SMART Letter #24
July 18, 1999



            SMART Letter #24 - July 18, 1999

            Copyright 1999 by David S. Isenberg

      At we accumulate intellectual capital

           the old fashioned way -- we LEARN it. -- -- 1-888-isen-com




>  Lead Essay: Mother of All Disruptions

>  Quote of Note: Seth Schiesel

>  Smart comments from SMART People 

      Zhou Wanshu on ATM-Head vs. IP-Head 

      Andrew Odlyzko on the History of Sail

>  Brief Report from 'Disruptive Innovation' Conference

>  SMART Contest: Invent a Protonym

>  Conferences on my Calendar, Copyright Notice, Administrivia


MOTHER OF ALL DISRUPTIONS: The Internet combines 

disruptive technologies of many component markets.

By David S. Isenberg

As the previous 'Intelligence at the Edge' went to press, (see 

"We're all incumbents on this bus," AN, July 1, 1999, page 16) 

I realized that I had sketched an incomplete picture of 

Lucent's role in bringing disruptive technologies to market.  

Yes, Lucent is an incumbent, and yes, I believe that it is 

missing a big one (the internetworking-induced shift of value 

creation to the edge of the network). 

But clearly Lucent is a prime mover, bringing key components 

of the telecom revolution to market. And clearly Bob Martin, 

the CTO of Lucent Bell Labs, is working to apply the lessons 

of The Innovator's Dilemma, by Clayton Christensen (Harvard 

Business School Press, 1997) to keep Lucent in the forefront 

of the rapidly changing telecommunications equipment game.

Christensen details how technologies can improve so fast that 

they outrun their market's ability to absorb the improvement. 

The recent history of the personal computer provides a vivid 

example.  The PC improved so fast that by 1998, the market for 

PCs was saturated -- the only response left was a dramatic 

price cut, which created the under-$1000 PC.  

Enter the 'desktop equivalent' laptop. As laptops themselves 

gain functionality, they are disrupting the desktop PC 

marketplace.  In addition, they bring new, formerly irrelevant 

values like portability (weight and size) and a small 


Laptop functionality, in turn, depends on improvements in many 

technologies - such as thin displays, miniature disk drives 

(that nevertheless store 'enough'), low power-consumption 

components, battery technologies, et cetera.


In the same way, communications networks are subject to 

disruption as component technologies improve. Optical 

transmission, for example, has progressed so fast in recent 

years that 'dramatic' is an understatement. This progress grew 

from improvements in the component technologies of -- faster 

lasers, dense wavelength division multiplexing (DWDM), and 

improved fiber, among others. 

Altogether, the headlong progress of optical technologies 

makes any superhighway analogy seem absurd.  By my back-of-

the-envelope calculation, if 64 kilobits per second 

represented one lane of a road, with today's DWDM and Lucent's 

40 gigabit per second laser (still in the laboratory), a 

single glass fiber would represent a 12 million-lane highway. 

It'd be 47,500 miles wide.  Imagine the toll plaza.

"[Optics] is leading to a brand new class of 'disruptive 

carriers,'" says Martin.  Qwest, Level 3, Enron, Frontier, 

Williams, Global Crossing, and others are building new long-

haul networks based on new optical technologies.  Today long-

haul prices are in free-fall. "Without big bandwidth, I don't 

think . . . the next generation of services will happen," he 

says. I agree.

Meanwhile, this disruption is only one component of the larger 

disruption to come.  "An unbelievable demand for capacity . . 

. will really be unleashed when the first mile problem is 

solved by cable modems, ADSL, and -- in a few years -- 

wireless," says Martin. "The new market dynamic of how these 

services will be created, sold, and used will emerge."


Yet Martin does not talk much about this new market dynamic.  

He says the Internet is not on his list of disruptive 

technologies (optics, silicon, wireless, packets and software) 

because it is "a network embodying the technologies, and the 

question was technology."  Like the laptop computer, the 

market impact of the Internet depends upon the trajectories of 

its component technologies.  

The Internet will be the mother of all disruptions.  Along the 

way, many component technologies -- transport, routing, 

access, computing, etc. -- are proving disruptive in their own 

markets. Lucent's attachment to its historically strong 

circuit switching expertise was so blinding, and router 

technology arrived so suddenly, that it had to acquire 

external router expertise and product lines.  In many other 

arenas, Lucent's homegrown technology has kept up or led.

