marketing ammunition second to none. Sheer eyeball flypaper!

This is not lost on the other powers to be - the media moguls and everyone with a retail presence, from bankers to retailers to - in our worst nightmare - the taxman.

Databases make very good bedfellows with content owners, who may also happen to be Web portals, which in turn may also turn out to be some of the most powerful boys on the block in the other domains already mentioned above.

Am I talking about Microsoft and MSN? Sure, but lets not forget about AOL, which is now touted as being the next challenger to Microsoft (at least in the US), for the following reasons:

• 17 million subscribers (by now we know to call them "eyeballs", right?).
• Its own browser providing some (limited) lock-in to its Web-browsing PC users.
• A bright future in information appliances, some of which will be bearing AOL`s own branding.
• A clear understanding of the value of its database.

A database which, incidentally, comes care of its access business - could this explain why at least some players are fighting for strategic control of the dial-up consumer base in SA?

So eyeballs come from operating systems, content and databases. And with eyeballs, come profits. And eyeballs come in jars, in peanut butter flavour, and in ready-made bread-spread. (If you are awake you may have spotted the oddball among the eyeballs in this closing summary).

I have had some good feedback on previous articles, so please feel free to e-mail me on brian@bmi-t.co.za if you want to kick the eyeball around further on this topic.