Date: November 9, 2000

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Red Herring Magazine's Third Annual "NDA" Conference was held
October 30-31, 2000, at The Four Seasons Aviara, Carlsbad, CA
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Dear Clients, Partners, Friends, and
Fellow Overly Obsessed Trend-Followers:

Well, I'm starting to write this one as I tool down the Pasadena Freeway on my way back to LAX, after yet another incredible conference experience. That's me in the flame-red Mustang, listening to what could only be called a bitchin' rendition of "Californication" by the Red Hot Chili Peppers on the radio....windows down, volume cranked, of course.

Okay, so I'm not actually *writing* the thing. My Powerbook isn't on the seat next to me--that I haven't attempted yet, at least not on this twisty, old Pasadena Freeway. And besides that, the damn shifter's in the way...and I'm reclined back groovin' to the tunes.

But, anyway, I'm thinkin' what a good time I had again down in beautiful San Diego County, at my third annual Red Herring "NDA" event....in my never-ending quest on the buzz trail for you, o benevolent and faithful readers.

Let's get right into it. But first, gotta pay some bills...

Now back to the NDA conference report. Here's what I had to say about it,
in the story I filed last week to Conferenza.com....

Post Bubble-Burst, the Mix
at "NDA" Noticably Evolves

by Graeme Thickins
grt@gtamarketing.com

In a sign of what a media organization must do to keep the buzz goin' (and the event revs flowin') after something as significant as the spring 2000 Internet bubble burst, Red Herring took a decidedly different approach with its NDA conference this third time around. Hey, they're nothing if not fast on their feet.

Though naturally minus 1999's hysteria and attendance levels, the NDA conference still delivered some provacative content and networking worthy of its reputation, and attracted an interesting blend of quality, senior-level attendees from large and small companies alike, many of them first-timers. Some 20% of the group were VCs, angels, investment bankers, or corporate investors--an impressive number.

The event's content was eclectic, indeed--including how a big government org is using the 'Net, a look at whether peer-to-peer really is the next big thing, much debate on just what the important trends really are, and a look at biotech and even energy, among some impressive pitches from 14 hot new companies (several just out of stealth mode). Generally, the quality of these presenting companies was better than last year.

In a major departure for Herring, known widely for the free-market, Republican-leaning stance of its founders, it gave the opening keynote slot to--get this--a large branch of the federal government, to let them tell us just how 'Net-savvy such a behemoth can supposedly be.

Secretary of the Navy Richard Danzig delivered a no-notes, no visuals, rambling one-hour monologue of how "the largest organization in the world" is going to "totally transform itself" with an intranet linking its 900,000 people. Results? Well, those will be a while, friends--the project is just barely beyond the contract-award stage. [Surprise, EDS was the big winner.] Danzig said "we broke all speed records getting to contracting in 18 months." But the implication of what changes the project *might* bring to one of the oldest organizations in the world (250 years) rose to heights as lofty as the Blue Angels at full throttle.

One had the feeling that the goverment wonks in the audience were in a state of ecstasy just contemplating the *thought* of achievements so glorious (and a budget so big). And that feeling proved true, as the first audience questioner called for a standing ovation for Secretary Danzig, as if he had just cured cancer itself. [It was a touching moment, friends.] After which he thanked the lady for her adoring words, but said it really wasn't anything altruistic--he just had "the greatest job in the world," but actually had no idea if he'd still even *have* the darn thing after January 20th, no matter who wins. [The questioner, a recruiter, in a move that certainly must have made her upstanding counterparts elsewhere in the audience cringe, asked Danzig if he had plans to jump to the private sector--she, of course, undoubtedly having a few juicy jobs ready and waiting for the man.]

That an opening keynote by a federal government appointee (and a Democratic one at that) could be called a change at a Herring event is an understatement. Still, one has to admire the fairness with which Herring allows its events organization and its magazine editors to examine both sides of the political fence and go beyond just the world of the, ah....mere private sector. (Witness also its recent "E-Gore" cover story that gave Al an unprecedented opportunity to hype his views to the tech crowd.) In tough times, it seems even a hot magazine has to reach out for new growth markets. [No word yet whether we can expect a new tagline on the magazine soon: "The Business of Technology *and Government*."]

What helped balance the seriousness of the opening morning, however, was a surprise appearance prior to the keynote by Kevin Nealon of Saturday Night Live fame, who did a "Red Herring NDA News Update" that had the crowd (well, except maybe the government/policy wonks) rolling in the aisles. A sampling: "In a continuing sign Hillary is serious about becoming a real New Yorker, it was reported yesterday she was arrested for urinating in public."

And In Other NDA Developments....

"Distributed computing" was definitely the term of the day, with the closely related "computing on the edge" winning the award for the most used and abused buzz phrase of the conference.

Michael Capellas Tries to Play Steve Jobs

The new CEO of Compaq (having risen from CIO, then COO), spoke of the major trends that will have an affect on the turnaround he is now orchestrating at the company:

1) Distributed computing is the driver. ("I'm betting the company on it," he said.)
2) Asia will usher in mobile e-commerce.
3) The telcos will shift to value-add services.
4) More computing will move to the edge of the network.

