‘7 Octopuses, Hands in Each Other’s Pockets’ : Technology: Cross-industry alliances are forming to usher in a new digital world, but the revolution won’t be peaceful.
Bill Gates, John Sculley, John Malone and Barry Diller sat down Wednesday to explain how they’d like the world to run.
It was not altogether an exercise in hubris. Gates is chairman of Microsoft Corp. Sculley heads Apple Computer. Malone runs cable giant Tele-Communications Inc. And former Fox network chief Barry Diller is now chairman of QVC Network, a home-shopping powerhouse.
Together or separately, these four men figure to have an inordinate influence on the accelerating information revolution that promises--or threatens--to transform the way people live, work and play.
Their unusual joint appearance, at a multimedia conference at the San Jose Convention Center, epitomizes the technology-driven “convergence” of some of the world’s most important industries: computers, entertainment, telecommunications and publishing.
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The broad outlines of this brave, new digital world are already clear. Homes will be wired with high-capacity communications links and equipped with computers that can sort through an almost limitless variety of audio, video and text information that will be stored on central network computers, or “servers.”
Want to see a movie or go shopping? Read a newspaper or visit relatives? Look something up in a multimedia encyclopedia? All it will take is a click of the remote control.
Developing the sophisticated set of products and services that will make all this happen, however, won’t be quick or easy or cheap. And with all these lucrative industries bumping up against one another, there will be many a battle over who controls what and who makes the profits.
Malone described the network of cross-industry alliances now developing as “seven octopuses, all with their hands in each other’s pockets.” But some of the octopuses have deeper pockets than others, and since each has eight arms, there aren’t quite enough pockets to go around.
Malone is confident that he’ll get his share. “The cable industry is the locomotive for these technologies because we’re the guys with the immediate applications and the revenue to drive this thing,” he said.
In other words, people have shown they will pay for cable TV programming and movies, so that’s the business that will spur deployment of the new technologies. Other services--electronic newspapers, on-line computer games, advanced home shopping services and new forms of “interactive” entertainment--will be added onto the infrastructure that’s built for TV entertainment.
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That’s where Diller sees the opportunity for QVC, a shopping channel he bought into last December after a long hunt for the right new media opportunity.
Malone is putting his money where his vision is. His company is about to announce the most ambitious installation of fiber-optic cable in the nation. It will spend more than $2 billion over four years to wire nearly all of its 10 million customers.
And next year TCI will begin offering digital cable technology capable of providing up to 500 channels. A key component will be a sophisticated set-top cable box that will be able to do many of the things a personal computer can do.
Sculley and Gates, of course, would love to have a hand in designing and building that box. Just as important, both want to provide at least the software for the servers that will store and distribute the digital movies and all the other information.
They’d also like to provide some of the information itself--thus putting their hands in publishers’ pockets. Gates envisions his company’s new multimedia encyclopedia--which offers videos, pictures, sound and text and is now sold on the high-capacity discs known as CD-ROMs--as being available via the digital TV.
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“The network will be preferable for most things,” Gates said.
It was something of a paradox to hear such a comment at a conference devoted primarily to the glories of CD-ROM. Ever since it was invented in 1984, CD-ROM has been promoted as the key vehicle for delivering a whole new genre of “interactive multimedia” software that adds video, pictures and high-quality graphics to text-based computers.
In the last six months, price cuts and the spread of powerful PCs have sent sales of CD-ROM players through the roof. Finally, the legion of small software companies that have been flogging CD-ROM entertainment and education programs to a virtually nonexistent market have some hope--only to be told that “the network” will make the CD-ROM obsolete (albeit not for another decade).
Yet CD-ROM will play a key role in helping to sort out what kinds of multimedia products and services people want, says Jonathan Seybold, head of a well-regarded new media consulting firm in Malibu.
And that’s crucial, because nobody yet knows whether consumers will really want any of the products and services that the new digital mega-industry will be capable of providing.
