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Power and Networking

David Burnett
Founder, Technopreneurial.com
November 2001

"Knowledge is power."

When the British statesman and philosopher Sir Francis Bacon published this assertion in 1597, there was no way he could have predicted that it would eventually become the doctrine for the connected economy and the Internet age. But today's networks bring people and information closer together, thereby facilitating both the access and communication of knowledge. Thus, IP networks are not merely geeky, computer technologies--they are tools for empowerment.

Recent studies on IT trends in India have suggested that networking and IP services will be among the next big business trends for local companies. Even as I write this, both new startups and members of the old guard are frantically developing fresh strategies to tap this potential goldmine. Some companies in Bangalore are already offering services and developing products in the areas of VPNs, IP telephony, wireless LANs, and remote mobile access. But if any of these companies are too succeed, they must obey basic economics--and they must fulfill a real market demand.

With technology, however, predicting demand is no easy feat. The problem often lies in a simple reality: most people of today do not yet understand the technologies of tomorrow. And if they do not understand them yet, it can be very difficult to predict whether or not they will be willing to pay for them in the future. Accurately performing market research on the potential demand for future technologies can be a daunting task. Fortunately, many predictions about the demand for networking products and IP services conforms to a general framework, and, oddly enough, it all gets back to Sir Francis Bacon.

Remember: "Knowledge is power," and networks empower. To understand future demand in networking, don't just look at the direct applications of the products or services--look at the empowering forces of the technology. Within this framework for predicting future demand, a cursory knowledge of political theory proves as useful as technology savvy.

James F. Byrnes, an early 20th century American statesman and diplomat, said, "Power intoxicates men." Not only is it intoxicating--power is also addictive. On a general level, most people who have power demand two things. First, they desire to secure the power that they already have. Second, they want to expand the scope and flexibility of their existing power. Future demand for network technologies and services will largely overlap with these two general demands. Those who have proprietary knowledge will seek to protect it, and they will always be on the lookout for opportunities to expand the scope of their knowledge and the flexibility with which they can use it.

But you might be wondering how these abstract thoughts actually translate into market demand. Let's look at some concrete examples. The first component of demand consists of the desire to secure knowledge. As enterprises and individuals seek to protect the knowledge and power that they already have, they will increasingly demand network security services. The technology research group IDC estimates that the U.S. market alone for information security services will exceed $8 billion in 2004. The company also predicts that the global market for information security services will increase from $5.5 billion in 1999 to $17.2 billion by 2004. Demand for security, however, is not just limited to service providers. IDC predicts that the global market for firewall and VPN security software will increase from $943 million in 2000 to $4 billion by 2004.

All of the above figures are significant. Nonetheless, each of these predictions was made prior to September 11th! The terrorist attacks in the U.S. have heightened the world's awareness about the insecurity of everything, thus fueling even greater demand for security products and services. Forthcoming market predictions suggest that post-September 11th demand for securing knowledge will increase by billions of more dollars.

There will also be high demand for network technologies and services that expand the scope and flexibility of knowledge. The scope of knowledge can be expanded by bringing multiple networks together, thereby increasing the knowledge available to either an individual or enterprise. Unified messaging and communications is a classic example of a technology that expands scope and bridges multiple networks and mediums of information. Demand is on the rise for this type of power expanding technology: IDC estimates that the U.S. market for unified communications services will grow from $400 million in 2000 to $5.5 billion in 2005.

Power is useless if an individual is unable to either access or exercise it. From a network perspective, knowledge is useless if your access to it is inhibited or constrained. There is an inherent demand for products and services that will enable users to access their networked knowledge with the flexibility of location. For example, the demand for mobile and unconstrained network connectivity has pushed up the demand for wireless local area networks. IDC estimates that the worldwide market for wireless LANs will increase from only $1 billion in 2000 to $3.2 billion by the end of 2005.

In short, people are willing to pay a premium for power. Indian companies can tap the global networking market if they remember that networking is fundamentally about power and knowledge. The above examples are certainly not exhaustive. And the framework for anticipating demand can be further applied for validating ideas and evaluating future demand in the networking industry. Demand will continue to grow for networking technologies and services that can secure power and expand both its scope and flexibility. Thus, the future of the Indian networking industry lies not merely in its ability to develop networks. It lies in its ability to manage power.

About the author

David Burnett is the Founder of Technopreneurial.com and a Thomas J. Watson Fellow. He presently lives in Hong Kong, and his current research includes working on a book about the collected "lessons" of Asia's new breed of technopreneurs. The author can be reached via e-mail at david [at] technopreneurial.com.

For questions about this site, please contact david [at] technopreneurial.com.

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