Network computing in the travel industry

Keith Gaylord, Product Marketing Executive, IBM Corporation

Keith is a long time IBM individual, he's been there 20 years, he's done his time in
sales and marketing he's also quartered a publication on strategic alliances with a
Robert Porter-Lynch, Warn Corporation, interesting thing Keith was telling me, he
started in the network computing division when they had 6 people, which I guess they
have a couple more than that now, thank you Keith let's go with it.

Thank you very much.

Thank you ladies and gentlemen, it's very daunting to be in a group of people who
have such an in-depth knowledge of an industry so I'm going to claim right now and
let you know up front that I don't hail from the travel industry, my role within the
network computing computer group within IBM is to help our industry groups
integrate technology into their solutions. So there may be some names like Brian
Hamel or Patty Jones that may be familiar to some of you. I do collaborate with them
along with our other product groups to deliver solutions to our customers and in turn
who will deliver them to theirs. What's a little bit different about this is it does have
somewhat of a product category focus, one of the things I hope to accomplish this
afternoon is to raise the level of awareness of something that is in fact very new to
the information industry. There has been problems in the past in the last 2 and a half
years when there were six and there are now hundreds if not thousands of people
dedicated to various elements of network computing solutions for industry, but there
is still a tremendous amount of confusion of exactly what a network computer is and
is not, so I will try to help establish that. And more importantly to help raise the level
of awareness about where network computing solutions are able to positively impact
both our customers and your customers in turn. One of the things I'd like to do as
part of this is a little show and tell, to pass round the first network computer this is
not the first one off the line that IBM put out, but this is what is referred to as a series
100, it's small but referred to the size of an algebra book, it's a couple of pounds
maximum, it's very energy efficient, it draws about 7 or 8 watts night light, some
people say why do I turn it off at night and that's a good question, a lot people decide
to leave it on. It does have moving parts, it's got an on/off switch right here, and it's
got a diaphragm in its speaker so that's the extent of what could possibly go wrong
from a moving point of view. It's got a little window in it, this particular model's got a
power PC chip, we're moving to Intel technologies and future iterations of network
stations. Forty three years meantime to failure on these, hopefully, there are few that
come out DOA. But take it, look at it, pass it around, there's a parallel serial port,
there's a Ethernet attachment, PCMCIA card attachment for keyboard and for mouse.
Now there's a tremendous amount of information as we all have information on our
products and services, but in the CD there is this website and it's a portal so to speak
into other sources of information about network computing and if in the event you'd
like to communicate with me that's my address if you'd like to do so. This is intended
to be somewhat of a stage setter, everybody has got things that presumably keep
them up at night they don't call at work for nothing, and what I'm suggesting is that
this era of network computing, or IBM refers to it as E-business, is something that's
able to solve real problems. Now IBM, especially the travel industry has got a host of
offerings, I don't intend to cover each one of these, but as I look at them and as I
relate experiences I've had with customers or shared customers there are a number
of these offerings which in fact have a very very high impact. One that I'm personally
involved in to a large extent is the advanced communications systems access,
ACSA, but again more information is available, you have a brochure that was handed
out to you, it's got URL's in that as well. This is a simplified view and often times
when I talk to customers I talk to partners or other technology integrators, often times
will just look at this and begin to envision what is that we're really talking about but
the simplified view of this is we are not in the terms of some who'd like to think going
back to the non-programmable terminal days but in fact we're able to provide the
same level function, the same level or greater of service level at less cost than the
alternative that was available say three years ago. We started out in the early 80s
with PCs and we've grown with PCs and we've evolved to a point where in many
cases each one of the desktops that are deployed today have the same images of all
the applications of the corporate organisation whether it gets used or not, has some
data on it and has a variety of support capabilities that require things like moving
parts, a disk. But this is a simplified view, what were talking about with network
computing is shifting the support of function and data off the desktop and into a
server environment. Gartner Group has been maintaining information on cost of
ownership, they tell us, since about the mid-1980s, it didn't really come out, so to
speak, until 1996 or so, when the topic of total cost of ownership became extremely
vogue and now they have a server dedicated to analysing and assessing cost of
ownership to customers, they've acquired perhaps one of the strongest players in the
market interpose which is the core of their services technology. And if you look down
here the date on this is really February 1996 and some people will say, well where's
the new information, we ought to be 1998 anyway. The fact of the matter is this data
hasn't fundamentally changed as a matter of fact what we have learned is instead of
costing in the range of £8,000 to £15,000 a year per desktop, land attached desktop,
that actually is going up as we see the complexity of the desktop and the amount of
data and applications that are being asked to reside on every desktop out there.