Christensen has studied how incumbents respond to disruptive 

technologies.  The only successes he's seen come when 

incumbents "acquire disruptive firms early and keep them 

separate." This, in effect, creates an independent company in 

which the infant technology can mature without competing for 

resources with existing lines of business.  Lucent is 

organized as several independent businesses, but these still 

compete at the corporate level for resources and employees.  

Maybe Lucent has discovered a new way to create disruptive 

technologies.  And perhaps many of its leading technologies 

are sustaining.  Or maybe Christensen is wrong.  

Meanwhile, the communications revolution is on, and Lucent -- 

so far -- seems to be selling what both sides want to buy. 

This article appeared in the July 15 issue of America's 

Network.  Copyright 1999 by Advanstar Communications.


QUOTE OF NOTE: Seth Schiesel

   "The changes in the long-distance industry are 

    undermining what is perhaps the fundamental rule 

    of telecommunications economics - that margins stick 

    to assets . . . in the next century, margins 

    in the communications business will stick to services 

    and customers.

From "Jumping Off the Bandwidth Wagon" by Seth Schiesel,

New York Times, August 11, 1999




Zhou Wanshu ( writes:


   "When I following the ideas in your article, another 

    issue [arose] in my head.  Even more and more Telcos 

    have admitted the circuit-based network should be 

    replaced by the packet-based one, but some of them 

    seek for ATM as the future solution.  And when looking 

    at the details of ATM, it looks many of its features 

    are still inherited from the old PSTN, even [when] it

    claims they will cover all fields and support all kinds

    of applications.

   "So I think a[n] interesting topic would be "ATMhead vs 

    IPhead: who is the basis of the future stupid network." 

    [Do] you think it's a worthy story to start?


   "In [your Communications Week International article, 

    'Facing up to the full impact of the stupid network'] 

    we can see the conclusion [that] IP has won hands down,

    [and] that IP is now reducing the need for ATM, and even

    SONET, making the network ever more simple and stupid.


   "But I still think a powerful story is needed to make 

    them, especially the Telco guys and policy makers, to 

    really understand the reasons. Otherwise they will go 

    in a wrong way to the next generation network, or they 

    (Telco) will continue their old PSTN business model or

    monopoly with a new face -- ATM."

[Hmmm . . . hasn't somebody made a compelling case yet for 

why ATM is not necessary in an all-IP world? If you know of 

such an essay, please send its coordinates! If nobody else has 

done it, maybe it is my job. -- David I]


Andrew Odlyzko ( took issue with my 

statement (from SMART Letter #23) that "the absolute 

pinnacle of the age of sail, the clipper ship era, came a 

mere decade before sail fell to steam."  He wrote:


   "The story is quite a bit more complicated . . . 

    [T]he American clipper, [] went into eclipse less 

    because of steam ships, than because of the end of 

    the California gold rush, which eliminated the 

    lucrative passenger business from the East Coast to 

    San Francisco, and led to slower but more economical 

    sailing ships taking over.  Soon after came the era of

    the British clipper ships, which were built for another

    trade where speed over long distances mattered, namely

    the China tea trade.  The opening of the Suez Canal in

    1869 and the introduction of the compound steam engine

    in the 1860s killed that era (since now steam ships

    could beat the clipper ships by taking a shortcut)."

To which I replied:

   "Yes, the picture is more complicated than can be 

    captured in a single sentence.  Yet I believe that

    just as the decade 1995-2005 will be seen as the end

    of circuit switching and the beginning of the Internet

    age (despite the fact that the Internet's precursors

    have been around since the 70s), so do I think that 

    the critical decade for sail was 1855-1865. (The last

    US Clipper was build in 1855, and steam technology 

    made great advances to be used in war & trade by the 

    mid-1860s.) . . . [But] you are right in [that] 

    *scheduled* service, possible only under steam, was 

    not introduced in trans-Atlantic trade until 1878 (by

    the Cunard line).  This [was, perhaps, the] key 

    'disruptive technology' for sail."

And Andrew wrote:

   "It could be argued that the real pinnacle of the 

    age of sail was around the turn of the century . . .

    The amount of cargo that the steel-hulled and steel-

    masted sailing ships of around 1900 could carry per 

    crewmember was about 10 times as high as the wooden 

    sailing ships of the Napoleonic era . . . "

To which I replied:

   "[By the same token,] I could argue -- given the 

    use of modern materials and designs, and the speeds 

    of today's vessels -- that we are living in the

    pinnacle of the age of sail right now."  