But the most difficult moment came as Capellas pushed his view that "the killer app is rich content delivered for home entertainment." He proudly showed us some new Compaq computer on a pedestal, and proceeded to demo it like he was Apple CEO Steve Jobs -- playing a music track through its PC speakers that sounded like, well, *tin* after we'd all been listening to the 6-foot-high speakers pounding out great music between the conference sessions. So much for trying to be cool.

But he also spoke in strong terms about his firm's focus on wireless, because that "very rich content" delivered in this manner "is where it's all going." He noted that no other technology has been adopted by 50 million users so quickly, and that we'll be seeing 100 to 200 million new users added per year. "Look for 850 million to 1 billion wireless users in four to five years," Capellas said.

"Content will be the driver," he continued. "Wireless will proliferate, and content will lead commerce."

A question from editor Jason Pontin was telling. "So are you really not a PC company?" To which Capellas said, "We've moved quite a ways from that."

A Look at Herring's No. 1 Trend for 2001: Distributed Computing

Also known as P2P (peer-to-peer) computing, NDA's first panel discussion brought together representatives from Microsoft, Sun, Storage Networks, and startup Popular Power, plus a senior Herring writer who's been covering this topic. Noted IT consultant and author Cheryl Currid, formerly CIO at Coca-Cola, moderated the session.

"Distributed computing is simply sharing computing resources," Currid began. She noted that this phenomenon is partly a reaction to the fact that PCs are asleep 70% of the time, and servers some 40% of the time, on average. "That's a huge number of wasted cycles," she said.

"It's about distributed IT infrastructure," said Herring writer Om Malik. "It aggregates all pieces of hardware, no matter the platform," added Marc Hedlund, CEO of Popular Power.

Bill Miller, cofounder and CTO of Storage Networks, which "has built fifty SPOPs in the U.S. and Europe," noted that his company has been drawn into P2P because its customers are asking for it -- "so we know it's for real." He said Akamai as an example of the P2P phenomenon, making static content available out on the edge. "Their core competence is essentially managing 10,000 computers on the edge."

Charles Fitzgerald of Microsoft's Developer Strategy Group said his company take a broad view. "The 'Net from the outset was designed to be highly distributed. The last five years have been about leveraging reach. The next five will be about increasing the richness of the experience. Our new 'dot-net' initiative is about distributed programmable services."

Sun's Kemer Thomson followed by remarking that his company's been doing distributed computing for years. "But we [the industry] must now adapt to the rising complexity. Because, as we begin relying on these new services, we're not willing to accept downtime."

Herring's Om Malik sees P2P as "peeling off the IT infrastructure... letting companies deploy software and hardware faster and cheaper."

Referring to the P2P phenonenon's poster child, Napster, Microsoft's Fitzgerald said, "File sharing is interesting, but we're now getting up the value chain. That's where the work needs to be done."

"The infrastructure for P2P is there," he said. To which Popular Power's Hedlund said, "Yes, but *security* has got to be there, too. You can't just say we've got XML and that will take care of everything." He noted that his company's early distributed computing customers, including pharmaceutical companies, are getting apps running in just two to four hours.

An audience question sparked a lively Microsoft-Sun debate: "Are clients becoming 'fatter' now?" To which Sun's Thomson immediately intoned: "That's the battle! Microsoft wants much more on the client."

"We don't believe in the dumb terminal model," said Microsoft's Fitzgerald. "The browser and HTML 3.2 is that dumb terminal. Your competitor is one click away--you can't build a compelling business that way."

Sun's Thomson countered with: "'Net devices are not dumb, just more efficient. The problem with the rich or 'thick' terminal is, what do you do when a new software version comes out? Look at the popularity of the Palm OS -- nothing fancy, almost to the point of dumb -- but it fills a need."

Herring senior writer Malik toned in with his recurring viewpoint: "I don't think this devices thing is that exciting. The real power of P2P is about making enterprises more efficient--not consumers--and saving big dollars."

A final audience question asked what impact P2P might have on the world of art. To which Popular Power's Hedlund (who used to be with LucasFilm) said he thinks it will allow individuals who have, "Say, an iMac with the iMovie application to do heavy renderings" not otherwise possible for them. "It won't necessarily result in new Mona Lisas," he said, "but it will put huge resources into the hands of individuals like never before."

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Worth Noting

This year's NDA also marked somewhat of a new era for the Herring--call it more growing up. After a year and a half search, the company announced it had hired a new CEO (from a very large media firm, the Times-Tribune Company), plus a new VP and Sr VP of events as well (strangely, none of whom were either introduced or participated in the NDA event). Founder Tony Perkins continues very much as the voice and personality of the events, and seems to still enjoy the role. Privately held Herring, which launched its first magazine issue in 1993 and its first event a couple years after that, now stands at some 350 employees, I learned, and has seen revenues grow an order of magnitude over the past five years.

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(More to come in a second report: HP's big view, Gilder on trends, a panel debates those trends, an interview with hot P2P startup InfraSearch, and Herring's "anti-trend" for 2001.)

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That's it for now, but look for my second report soon, with much more in the way of specific insights and quotes from this event.

Again, if you'd like to be among the first to get my reports by email in the future, just email me, say "yes," and include your contact info.

your faithful, unstoppable, Mustang-drivin',
freeway crusin', trend-followin' maniac and
nonstop-schmoozin' conference reporter,
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Graeme Thickins, Founder & Principal Consultant
GT&A Strategic Marketing Inc.
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