If the likes of AT&T, Intel, and IBM had to fold Cometa after only 18 months, we must be living in a very different world from the one that made those companies rich.

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A heavenly body burns up in the atmosphere of Earth
The news, two weeks ago, of the demise of Cometa Networks underscores the difficulties of pioneering new alliances and services in the post-dot-com recovery. Cometa—a Wi-Fi “hot spot” connectivity wholesaler formed with the backing of AT&T, Intel, and IBM—shut down operations less than a year and a half after its highly hyped launch. The sudden press release claimed that the company was profitable in its Pacific Northwest operations, but couldn’t convince investors to provide the capital for nationwide US expansion.

We won’t know all the details of the Cometa story for some time, if ever. But we’re still entitled to ask the basic questions. Why did a startup with backing from titans fall so quickly behind its less-ballyhooed rivals? Did Cometa consider itself the blessed child of the gods and thus impervious to competition? Was Cometa simply out-finessed by sharper business development or smarter pricing from its rivals?

Cellular provider T-Mobile quietly pulled off the coup of co-branding the highly visible “hot spots” of Starbucks coffee shops, the establishments that created the cultural icon of the latté-sipping laptop user. Wayport managed to snatch the McDonald’s fast-food account right out from under Cometa, though Cometa was already conducting trials with McDonald’s before Wayport entered the picture. And just last week, McDonald’s agreed to an exclusive four-year commitment to Wayport’s newly configured—and much more attractively priced—service, now called WiFi World.

The turbulence of disruptive technologies requires new thinking
We’re now living in an extremely turbulent environment created by emergent and highly disruptive technologies. Even worthy vessels can be swamped by the chaotically clashing waves of such turbulence. To survive, companies need new thinking about two basic things: alliances and services.

The backers of Cometa Networks clearly represented a new alliance, but it was an alliance of big, entrenched players from the previous IT / telecom era. Did that alliance represent new thinking? Cometa was formed in response to the phenomenon of “guerilla networking”—the use of commoditized, consumer-level routers and Wi-Fi transceivers to create clouds of free, short-range connectivity in cities, primarily for laptops. The thought behind Cometa’s founding seems to have been: Since ubiquitous connectivity is clearly part of everybody’s vision of the future, why leave its provisioning to freelance hackers and community computer clubs? If you could offer it from a trusted source, with reliability and security, there’d be money in it, right?

Well, not necessarily—or at least not necessarily as much money as the company’s founders needed to make. Until very recently, IT and telecom have been able to dictate terms to the rest of the world, and remain largely aloof from the real world’s messiness. Re-thinking that position is proving to require more imagination than such companies anticipated. Cometa’s allied backers seem to have brought to the venture a classic let-the-world-come-to-us IT / telecom perspective, not the new thinking required in a moment of profound technological disruption.

Differentiation and enduring value lie in services, not infrastructure
It is rather amazing—but also gratifying—to see how quickly the average citizen has come to view fast access to a global data-network as nearly a birthright in the 21st century. Perhaps you remember what cable-based broadband Internet access did to the comparatively pricey and slow ISDN offerings of the major telecom providers. If you do, then you probably also remember what the $200 4-port consumer router did to cable’s expectation that households would be willing to pay $50 per month for each connected computer.

In both cases, a disruptive technology ate the lunch of an established player that thought it had the whole thing wrapped up. The established player was suddenly playing catch-up. This will continue to happen, over and over. Therefore, as companies explore alliances in an age of endless technological disruption, they need to think about what constitutes enduring differentiation and value-addition. The answer to that problem is “smart services.”

As we’ve said elsewhere, bit-travel alone is a declining profit commodity, and not an adequate basis for a sustainable business model. Bit-movers need to find clever ways to add value to their traffic—or to partner with clever value-adders. To repeat a little rhyme we invented for one of our white papers:

If you want someone to come in your store,
Don’t charge them to open the door.

Mere connectivity is the door. And yes, for a relatively brief historical period (in the big picture), people were willing to pay to open the door. Those were the salad days for the infrastructure builders. Those days are now over. The future money is not in plumbing, but in the next generation of smart applications and services.

New services come from understanding new customer problems and behavior
The late Cometa Networks was offering plumbing. What might have constituted “smart services” thinking in Cometa’s case?

Great ideas for innovative services come from something very simple: understanding new customer behavior and problems. That sounds easy, but large companies tend to see only the behavior of the traditional core customers that made them rich. In the process, they often blind themselves to new opportunities arising from new customer behavior and problems. What problems did Cometa’s target customers have? In Cometa’s view, the customer’s problem was not having convenient connectivity outside the home or office. That was incorrect thinking. Consumers now view connectivity as a built-in feature of the modern world. Every year, they expect to pay less for it, not more; and if the price doesn’t go down, the quality of service had better go up. Merely providing connectivity is not a sustainable business model. So let’s keep thinking.

