AlwaysOn is a conference put on by the publication Red Herring and hosted by the Stanford University Law School. It is also an insider’s conference with many key individuals from technology companies and VCs in the San Francisco Bay Area. The panels are populated with CEOs and CTOs. These are also the survivors of the bust.

One way to consider this event is to ask the question – Where do we go from here? The conference organizers might view this is overly harsh. What is being sought is to validate the impact that AlwaysOn will have. As a result, the conference is probing many issues from wireless to security to home networking. The panel discussions are unstructured and the insights frequently haphazard. There is an audience poll on two key issues per panel and an on-going web cast. This is all great use of Internet technology, but in the end the value to those who paid the bucks to come are the insights and contacts. What is important is the networking between individuals, many of whom are the who’s who in technology in the Bay Area.

AOL Shows AOL 9 with Wireless Support

Jonathan Miller, Chairman and CEO, AOL spoke for the first time about the impact of the restructuring it has been going through. One element of this is built-in wireless support in AOL 9, which he showed for the first time at this conference. The details of the wireless support were not fully announced but included the major Wi-Fi hot spot companies of AT&T and T-Mobil and implied support for Wi-Fi. At the same time AOL 9 shows how the company is seeking to be a one stop subscription services company. Broadband plays a central role in this but it remained unclear how AOL will provide the connectivity.

This was the first public airing of the AOL strategy after the hail storm of reorganization and turmoil. Jonathan Miller seemed less than comfortable with the presentation but it came off with many insights on company directions. He was clearly seeking to fit within the theme of the conference of AlwaysOn. AOL has been doing extensive consumer research to set this direction and Jonathan used much of this to pepper his talk.

We recently completed research with 25,000 customers. We found that there are substantial different use patterns of connected households with extensive online experience. We call these the “highly tenured” users. Typically these have 4 years or more of experience.

This group spends 2X more time online per day;
88% more e-mail sessions and
40% higher IM usage.

½ use broadband radio or music.

55% watch video or movie clips.

They spend 65% more time than non-tenured broadband users.

This group is 3X more likely to buy a book online, 7X more likely to buy a game and 5X more likely to buy online.

The #1 concern of parents is parental control but 97% do not use what is available.

We need to clean up the neighborhood that has been created by the Internet. This has many forms from parental control, to spam to virus.

At AOL we block from 1.5 to 2.5B spam messages a day.

Our new user interface will be made available to users in a few weeks is AOL 9. Some of its features include – an example session was shown.

We seek to significantly ease the user access to features and content of interest to each user. Much of this will be made available with either one click or zero click – the latter being menus or information which surface as the mouse hovers in an area of interest.

We have computed the value of the free content and services in the AOL subscription of $14.95 is $130 if purchased independently and this is exclusive of e-mail and IM.

We believe strongly that content drives functionality. That is, that content will drive the value of the user experience. One important element of this is peer to peer.

The theme of AOL 9 was:

Always in Control
Always Protected
Always Engaged and
Always with You.

As part of Always in Control was SFO – Search, Find and Obtain.

Always with You encompasses Home Networks but little was said on what and how AOL will support this. Another component is via Wireless and Voice – it is assumed that this implies a WiFi connection including hotspots.

Significant improvements to parental controls were shown that allowed parents to remotely control access that their children have to the Internet.

We have relationships with the major wireless providers and this includes AT&T and T-Mobil and this is reflected in AOL 9.

One of the fastest selling add-on products we have is virus protection for the home PC.

We seek to make AOL for life.

AlwaysOn – we are betting the company on this.

Our business model is that of subscriptions to services purchased by consumers.

Palm Looks to the Future

Eric Benhamou, Chairman, Palm and 3Com, laid out his view of the future of handheld devices. His list of factors and technologies included:

Flexible displays including electrophoretic (e-ink);
Software configurable hardware
Software defined radios
Power conserving OS and
Power supplies

Eric was particularly bullish on the potential and technical advancements in displays. As we have stated before we believe that Palm is likely to be the first company which e-ink speaks about as having a portable electronic book reader device. An example to a Palm Tablet was shown which includes a stylist. A role for the remote control was indicated when Eric stated that there were 500m remote controls shipped in 2002 – more than the number of cell phones. With 30m handheld computers having shipped the exciting market has yet to arrive. It is here that pricing will play a key role. Eric stated that, as he has seen before, the $100 price point is where the market will explode. This is on the horizon at Palm.

Eric ended his talk with the impacts of the recent M&A activities on the industry. Palm, when combined with handspring, will become the Palm Solutions Group, and Palmsource, the independent OS company. This company will be free to pursue many applications for the OS, independent of the hardware. Eric provided broad categories of: ultra-mobil, communications, information, lifestyle, industrial and education.

Panels

Communities

It was interesting that on this panel was both eBay and Match.com, a dating service. Some of the eBay comments were the most interesting.

Major corporations are now using eBay as a soft launch medium. They could not identify any products that were pulled due to poor response from such market testing.

BuyItNow happened due to user demand and now 30% of the sales are done with this.

eBay began as a collectable site but now 60% of the merchandise sold is what they call “practicals.”

Some of the experiments with wireless for eBay bidding have gone very well, in particular in the UK and Germany where bidding is done on SMS. The US does NOT get wireless.

Wireless

This panel struggled with the debate: Wi-Fi vs. 3G. Qualcomm held on to its position that 3G is the future, but acknowledged that Wi-Fi has a place. One of the more interesting points centered on the struggle: what is the role of fixed, all-you-can-use pricing? T-Mobil has unlimited usage of Wi-Fi at $19.95 and GPRS at $29.95. Many on the panel felt that $50 is the market breakthrough level. That is, at $50 or less the wireless data market will expand rapidly. Sky Dayton, CEO of Boingo Wireless, compared this to his experience at EarthLink – when the ISP pricing dropped to $19.95, Internet access exploded.

Home Networking Panel

This was lead by Kristine Stewart, the President of the Internet Home Alliance. On the panel were Invensys, Sears, Whirlpool and Microsoft.

Sears made the case for remotely monitored appliances. They have 13,000 service technicians who make 12m service calls a year. 12% of those require a second visit – mostly due to the need to get a part. There is a huge economic incentive on Sears' part to understand what the problem is before going to the home.

Invensys Home Control Systems made the point that there could well be enough value from home networking, such as power management, that the value from the home networking change would not require any consumer investment. This is another way of saying what we have heard from 2Wire and Linksys, that the MSOs and ILECs are offering home network equipment for free as a part of the service contract.

WAVE Comments

We spent two days with the best minds in the business of PC/IT/Networking and related areas. One word sums it up - incoherent: The areas of discussion included

Wireless;
Home Networking;
Communities
DRM;
Real Time organizations;
Security;
Handheld devices;
OpenSource and Linux and
More.

By definition the companies here are the survivors of the bust. Yet, there were no fresh insights as everyone struggles. Be it eBay or Palm they each tune their respective playbooks in the markets they understand.

It can be rightfully argued that incoherence is the nature of markets and the future. But we go beyond that. With what have been 30% growth markets they are now collapsed to <10% and in many cases <0% growth. Few are interested in these markets – they are boring. It remains to be seen if this sector will regain its glory. If that will happen was not at all clear from AlwaysOn.

The format of free flowing panel discussions has its high and low points. The high point is that the moderator may be able to elicit fresh insights, and the low point is that nothing new may be said. All the sessions were framed in the latter. We believe that the combination of the unstable industry and format made the conference interesting but not a blockbuster.