Now important in this conversation is the notion that the preponderance of the cost of
support on an annual basis is not the acquisition cost, it's not the capital or a lot of
companies are moving toward expense to support their desktop because they can't
write them off legitimately over the period of time that you're supposed to, so they're
moving PC acquisitions to expense, but the largest cost associated with the user
operations and the administration to support the desktop. Much of which is involved
in routine activities which include introducing new applications, updates to old
applications, or as well experience, and I've been experiencing that with my laptop
it's been into Memphis twice in the last two months, like physical hardware problems.
And that's where the majority of the cost resides, what remains consistent when
you're in a network attached world, and a desktop world is that the application and
the application support remains the same. That means those that need help
understanding how to use the software, the applications, how to migrate from one to
another and so forth, things that are inherent in the nature of the function will remain
the same. The variances are in the operations and administrative support primarily.
Now early on there was a great deal of over-zealousness on the part of Mr Ellison in
particular but Scott McNeilly in the 1996 era were really touting the potential of
network computers and network computing and if you think about their business
models they had a very strong vested interest in doing so. In reality they got a little
bit carried away, and this is not a pejorative statement at all it's just something they
had decided to do, Sung came out with a Java station and it was intended to be a
Java station, meaning you ran only Java applications, there was no capability at the
time for other emulators, there was no access to Windows applications and it didn't
succeed and does anybody have any Java stations today? I'm looking for hands,
good intentions we very much want from an IBM point of view for other players like
Oracle, like Sung, like Wise, like NCDI and others to in fact make a presence in this
market place, because what we're doing here hasn't been done and I'm saying this
from an industry perspective since the early 1980s. And that's introducing a new
product category, it's not a PC, it's not like anything we've had before. Now the value
proposition here is from a user point of view to deliver the same or more function, or
more access to information applications to deliver this equal or greater function, at
equal or greater service levels at less cost than the alternatives. That's the value
proposition, I submit it, it's our value proposition as a product in services and design
integrator, I submit it to you for your customer if you want to deliver the same thing,
whether it's internal to the organisation or out to your affiliated enterprises or
customers. So what we're doing is merging in reality the best of both worlds and
hopefully minimising or altogether obviating the negative aspects of the two
environments. Non-programmable on one hand and a personal computer, land
attached desktop on the other. Getting back to the statement that what we're doing
is going back to the old days of dumb terminals attached to 370 390 Unix servers, for
example, a network computer, that's being passed around right now has on it when it
is operable, a browser, a at least one Java virtual machine, it's got natively 3270
emulation 5250X, and you can add on VT and others. So a non-programmable
terminal doesn’t have that capability, non-programmable terminals don't have
graphical interfaces network computers generically by definition have graphical user
interfaces. So there is a real distinction between non-programmables and the world
of network attached computers. What a network computer doesn’t have is, I always
think of this as moving parts, and moving parts inherently have things that go wrong
with them, whether they be disk drives in particular, and copies of operating systems
on them. So it's bring together the best of both worlds. This is pretty much what I
described earlier, what I would change on this is the idea that Windows applications
really fall outside the larger realm in here, the way I view Windows applications and I
go back to the model of the Java station is they didn't take into consideration that
95% of PCs today access Windows applications in one form or another. So we
perceive as requirement that you need to be able to get to any server in the network
and now I talk about Windows applications running under NT in the terminal server
edition, an Ica from Cytrex is just another server out in the network. This is an
attempt to say that we're moving into a new world it's a different picture of what I had
before, and in this one it really includes that NT windows, as another server on the
network, again I mentioned that I've been working quite a bit in the airline industry
we're partnered, we're working in collaboration with CIDA and CIDA has announced
something that is called the 'The Network Computer Solution and E-migration
Roadmap'. Just out of curiosity has anyone had any exposure to CIDAs new
initiative at the desktop. That's good feedback for them. But in any case we are
working with them, and one of the things that we have been demonstrating is the
ability of a network computer sitting in Bedfont Lakes in the UK accessing a TPF host
in Florida, running Windows application from out of Hersley and accessing Unix
applications and Domino applications out of Wilton, Connecticut. Now that kind of
demonstration really highlights the idea akin to the analogue that I like to use which is
a cellphone, how many people have cellphones, everybody. I don't have a cellphone
by the way, but what do you want delivered in self-service, you want to be able to
pick it up and get a dial tone every time you turn it on, right. And you want to be able
to call any number as long as it's a legitimate number wherever it is in the world at
any time during the day. Do you have any idea where the switches are that route
those calls? Do you have any idea what the processor is that's inside your
cellphone? Do you care? You want function, you want performance and you want
low cost. That in a nut shell is what network computing is all about. You as a user
don't care where those servers reside, as long as you can get to them, and they're up
