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Ultranet, the next network

A bleeding-edge federation of startup companies strives to reinvent the next-generation network

By Miko Matsumura, JavaWorld.com, 11/01/97

The Internet today is a different creature from what we remember in the 1980s. At that time, the dominant domain was .edu; now the dominant domain is .com. Traffic on the Net has increased by a factor of 200. Radical changes like these create new opportunities and new challenges. The Internet continues its growth, and each stage presents new opportunites and new pitfalls for the companies involved.

Stage one: the rise of the Internet

• Defining technologies: Internet Protocol, SNMP, HTML
• Business model: giving away information and software for free
• Winners: creative small companies -- Netscape, Sun Microsystems (JavaSoft), Yahoo
• Ecological metaphor: new ecosystem

During the early days of the Internet, the only way to transfer value through the network was to give things away for free. The companies that emerged as successful at this time were those explosively creating mindshare through the distribution of free software -- in particular, software that, by its nature, represented the architecture of the Internet. Like hardy, new plants that appear after a highly destructive forest fire to define the biological substrate upon which all following species depend, these pioneering companies exhuberantly charged into this new fertile network territory.

Although there were many winners in this pioneering era of the Internet, I will pick three exemplary cases: Yahoo, Netscape Communications, and First Person (the division of Sun that eventually became JavaSoft). I refer to them all as "small companies," since Yahoo started as two people, Netscape as a half-dozen, and First Person as a few dozen.

Leveraging the successes of Mosaic, the engineers at Netscape jumped ahead to claim a dominant position in the browser space by giving away the Navigator software. Nipping closely at Netscape's heels was Sun, which contributed Java to the architecture of the Internet. The dynamic duo of Filo and Yang created the Yahoo Web index, which remains among the Web's most popular destinations. This contribution to the Web architecture is paid for by advertisers and sponsors, and represents another successful business model for this stage.

Early arrivers to the Internet essentially were driven by their interest in investors' money and were giving away their products and technologies for free. The idea that customers could pay nothing for a company's products and investors would line up at the door to invest in them is a strange one. But grabbing investment cash with both hands and tossing away value is not a sustainable practice for companies. There are still those who don't understand the business model of open software: publish the interfaces and compete on the implementation. Yet at the time, this practice demonstrated a powerful truth: The contributors of innovation are well rewarded in the marketplace -- a truth not applicable to all markets at all times.

Stage two: Growth of intranets

• Defining technologies: firewalls, groupware, Web/SQL connectivity
• Business model: giving away information and software for free (but only to members of my own company)
• Winners: stable, medium-sized system integrators -- Baan, SAP, Anderson Consulting
• Ecological metaphor: the segmentation of the biosphere into biomes

The discovery of a sustainable business around the distribution of free information and software caused another rush of excitement. The idea of allowing members of a company to give each other free information and software through an "intranet" spurred an explosion of development activity. Ultimately, though very lucrative for system integrators and companies who serve the IS departments of the Fortune 1000, this phase did not represent a major shift in the available technology base. It merely consisted of each of the major company types adapting the existing technology in a way that suited its unique needs.

 

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