Fixed Wireless Technology

Wi-Fi Planet Keynote: The Impact of Open Standard Radio

A key observer and Internet investor explained to attendees at the Wi-Fi Planet Conference & Expo why most pundits and players will inevitably underestimate the disruptive potential of Wi-Fi.

by Alex Goldman ISP-Planet Managing Editor [July 27, 2005]

Bill Gurley, venture capitalist at Sand Hill Road, Menlo Park, Calif.-based Benchmark Capital, said that humans have a poor history of forecasting technology, but luckily, a scientist has explained it:

"Prediction is very difficult, especially if it's about the future."
—Niels Bohr (often attributed to Yogi Berra)

People get comfortable with the technology they understand.

"This device is inherently of no value to us."
—Western Union internal memo concerning the telephone, 1876

"Alternating current is a waste of time."
—Thomas Edison (for more on his campaign against alternating current, see The death of Topsy)

"There is no reason anyone would want a computer in their home."
—Ken Olsen, DEC, 1977

Gurley explained that people see what they want to see. "People put themselves in a veil of denial and rationalize."

The power of open standards
This denial is particularly strong in the face of open standards, even though there are two obvious success stories:

1) The IBM PC running Linux. "Last year, Morgan Stanley put its back office on an Intel-based Linux-based grid cluster."

2) Ethernet. "Originally designed to connect computer to printers (which were copiers at the time), Masayhoshi Son now uses Ethernet to deliver the triple threat network."

Gurley said there are six rules of open standard disruption, as described by Clayton Christensen in The Innovator's Dilemma.

1) Disruptive technologies enter at the low of the market and scale upward (so Ethernet, developed for printer networking, ends up delivering advanced services to millions of customers in Japan).

2) Disruptive technologies compete with an industry, not a company. It's a kind of business Darwinism where the collective R&D of all participants, including failures, competes against the new technology.

3) Disruptive technologies offer price performance gains.

4) The importance of backward compatibility is often underestimated but is vital to creating network effects and maintaining a large installed base.

5) The scope of application of a disruptive technology is underestimated, especially by incumbents (this item applies directly to Wi-Fi, where WISPs as well as pioneers like Dave Hughes and Dewayne Hendricks have proved naysayers wrong by doing what was deemed impossible).

6) Disruptive technologies cause vertically integrated players and their technologies to fall by the wayside.

802.11 is an open standard
So far, in the case of Wi-Fi, Gurley noted that we have seen items 1 through 3, but have yet to see items 4 through 6. He said that with dual mode WiMAX and Wi-Fi technology, all 6 elements will be achieved.

Popular derision of Wi-Fi is holding it back. "People think 'coffee shop' when they hear '802.11.' The technologists have a brain dead idea about what the technology can do. Even Intel says the limit is 150 feet."

He noted that Adam Zawel, analyst for the Yankee Group, was quoted in the Boston Globe on June 13, 2005, as saying, "Hotspots are at a disadvantage to cellular networks as they are limited to small spaces such as cafes while cellular networks have a much wider reach."

"He's so blind I hope he doesn't drive," Gurley said.

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