they're in the hours that you work and they're low cost and that's really the model that
we're striving for as an industry. This is in one way to say that IBM has been in the
leadership position, it's also to talk about the fact that there are other players in the
market place and I mentioned earlier before, this is a new product category it's
absolutely critical from an industry perspective in my estimation that every one of
those players is successful. On the right hand side, the pundits out there who have a
tendency to watch us are trying to forecast what they think the volume future is of
network computers. Now Misha from Marriott and I had a little conversation about
adoption rates, the adoption of the network computer as a product category has
disappointed everybody in the marketplace, first of all Ellison and others set an
expectation level which was terribly unrealistic, it wasn't appropriate. At the same
time if you look at the adoption of the PCs starting in 1981 or whenever the first one
came out, network computers have outstripped by a factor of about 3 to 5 the
adoption rate of PCs when they were introduced, for what it's worth. One of the
reasons why the adoption rate has not been as quick as many would have like it to
have been, myself included, I refer to as a cultural phenomena, Misha, if you don't
mind, I'll just say some of the things that we had talked about, and some of the things
I have learned in the last 2 and a half years. The attachment that organisations and
individuals to the technology can become religious, we were talking about the need
to put out Windows 95, not because inherently Windows 95 is going to do something
specific for the user, but that's what we've been doing all these years. We have
migrated up the chain 95, 97 we'll be 2000, and we will continue to do this until
something happens, now we talked about a phenomenon which baffles me and I run
into these situations and bottom line is the bottom line, there either is a lack of
awareness of what the real costs are associated with supporting desktops and I'm
talking about all desktops. Or the organisation is so flush they don't need to watch
that. I got a call about two weeks ago from a customer we had worked with back in
1996, they were all excited, they had fabulous plans about deploying Java and each
email function, great applications that never came to pass. There were quite a few
organisational issues. Since that time we worked with them there was a new CIO
showed up, and they do about £25 Million dollars worth of desktop refresh every
year. Does anybody, this is a rhetorical question, does anybody have a handle on
what your costs are associated with technology to the desktop every year? It's not
uncommon, it's one of these things that we've been doing it, we will continue to do it,
well requisition came in for laptops and on that list of users were engineers on trains,
and the CIO looked at the requisition and looked at the user community and said
'what the heck are we providing IBM 770s or whatever it is that they were purchasing
for engineers on trains'. The answer was, well that's the standard, and we have
agreed that we're going to standardise on a desktop, what happens often times is
that it's the highest common denominator not the lowest common denominator, and
everybody gets one. Now what this gentleman has done is said 'yo, I don't think
we're going to do that is there some way we can get a better handle on what it is as
an IT support organisation we should be delivering to our users without disrupting the
function that they need and expect and that we must deliver and the performance'.
But let's take a look at different ways we can approach this, I'm looking at time here,
there are four testimonials, application availability and rapid deployment are the top
two, manageability and reliability is the second one, and cost is the third, it's not
usually top of mine, Lou Girshner, has chats with CIOs CEOs about every 4 weeks,
he loves to do technology demonstrations. Invariably network computers are shown
and what's interesting is the person who typically is assigned an IBM Vice President
to do that particular demonstration Lou steps in and starts talking about not network
computers, but network computing per se, and often times responses from CEOs is
'Lou listen, I pay a lot of money to some very talented people to make decisions
about what technologies we need to deploy and as long as they get the job done and
deliver the goods and services for the price that I think it should cost, I don't question
what they do, but I'll tell you one thing that's really top of mind for me, I need to be
able to make decisions and deploy decisions quickly, if what you're talking about will
allow me and my organisation to move in the market place more quickly, aka become
more competitive you have my attention'. So typically the things that are top of mind
when I talk to customers and decisions are made as one, can I deploy the function I
need to quickly, can I make changes quickly when I need to and oh by the way will
this cost less than the alternatives. Last year we installed a couple of hundred
network computers in the SAP Waldorf training centre, it's a corporate head quarters
and there was a very nice ribbon cutting, the Germans like to do things in a very
proper and officious way and we're very pleased to participate in that, and the CEO
at the time asked the crowd a very rhetorical question, 'when was the last time you
installed 2000 applications of Windows Office 97'. No one said anything, no one
needed to say anything and by the way I don't want to pick on Microsoft it could be
'When was the last time you installed 2000 copies of Lotus', or whatever it is, your
suite of applications. It could become very labour intensive and what we find is
extremely well intentioned employees, when they get a new desktop, one of the first
things especially the knowledgeable ones will do is go to sister or config and they will
accommodate it so they can put some of their own personal applications on it. And
what that means is that the next time IT organisation wants to roll out the next
release guess what, that desktop and any other desktop that had in some way been
changed requires a personal call and that attacks that operations and administrative
cost. So those are the four basic drivers I'd say for why people are making network
computer decisions.

