The Internet: What Comes Next?

ECKHARD PFEIFFER, PRESIDENT AND CEO, size="2">COMPAQ COMPUTER CORP.

Without question, the digital age has

produced a new method of creating wealth namely information, and today's corporations need

to better understand how to use it to create more value for customers and more wealth for

shareholders.

hspace="0" width="111" height="227">At the heart of this digital economy is the Internet.

Today, nearly three decades after its birth and four years into its mass

commercialization, the Internet continues to evoke a gamut of strong emotions; its scale

and vastness overwhelm some, while for others it is a social and economic nirvana.

Yet, the Internet has only just begun to

realize its vast potential and become fully integrated into business and society. Its most

profound transforming power lies ahead. With that in mind, it is important to look at

where the Net is headed, what companies like Compaq are doing to make it run faster and

work better for more people around the world, and lastly, how it can be absorbed into the

very core of business.

The Future



While looking at the future of the Internet, Silicon Valley marketing pioneer Regis
McKenna once wrote "a global nervous system is being assembled linking ideas...

information...images...and the cultural repositories of nations-the whole Pandora box of

human affairs-that can be tapped into by anyone with a telephone, a TV, a PC, or a device

that combines all three." This idea of a nervous system is interesting, since we are

starting to see a lot more intelligence in the network itself. As a result, the network

will come to know much more about our broad information needs, finding the information we

want and bringing it to us.

We're also seeing the Internet become

increasingly engineered for change. Any of the Net's parts can change at anytime in any

way and incorporate experiments without invalidating the whole. Much like the human

nervous system, we're seeing the Internet begin to differentiate its pathways to suit the

work it's being called on to do.

Consider the familiar, public Internet;

this network of networks will be oriented primarily to casual conversation and chat,

business-to-consumer ecommerce, information retrieval, and entertainment. This

Internet-for-the masses will become a parallel-and maybe even a substitute-medium for

radio, TV, movies, and telephone. In fact, we at Compaq view Internet as an entirely new

domain of economic and social life, rapidly becoming a place for commerce, information,

and entertainment. It will not just be a conduit, but an essential destination in itself-a

new market space that's forcing every business to reinvent itself to do ecommerce.

Just as you would not want to drive your

family vehicle in a car race because it's not built to accelerate, brake, or maneuver at

breakneck speed you may not want to entrust the exchange of your most confidential and

time-sensitive corporate information to the public Internet. Due to this, we are seeing an

overlaid, but interconnected, 'industrial strength' Internet emerging. This the Internet2

will be the aggregate of corporate intranets that are connected by firewall to the public

Internet, and these intranets will be open-with restricted access-for selective external

use. They will run just like the general purpose Internet, but will be fully bullet proof,

offering high levels of security, filtering, and restricted access service. This quality

of service will be guaranteed by special network providers, such as PTTs, telcos, or

Internet Service Providers (ISPs)-in a pay-for-what-you-use approach.

The Net is maintaining its furious growth.

Worldwide, the estimated number of Internet users today ranges from 40 to 60 million

people. Morgan Stanley recently estimated that the number of users will grow 54 percent a

year for the next two years, resulting in more than 150 million cyberspace residents by

the year 2000. So what applications are propelling this growth? Well, customers not only

want to access information, they also want to create and retrieve content, communicate and

collaborate, integrate their legacy applications, as well as buy and sell.

Today, most of this capability is enabled

through corporate intranets. The growth of intranets, and the servers that power them,

will continue to boom, with the installed base of intranet servers growing more than three

fold till the year 2000.

At the same time, we at Compaq see another

focal point for Internet services. We expect more and more companies to leverage ISPs. Why

is this happening? For one thing, tomorrow's Internet-based services are going to be far

richer and far more valuable. The Internet will still provide basic access services like

mail and news, and content services like chat and web site design, and it will also enable

users to tap into services like fax, messaging, telephony, video streaming and

conferencing, encryption, transaction processing, virus scanning, content screening etc.

An ISP will provide this broad menu of services on the Internet backbone rather than on a

spur of the backbone, ensuring access to much higher bandwidth. The web infrastructure

will most likely become a computing platform where a lot of applications will reside and

run.

Addressing Internet Challenges



Companies such as Compaq are committed to improving customers' personal access experience
in and out of the Internet. At Compaq, for example, we are tackling the Internet's

thorniest problem-poor response time for WWW browsing. We've developed a powerful new

combination of industry-standard fast servers and sophisticated graphic compression

software that will increase the speed of Internet access for both corporate customers and

home users. The technology, called Compaq Acceleration Server, which is still in

development stages, will load web pages two-three times faster, enabling users to have a

more satisfying Internet experience with their current modems over standard telephone

lines.

Compaq also views communication bandwidth

as a serious problem, we're heavily involved in standards setting and technology

development to propel the development of alternative broadband solutions for telephone

companies, cable, satellite, and data broadcasting.

Internet In Business



It is important to look at where the Internet is headed, and how companies such as Compaq
are working to leverage Net for customers. But it's also important to reflect on how

companies can avail Internet for their own businesses. The top priority at Compaq

regarding Internet is to make sure that the company is solving real problems and providing

real value. Whether this means making it intuitive and cost-effective for our employees to

share information and collaborate, or helping end-users learn more about our products to

derive optimum benefit from them.

Compaq has been on a multi-year path to use

the Internet to shrink time and space between the company and its customers and build an

enduring, interactive relationship. Our goal is to run Compaq as an exceptionally

responsive corporation, and to do so, we've changed the clock speed of all of our internal

information systems so that the company has a reliable, real-time, and consolidated global

view of supply and demand.

We've also created a new information

infrastructure for delivering external and internal Internet-based applications that use

Active Server Pages, Java, and other tools to create dynamic pages of information that are

refreshed in real time from constantly updated databases. With this capability I can, for

example, peer up and down our supply chain and look at demand for any of the company's

product lines. I can also launch a product configurator application, select a product of

interest, tailor it to my liking, adding, for example, a CD ROM, 128 MHz of memory and a

graphics card, and in real time, see the price change to reflect each new feature. This

capability is finding its way into a host of customer and partner-enabling applications.

We're also extending our extranet to our

commercial resellers and retailers, through which we provide detailed information about

our products, services, and solutions. This enables us to answer questions, help with lead

management, offer configuration and sizer tools and, in general, deepen our relationship

with our partners, as we work together to ensure that the indirect channel remains a

highly efficient delivery and support mechanism for the long term.

Turning to customers, we've been fortifying

our Web site to provide richer, carefully segmented content and capability. For example,

in the future, we want to put at the disposal of our resellers and customers a Web-based,

interactive product showroom that will help them match product solutions to their needs.

Compaq is determined to bring the power of

Internet-based solutions to more of the world's workplaces, homes, and schools, helping

make the world more richly liked.

Above all, the digital age has spawned the

most coveted resource for today's businesses-information. Companies of all sizes can work

with customers and partners around the world to fully leverage this entirely new domain of

economic and social life.