A radical break from Big Blue’s traditional business

Lucie Fjeldstad, vice president and general manager of multimedia for IBM, believes that high-bandwidth digital telecommunications is the basic infrastructure for the future of the digital world. She also believes that IBM can make a substantial contribution to the development and deployment of these digital networks — and can derive revenue not just from providing hardware, but from being an information provider as well.

Of all the keynote speakers, her vision of the future — and her vision of the role IBM should play in that future — represents the most radical break from the company’s “traditional” business and business practices.

Virtually every information and entertainment industry is “going digital” — music, publishing, video production, telecommunications and television. For all of them, the key technology for the future will be the digital distribution link. This will most likely evolve from the current cable and/or telephone systems.

Cable is particularly interesting because of the high-bandwidth infrastructure already in place and the tremendous potential of fiber-optic networks now being installed. Until now, cable has been a broadcast medium. This is probably going to have to change to a certain extent. (The traditional analog-world “channel” metaphor is not very useful when consumers have 150 channels to choose from.)

From broadcast to telecom. IBM would like to go even further and help turn cable from a broadcast business into a telecommunications business. And IBM would like to participate in the telecommunications business.

Cable will continue to carry television programming. But it will also have substantial unused bandwidth that can be used for all manner of additional services, including one-to-many (broadcast), one-to-one, and peer-to-peer applications for business-to-business, business-to-consumer and consumer-to-consumer markets.

Like Grove, Fjeldstad sees widespread communication via digital video as a central part of the coming revolution. “We want to do for full-motion video what facsimile and cellular phones have done to data.” (Which means, we presume, that IBM wants to provide an infrastructure that makes it possible for businesses and individuals to transmit and receive video at will. One telephone company visionary we know envisions home camcorders equipped with phone jacks that allow individuals to transmit their own videos.)

What does IBM bring to the party? Fjeldstad says that her company has developed a system architecture that encompasses the full range of technology required from scalable high-speed servers and gigabit digital switches down to the set-top decoder box. It is applicable to both cable and telephone companies. (Ultimately, she says, the telecommunications infrastructure should resemble the transportation infrastructure: When you have a package to send, you pick the transportation alternative that makes the most sense for that particular package.)

IBM does not want to get tangled up in fights over video compression schemes. It will support whatever emerges as standard. Nor does IBM want to be strictly a hardware provider. Like John Sculley, Fjeldstad has dreams of owning a piece of the information-provider or information-server business and deriving an on-going revenue stream from the data that flows over the network. As Andy Grove pointed out, everyone seems to want a piece of someone else’s pie as part of the reward for cooperation.

But IBM cannot do this on its own. It is actively seeking partners — especially in the cable and telephone industries. It is now field testing its architecture with Rogers Cable in Canada. A joint project with Bell South is next. Beyond this, Fjeldstad confirmed that she is in the midst of active discussions with a number of other companies — including, but not limited to, Time Warner (see Vol. 1, No. 12, p. 3).

Jonathan Seybold