The next couple of charts has to do with forest for the trees, I mentioned before that
my task over the last 2 and a half years has been to help identify real solutions that
can be deployed that will have a real impact on business and customer value. We
have broken it down into four quadrants and the ones that we followed most closely
were non-programmable replace, then move more into the older PCs, the 386 486
low inpenium and then into the job of space, and there's some examples that
describe each one of those. Industry examples, American Airlines was one of the
first really named customers that installed network computer, they did the initial
installations in American Eagle, a regional carrier, they installed it in a training
environment, they are since moving to maintenance and cargo, they'll be moving that
into gates as well and I think it's safe to say you going to see quite a bit more coming
out of American with the support of Sabre as well. I think that they're extremely
innovative and they're taking some very calculated not quick moves that will position
them in this network computing world in a way that I think will provide them with
tremendous competitive advantage. And that's really a browser and a Java based
statement. But there's 4.5 Million, it's interesting when you take a look at the return
on investment, what they were doing was replacing older terminals and if they had
elected to put in the PCs they had used all along, it's £4.5 Million of mill work, just the
mill work alone, not to mention the on going cost of support to the older PCs. And
that made a very quick justification to them, just the physical environment again it's
very small, they put these network computers where the sun doesn't shine, it doesn’t
need ventilation because it has no fan in it, it doesn't worry about dust because it
doesn't have a disk nothing to be corrupted in that sense. These are the businesses
within the travel sector that I'm aware of that either have product installed or they are
evaluating in production pilots and will be installing, but I mentioned earlier we're
working with CIDA on airlines and airport. Hotels, quite a bit of talk I think about
hotels in providing means by which customers clients can get exposure to new
products or ideas about ways in which they can buy products and services in the
travel industry. Hilton, gentlemen, this morning mentioned they going to be putting
high speed access to all their rooms, I presume that's to provide each room with the
ability to access at least the internet. Has there been talk about what they intend to
do with that, (talks to the audience, cannot make out the responses), let me ask you
a question, how many people have portable PCs out there? How many people take
them wherever they go? How many people if they had an alternative, would leave
them at home? I suspect we're not very far away from that, again Misha and I had a
little conversation about this, this is another little pet project of mine. The Sheraton
group within Sweden has started to install network computers and fairly high speed
access to each of their rooms. One of the sources of revenue for the properties is to
sell advertising, and I've got a picture of a piece of technology that we're going to be
bringing out this year, which is an integrated thin film screen, the laptops, they're all
thin film technology, but the idea here ultimately is to put a very attractive network
computer which is a thin film display with a network computer integrated into it, in a
hotel room, not the TV, properties I've spoken with the majority of them say that's
entertainment. But the idea here which companies like Saab have signed up for
example, is that when you get in there you can programme that to do and display just
about anything, you can have advertising on there that scrolls every ten seconds, you
get information about that property, you can have information about extended
capabilities within the chain, other properties, you can give access to those within the
hotel rooms, information about local markets, hotel-net, hotel-net's one of these
providers, they're in the business of really writing, hosting software to provide
information about a local market, about what the venues are, places to go and eat,
shows and so on and so forth, and one way to garner additional revenues is to attach
10% on each one of those transactions. I would suspect behind that statement is not
for people necessarily to come in and plug in their laptops and there be no way to
present something that is specific to the hotel or the chain to the customer. I suspect
that if they're thinking like some of the others now I don't if Marriott going to that in
any of the other chains, but Sheraton has made that decision and they brought in
about 300 of their properties owners/managers and they're very excited about this
idea. I suspect that's one way the hotels will go, but probably management systems.
