Cisco outlines next web revolution

Senior vice president Howard Charney believes a major wave of innovation is due, thanks to the web, growing urban populations and low hardware costs

"No army can withstand the strength of an idea whose time has come," said Howard Charney, Cisco's senior vice president, borrowing from Victor Hugo to summarise the power of the internet.

Speaking in Brisbane this week, Charney said the world — split into "information-rich" (developed) and "information-poor" (developing) countries — is on the precipice of a major wave of innovation, thanks to the internet, growing urban populations and falling hardware prices.

The combination of the availability of Nicholas Negroponte's so-called "$100 laptop" to two billion people in China and India, and over half the world's population living in cities by 2008, will have a profound effect on both worlds, said Charney.

Greater access to information will improve living standards by removing isolation, which will in turn stem the growing disparity between productivity growth rates of information "poor" and "rich" nations — a gap which has doubled in the last decade according to an OECD report, said Charney.

However, he said his vision is not entirely philanthropic. For developing nations to improve life, they will need networks — Cisco's networks, he hopes, whether it's dark fibre or wireless.

"You know, we're very big," said Charney. "When you're big, you have societal obligations… But are we going to be making profits off [building networks in developing countries]? Yes, there is a business proposition."

IBRS analyst Dr Kevin McIsaac, agreed that "enabling technology" like a laptop will help, but posed the question: "What else will they need?"

"In Bangladesh the [Grameen Bank] lent as little as $5 to women to buy a mobile phone. This was incredibly important to enable the technology for these women to get started. They would rent out the time on the phone, which was enough to live, pay the mortgage and was a vital piece of technology in the village."

Instead of walking two days into the village to sell their produce, the women were able to call local buyers and negotiate better prices, which offered a better outcome than would have been possible under stressed conditions, McIsaac added.

Across the information-rich divide
However, innovation won't simply happen for "information-rich" countries, continued Cisco's Charney.

"Our challenge today is in recognising the potential of new technology and putting it to use faster than before," he said.

"To sustain innovation, we need investment and sometimes that seems like crazed speculation," he said, using Holland's tulip and the US's great llama bust as prime examples.

"This does not mean people should take greater risks," Charney said. "Investment occurs in different ways and sometimes people get caught up in making money and build out business models that don't turn out to work, but that also created investments in dark fibre. Now, we use that for a business model that does."

"That permitted the Indian outsourcing industry to get started. How could companies in the US and Europe outsource to India — which is now worth hundreds of billions of dollars?" asked Charney.

However IBRS's McIsaac warned not to interpret retrospectively good investments for efficient outcomes. "Value has come out of the [dot-com boom], but there was an enormous waste of investment," he said.

"Business needs to take a portfolio view of investments in technology. Five percent should go into blue-sky investments, like wikis and Web 2.0 for knowledge-management projects, but 30 percent should go into keeping IT running and improvements on existing technology."