Cometa was a human-centric company. True, the humans in question were using connected devices, but the devices (e.g., laptops) were the kind that require full human attention. This was not hard-core M2M by any means. To have value, any service offering would have to be something directly experienced by people. Now, the dirty little secret about the human use of computers is that people are slaves to their machines, rather than the other way around. Configuring, maintaining, and using a computer remains to this day a much more frustrating and time-consuming activity than it ought to be.

That’s the general proposition; now we have to get more specific. A big consumer-market problem with computers is that people don’t back up their files, and thus they lose important stuff all the time. Why is it that computers don’t automatically back themselves up? We know how to write software to do this in the background, with encryption and compression, while you work on other things. In the consumer market, the main reason it doesn’t happen is that there’s usually no good place to back up to. But if you have Internet connectivity, you have such a place—a nice, safe, off-site place: remote servers maintained by the connectivity provider. Bingo: a valuable service that a bit-moving company like Cometa could offer to differentiate itself and discourage vendor-switching.

Creative M2M / Pervasive Internet alliances will make Cometa look easy
If the likes of AT&T, Intel, and IBM had to fold Cometa Networks after 18 months, then apparently we’re living in a very different world from the one in which those companies made their fortunes. If it was so unexpectedly tricky to make a venture like Cometa work, imagine how tricky it’s going to be to make the visible (human-centric) world work with the invisible (device-centric) world.

For the M2M / Pervasive Internet arena, Cometa’s flame-out raises this question: Can both established and insurgent companies form new alliances to offer new services that will represent genuine and enduring value to the end-constituent? We’re optimistic, but cautiously so. To date, the track record has been awfully slow and bumpy. Truly innovative M2M alliance activity is still strangely hard to find.

Next time: The problems and potential of M2M / Pervasive Internet alliances.

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Harbor Research Inc. has been providing strategic consulting and research services to leaders in communications, computing, control, and content since 1983. The firm has built relationships with larger multi-line companies including AT&T, ABB, General Electric, Danaher, Eaton, Emerson, Hewlett Packard, Honeywell, Hughes, IBM, Intel, Invensys, Lucent, Motorola, Rockwell, Siemens, and Texas Instruments, as well as focused growth companies such as EMC, Cadence Design, Conexant, Qualcomm, and SAP.

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The brains of the Web. The brawn of server databases. The beauty of a CD-ROM.
For nearly ten years, we’ve been waiting for Web media to get good enough to let us do this. It’s finally here. Harbor SmartSphere® re-invents the whole concept of delivering research value. It’s to business research what the Pervasive Internet will be to business itself: a huge injection of dynamic intelligence and sheer voltage. SmartSphere® is online, interactive, dynamic, and visualized. There’s nothing static, rigid, or dead about it. Eventually, we at Harbor will do everything in SmartSphere® that we used to do on paper, and we’ll do it better. And you can, too. in a custom-configured project of your own, SmartSphere® can be anything you want it to be.

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A small portion of an interactive Harbor SphereMap™. This one portrays a company’s world. You “fly around” the map by dragging it with your mouse, bringing into focus any area you want to explore. You see a company’s peers, investors, products, and alliance-structure at a glance. Clicking nodes fetches additional information from the database. Shift-clicking nodes creates new maps of other companies—and maps of markets, too.

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When you visit our SmartSphere® demonstration, you’ll see a limited version of our own “Pervasive Internet Suppliers” project. Bear in mind that the free demo offers limited information and functionality. The full “Pervasive Internet Suppliers” project, for example, was created to replace and improve our own earlier online publication, Pervasive Internet Report.

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You’ve heard about some of our SmartSphere® projects. Now let’s talk about yours. Does your company have business development, M&A, R&D, or sales and marketing goals? We hope the answer is yes. How would you like “living business intelligence”™ on the companies that interest or worry you? Or on the markets and technologies that are defining your future? A custom SmartSphere® project is the perfect way to do that. “Living business intelligence”™ means research that is laser-focused on your targets, and continually updated for as long as you need it.

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If you’ve read this much about SmartSphere® without clicking something, it’s time to click. Here are those links once again.

1. Visit our free, live SmartSphere® demonstration.
2. Download a brochure on the SmartSphere® research platform and services (PDF, 970 KB).
3. Download a brochure about our SmartSphere® “living research” projects on the M2M/Pervasive Internet phenomenon (PDF, 240 KB).