Microsavdalio has got a new release out called Opera and it is enabled in Java
amongst other technologies and they have a very nice design in my estimation in that
they are able to accommodate whatever the network design is of their customers, it's
N-way design but there an example. Spring and rillo systems, railroads, both
domestically and in Europe, railcars, Hertz heavy trucks and travel agents, I talked
briefly with Elsee, she's domestic here for Carlson, with Carlson world choice leisure
in the UK, it's got about 400 agents it's a wholly owned, and it's makes a big
difference if you have a wholly owned environment where you can dictate to your
agents what they're to do, as opposed to a franchise environment. But what they're
moving to is a network computer based Java HTML based system that will allow their
sales agents to, instead of having single events presented to the customer or client at
any one time, they can do calls based upon profiles to the various tour and leisure
package providers, and have those delivered to the display, including video and
audio, and sometimes real time video of the properties that they're presenting to their
clients. And Carlson world choice is doing that. What makes that possible is not that
they have all the function at the desktop, but indeed this is true network computing
where the function is resident out in the network. If there was one chart that I would
ask USA Today to run that would help people understand the implications of network
computers, it would be this chart. My team put together, I offered I suppose a very
simplistic process getting back to that railroad, who has called us back in and asked
us can you help us sort out which of our users really need PCs. I didn't say that
earlier, but this is not throwing the baby out with the bath water, this is co existence,
this is the ability to evolve into a new environment, as opposed to saying we're going
to be all one thing, or all another thing. And we hold these workshops, and in
advance of the workshops hopefully we're able to gather sufficient information about
what exists today within the enterprise, hopefully defined by function, but the
conversation often times goes like this, let's just talk about the data, you've got users
out there who have PCs, the data that's on the PCs, is it personal data or is it
corporate data, you don't have to answer that, corporate is it corporate, it's supposed
to be corporate data, the asset belongs to the person or the corporation, it belongs to
the corporation most of the time. Is that data being protected? Is it important data?
You don't have to answer this, the conversation goes like this, and usually, hopefully
there are senior level people there both from the operations side and the business
units side. Is it important data and that's usually answered yes, do those people who
could take advantage of it, sometimes, it depends upon what kind of work groups
software and so on we have on it. But the conversation begins to illicit questions
about data and information, and more and more I think we're being driven by
knowledge and intelligence and ability to put it to use to be competitive. It's a very
trite thing to say but it's very real. So we have this conversation about data, is it
being protected, do you have backup, is it secure, is it being shared, would you like
to do something differently. The advent of network computers as product category,
some people use as an excuse to put in practices and policies that they wish they
had done if they had known better back in 1992. So it's just an opportunity to do that.
Applications, whose responsible for maintaining and managing the applications on
each one of those desktops, the individual? It really depends, but for the large
population hopefully the IT organisations, support organisations has that
responsibility as part of the service level contract. Is it being done as effectively as
you would like it to, I've got to ask a very good question, why has IBM not deployed
to its 230,000-240,000 employees, Notes, well we're almost there, after about four
years. And the biggest inhibitor that we've had to deploy Notes to everyone has
been the desktop. It's just the sheer amount of time that's required to make sure it's
on everybody's desktop. And no sooner than we have one version out, then guess
what, we need another version, for very good reasons, things change we want to be
able to update it, those are the two most important discussion topics we have and
part of this conversation is hopefully to allow the customer to make a decision for
themselves at a very high level, which of our users because their our users that need
the flexibility, the ability to manage in a very personal way the applications and the
data on their desktop. And it's useful, getting back to this common denominator
model, that there is the right level of attention for those people who need work
stations there, some people who need work stations, not just high NPCs, to be able
to identify that user community and make sure that they're getting the level of support
that they deserve. Of the studies that we have done in a quote/unquote typical
commercial environment, and I would consider most of the organisations represented
here are what I would call typical, easily 70%, the customers tell us this, we just walk
through the conversation, the customers tell us based upon the criteria that you help
us think about we'd say that 70% of our users have very standard applications, have
no need to introduce new applications diskette drives, really do information update as
opposed to real creation of information, they're making changes, making
reservations, doing payroll, so on and so forth. Easily 70% don't really need a PC on
their desk, as long as, and this is where they start thinking about the value
proposition, as long as we can deliver equal or greater, because many of them are
thinking about HR self service, many of them are saying we're going to get rid of
paper as much as we can, therefore put as many of their publications as possible up
on the web as son and so forth. So they're saying there's new things that we want to
add, but as long as we can maintain the function or greater function, equal or better
service levels and improve the overall cost associated with it, we'd like to seriously
consider it. This is just a template we use about looking at what you have to today
and where you want to go. It's very important, Microsoft, and I think you said this
brochure says 'What is it you want to do, Microsoft where do you want to go today,
we'll take you there', the IBM thing, we'll take you there, not just asking where you
want to go, but we'll take you there.

