It Will Be a Wired, and Wireless, 2001

As users, students and marketers of technology, we strive to understand, anticipate and apply developments. You probably know some of these. Others are less publicized. I anticipate that these trends will drive the marketplace during the next 12 to 18 months, barring a major economic realignment.

Broadband is here. Faster, fatter pipelines for voice and data are being deployed. Several million people use them to get online. ISDN technology will be surpassed by DSL service from phone companies and by cable modem access to the Internet supplied by cable and satellite television firms. Prices fall below $30 per month. BellSouth, Bell Atlantic, RCN and AT&T/TCI are actively promoting these services.

We expect serious home surfers, gadget guys and early technology adopters to generate significant demand – so much so that providers will be challenged to deploy fast enough to meet demand, especially in major metropolitan areas, where installations are proceeding fast and furiously. Local price wars will accelerate demand.

The implication is that Internet content will look and feel like television sooner than we thought. Programming that uses streaming audio and video will be accessible, and the likelihood of media competition or convergence between television and online programmers is strong.

As Sony’s PlayStation 2 comes to market and Sega and Nintendo compete in the gaming market, look for greater influence by young men and gamers on the look, feel and content of mainstream Web sites. Keep in mind that the visual experiences and the graphic palette of people younger than 18 are driving popular culture, especially the Web and its mobile or broadband variants.

Young people accustomed to music videos, Game Boys and other new media process more information faster. They will be critical arbiters for designing effective user interfaces online, to empower mobile devices and in video channels.

Scalability and customer service will drive e-commerce. It is evident that a lot more shopping will be done online. This holiday will exceed all previous ones. We are still mapping shoppers to buyers and trying to measure the transference of messages among media channels. But the bottom line is that the Web is a force in retailing and will remain so for the foreseeable future. More and more bricks-and-clicks retailers are expected to find the right balance between online and offline channels. A few pure-play e-tailers, despite Wall Street, will establish themselves in the hearts and minds of consumers.

The rate of transactions and the satisfaction of customers will be direct functions of sites’ ability to scale up to handle traffic spikes and merchants’ agility in trafficking goods, answering inquiries and handling returns.

Two-thirds of items put in online shopping carts are never purchased. The average customer must be engaged in 22 seconds or less. And the average e-commerce site turns over 60 percent of its customers every six weeks. Hype and seasonal retail cycles will drive demand, while the back-end mechanisms will determine who wins and who loses market share.

Communicating what you want a customer to do, then giving him a clear and easy way to do it, will spell online commercial success. Industry pundit Seth Godin assumes that e-commerce shoppers are like hungry gorillas. They want to act. They have little time and no patience. Therefore, he argues, “show them the banana” quickly and clearly or risk losing them forever.

Tiered Internet service provider pricing is on the way. Internet service providers will adapt cable television pricing structures to break the current $19.95 “all you can eat” revenue barrier. With the deployment of faster lines and telephony over the Internet, look for tiered services based on function or minutes of use and multifunctional bundles (e.g., local phone; personal toll-free numbers; regional calls; a ubiquitous ISP connection to a PC, IDA or phone instrument; cable television; long distance; caller ID; and voice mail, all for a single monthly fee).

When the AOL-Time Warner merger goes through, expect experimentation with prices, offers and product bundles as second-rank ISPs scramble to fight the behemoth.

Appliances will apply. Look for the holiday season to make or break WebTV, AOL-TV and other “Internet appliances.” Several manufacturers, notably Gateway, will introduce less-than-fully functional PCs or similar devices designed to offer quick and easy access to the Internet. Targets will be families in need of a PC, older Americans who are techno-phobic and the 50 million-plus households not yet wired.

Some of these new appliances will cannibalize lower-end PC lines. Gaming devices from Sony, Sega and Nintendo will match and, in some cases, exceed PC connectivity, speed and graphics capabilities, which will provoke intense battles for market share among a sophisticated, high-use, discerning and hard-to-reach segment.

Mobility will matter. For the sophisticated, wired professional, the next step is to take his key PC functionality on the road either by getting thinner, lighter laptops or by moving e-mail and other critical applications to enhanced cellular phones and other hand-held devices.

Wireless application protocol is under scrutiny in technical and marketing circles. The wireless infrastructure in the United States is not strong enough to support broad usage for several more years. Nonetheless, the battle is joined in Europe with hardware and software vendors looking to leverage their resources in the United States and later in Latin America and the Pacific Rim. Things will get even more interesting when the next generation of phones and personal digital assistants is equipped to send and receive Global Positioning System signals so they can track a person within 30 feet anywhere on Earth.

In the short run, there will be many experiments and much hype. Many of the so-called applications will be nothing more than technology-enabled parlor tricks. What is not clear is which audiences truly want which services. And at what prices will these audiences accept the services and grant marketers access to them?

Wireless applications will bring about a battle to become consumers’ or businesses’ single-source message manager. The most wired road warriors will seek ways to consolidate information tools such as e-mail, fax, cellular phones, toll-free numbers, calling cards, Palm Pilots and pagers into a manageable system. The ideal system will be one where these devices talk or hand off to each other, store similar data, follow you around and can be easily accessed anywhere by voice or key stroke command.

Surfing patterns will be significant. Huge numbers of Americans surf the Web at work during traditional 9-to-5 business hours. As much as 40 percent of school-age children surf the Web from 4 p.m. to midnight doing homework or playing games. Look for content providers to promote sites differently to different audiences, take a stab at “appointment” programming and seek out promotional partners on this basis.

As we become more sophisticated in understanding Web use patterns, we understand that one size does not fit all. Segmenting audiences by demographics, psychographics, age, sex, income and time of day is the next logical step. Unfortunately, the data from media partners are limited, and the disciplines of measurement and analysis are not as widely understood, developed or deployed as they are in the offline world.

A healthy number of people surf the Web and watch television simultaneously. Look for several services to compete for their attention and their dollars. Similarly, retailers will look to install kiosks in malls and at the point of sale to offer shoppers multichannel access to products and to better leverage time and inventories.

A slowdown is coming. A backlash against high technology is inevitable and not surprising among some segments of the population. Unconvinced that technology will improve their lives and believing that technology erodes traditional values, invades personal privacy and undercuts ethnicity and culture, prominent cultural leaders will call for a slowdown in Internet deployment and use.

This idea not only will come from conservative forces, but also will be mirrored by new age or “simple living” sensibilities of the left. Perhaps the “slow dining” movement is the precursor of this trend.

• Danny Flamberg is a senior vice president, managing director at Digitas Inc., New York. His opinions are his alone. Reach him at

[email protected]

Related Posts