And Andrew agreed:

   "Modern composite materials, GPS, and satellite 

    weather pictures are doing wonders.  As an 

    interesting item, the record time for the 

    NYC -> SF voyage under sail that had been held 

    by the [the American clipper] Flying Cloud for 

    almost 150 years was broken a few years ago by a 

    much smaller, but more modern yacht."



Last week's 'Disruptive Innovation' conference, with Clayton 

Christensen and George Gilder, was not your usual telecom 

meeting.  It attracted a wonderfully diverse crowd from 

strawberry growers to hotel builders and plumbing supply 

distributors (in addition to many techies). One of Gilder's 

talents is a genius for imbuing technological progress with 

higher meaning - the meeting provided an ideal platform.  

There were two highlights for me. 

The first was MIT Professor Eric von Hippel's talk, entitled 

"Listen to your Customers."  The title flies in the face of a 

central Christensen tenet that if you listen to your customers 

you are missing the action at the edge.  But von Hippel 

introduces a new concept, "the lead user" - someone with 

greater needs than the average customer and greater means to 

innovate.  Often, says von Hippel, this kind of user is the 

source of the next disruptive innovation, so the trick is to 

find lead users and partner with them.  

The second was Carver Mead's closing talk.  In the 1970s, Mead 

provided breakthrough solid state physics that became the rock 

upon which Fairchild, Intel and the rest of the semiconductor 

revolution was founded.  He recounted his insights with 

modesty and simplicity, so non-physicists could grasp their 

importance and the process by which he achieved them.  It was 

an honor to be in the same room as this great man.

Clayton Christensen won the "show-must-go-on" award.  He was 

wracked with a painful facial neuralgia throughout the 

conference, but nevertheless he produced his special brand of 

careful listening, his inimitable charming smile, and the 

conceptual glue that made the conference a success.

I think I did a pretty good job of presenting my 'Stupid 

Network' talk.  George seemed to like it, anyway.  Bob Martin 

followed me, focussing on technology but not disruption.  In 

the question and answer session, George tried to open the 

topic, but Bob would have none of it.  At one point Bob 

exclaimed to the effect that Lucent stopped choosing sides 

when it split from AT&T.  Should we expect an arms merchant to 

have morality? - David I



What's a Protonym?  Well, 'Stupid Network' is one.  So is 

Prosumer and Prosultant(sm).  They come from Intelligent 

Network, Consumer, and Consultant (also note Insultant, 

Resultant, Scapesultant). So is monokini (from bikini). So is 

protonym (from synonym and antonym). 

I just found a new one: Probiotic (from antibiotic). As the 

brochure for a lactobacillus product explains, "Probiotics 

promote the growth of good bacteria and antibiotics can kill 

both good and bad bacteria.  

(If you must, see for the probiotic story.).

Successful contestants will invent and define a new protonym 

and submit it to (Forget about prescriptive so-

called rules of etymology, like the one forbidding mixing a 

Greek prefix with a Roman root! The deal here is whether your 

new word makes sense to today's speaker of English!)  

Contestants and their logologisms may be featured in a future 

SMART Letter, and they could earn the recognition of 

approximately 1207 SMART People.  Entries will earn extra 

points if they parody high tech products, corporate life, the 

telecom establishment and/or regulatory bureaucracy.  The 

decision of the judge will be final.

Thanks to David Weinberger, creator of the Journal of the 

Hyperlinked Organization ( for inspiring 

this "bogus contest."

Prosultant is a service mark of, inc.



July 28-29, 1999, London UK. "Business Discontinuities within 

the Ubiquitous Internet" by TTI/Vanguard.  See for more details.

September 27-29, 1999, Lake Tahoe CA. George Gilder's

TELECOSM!  REGISTER NOW -- It's almost sold out!!!

I'm putting a high-level panel together on The Stupid 

Network.  For more information, watch

November 4, 1999, New York City.  Merrill Lynch Technology 

Advisory Board Panel, quite possibly featuring Gordon Bell 

(father of the VAX), Phil Neches (founder of database machine 

company Teradata), Don Norman (who wrote "Turn Signals are the 

Facial Expressions of Automobiles," and other worthwhile 

reads), open source spokesman Eric Raymond (who wrote the 

must-read essay "The Cathedral and the Bazaar"), and several 

others, no less distinguished, whose work I don't know as 

well. I'll participate too.  Save the date.  Stay tuned for 




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Copyright 1999 by David S. Isenberg -- -- 1-888-isen-com


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David S. Isenberg, inc.  

1-888-isen-com            1-908-654-0772

** -- the brains behind The Stupid Network



Date last modified: 23 July 99