Again, getting back to, I've been spending the last couple of months with the airlines
industry, we took it another step further, talking with airlines and the question will
come out 'So you've done this work Gaylord, where in the airlines have you found
there to be business areas or departments or common user groups, that lend
themselves to this network computing stuff you've been talking about', well here's a
roster, this isn't the be all and end all, so very cursory here and say of the centre and
left hand column what percentage of your desktops out there are represented by
those business functions? I'm sorry (to audience member) right, but of the clients
that you support and service, what percentage are represented by these two
columns, the centre and the left one. Of the airlines that I've spoken with, easily 70%
they are saying, it fits into this network computing model, it fits into the model, so it's
not scientific in terms of the rigours of this, but it comes fairly close. I'd mentioned
ACSA before, this is one area that lends itself to the travel industry, whether it be
airlines or hotels, travel related services. IBM's product happens to be ACSA which
will allow you access to multiple protocols and network protocols and so on and so
forth, coupled by network computer, and they're others out there, the reason why I
put that up is I'm familiar with ACSA and here we still have choice associated with it,
you don't have to do one technology versus another, but the IBM menus
organisation announced last month in January, I think January 9 it's Java version of
ACSA, now it doesn't have the same level of function that the Windows based
version has today and it will grow into that, but the point here is that there are some
people who are, they say, if we don't do it in Windows we don't do it, we understand
that, we're not saying you have to do it in Java, however, and I mentioned an
American before and I'm going to include Sabre in that, I think there is some very
forward thinking organisations that are looking at what Java can truly deliver from a
business point of view for all the right reasons, and saying the more Java that I can
effectively deploy as a strategy, for all the right business reasons that is my first
choice, so you can go one or the other, it's still network based implementation, and
there are pluses and minuses to either side.

This is a very business chart, but I do want to communicate that this is something
that's not new whether it's to IBM or to EDS to Anderson in terms of doing very large
scale complex deployments. It just happens to be a network computer, with a few
changes in terms of what resides where within the network. The largest deployment
that we are undertaking right now is not the travel business, I wish it were, but it's in
the insurance industry, roughly 15,000 agents and 45-47,000 desktops, and to do
15,000 physical locations in 18-24 months is a very major undertaking from an
integration point of view. It requires saying that you want to do it, coming out of these
desktop segmentation workshops and feeling really good saying wow I know what
the future is, but getting from where you are to where you want to be takes quite a bit
of effort quite frankly, but the pay off could be there, and this is one of the charts we
use to say that people have really thought through the implications about providing
boot support for clusters of network computers, providing the response time that
people are expecting based upon networks that are deployed and the servers that
are deployed, we had this conversation Misha and I'm going to bring it up again I
remember what we talked about today. This business about 'Why is my mail system
down so much of the day', I think about that (tape finishes) (next tape starts) services
levels within the intranet world. This is simply to say that one of the things that
differentiates IBM and the reason why Gartner had put us up in the upper right hand
corner is one, we came out from the very beginning with a strategy to say that we
have a family a product. There's no one thing that's going to solve your problems
and there are different price points and different performance levels, but it's to say
that you can start out simply with replacing non-programmable terminals and gaining
access or you can do Java, we are going to continue to evolve that, there's quite a bit
more, I mentioned we're moving to Intel, I think will become somewhat of a standard
within the industry for network computers, and this is a picture, it's a very old picture
of what I was talking about in terms of thin film display with a network computer, and
this is very crude, because all that was done really was to take a Series 300 and
literally create a housing in the back of a thin film display, and that's what you see
right here. What we will be coming out with will be quite a bit more elegant than this,
the price point is fabulous and we think that for any situation the feedback we've
received as any customer facing situation whether it be on a desk within a hotel, it be
within a reservation area where there's a real premium on real estate this concept will
really take off. The thin film technology is just, the cost is plummeting on that which
really allow that to happen.

One of the last charts here, I hope. You can read the bottom down here, Gartner
estimates up 80% of the application development organisations a three tier
computing model by the Year 2000. One of the things that I do in my capacity is to
work with third party solutions providers and I can't think of one that I'm aware of that
has a presence within the industry that is not either working on a HTML or a Java
version of their application. And that's a statement from solution providers, I would
imagine that might be true for industries as well. This idea of a three tier network
computing design seems to be taking hold, one of the reasons for the adoption rate
we see, I don't think the flood gates are just going to burst wide open in terms of what
you see in terms of adoption here. But I think that IDC curve where the numbers by
the Year 2000 or 2002 reaches truly the millions, will be driven in large part by
extended enterprises who are adopting particular three tier technology.

The future, I mentioned the analogue that I like to you which is a cellphone, there's a
section in Japan, I was there last year, called the Acubara, many of you may know it
already, but it's rather interesting, there are five story department stores, has
anybody been to the Acubara in Tokyo? It's interesting for technologists, but they are
department stores, five-six story department stores, they're all laid out identically the
same, they're all the same, what you find on the third floor, you find on the third floor
of the other building. And when I was there a year or so ago and there was two
things that really impressed me and they're starting to come out on the market right
now, we're fascinated with this palm pilot, but they really have these very small
portable network computers, little tiny keyboards, which are really designed to go to
your local phone booth, plug in and get your job done. They also had TVs, 11inch
TVs, which were this thin film design, they look like something that George Jetson
would put on his desk. They're very sleek but it was programmable and it had a split
screen. Now they're usually two years ahead of us that was a year ago, I would
imagine in this coming year we're going to be seeing TV purveyors here in the States
in particular coming up with that kind of technologies. But much of what is shown
here has been demonstrated by Japanese companies, especially in shows in Japan.
One of the biggest challenges we have is mobility that's one of the things that was on
that what I call a saddle chart, my mic chart, that I would ask to be put into USA
Today, 2 and a half years ago, 1996 here in San Francisco, Apple, Netscape, Oracle,
Sung and IBM got together and created what was then called the Network Computer
Framework. And the goal there was vendors within the industry establishing
standards for what could be called a network computer. That has evolved over time
but more importantly, an expanded group which is now including Microsoft. What
was absent back in May 1996 were organisations like Microsoft and all the PC
vendors. They didn't like this idea of network computers. Interestingly enough too
Microsoft said it's a fashion statement that'll never happen. Six months later when
people started talking about the Net PC they said 'oh yeah, Net PC I think that's a
good idea, so we're going to create a Net PC' and about 17 vendors said I am going
to create Net PC, including IBM by the way, and about six months later, they said 'I
don't think a Net PC is a good idea'. And just a few actually announced that some
people are delivering it, IBM were due with their Net PC. But again this is the power
of Microsoft, you know. And now they've come out with Windows based terminals,
which has got a proprietary environment with RDP and Windows CE. But the mobile
computing is probably one of the most compelling requirements within the industry,
and that's truly to be able to work disconnected. And the problem is not the
technology, Fujitsu showed a year and a half ago, a two pound mobile network
computer, it had all the RF capabilities, you know the technology's there. It's
synchronisation, that's proving to be the biggest biggest problem with data, is
synchronisation and trying to solve that, so it's not the hardware technology per se.
But there are people who are working on the mobile network computer reference
profile, smart card, my greatest desire is to stay at the hotels that are represented
here when I travel, and take out my smart card and have one of these elegant
network computers, sitting on a desk, and log on simply by swiping my card, and
getting access to all my applications whether they be Windows based applications,
my mail or whatever it is. And there are people who are very heavily focused on that
smart technology today.

And the last piece of it is Java, and the whole idea here is to truly be device
independent. To truly be device independent. So the great goal, certainly in a job is
to write once, and run anywhere via a superior environment, but to be able to do it on
any device that's out there. Another most important feature of this is to be able to
provide people who manage these environments with technology software that will
manage any device no matter who the manufacture is out there. Whether it be an
appliance at the low end, or a IP device at the high end. I mean that really is the
goal, certainly from IBM as we collaborate with some of the partners we have.

Wrap up is to say what we're trying to do is to deliver to our customers and to their
customers and enable them to deliver those business functions that you need to do
to remain competitive. And we really think network computing is a piece of that and
network computers in terms of supporting network computing framework as well.