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In Search of the Net's Next Big Thing


If you think the Web is the Net and the Net is the Web, think again. While the World Wide Web is the most popular way to tap the information coursing through the Internet--the physical network of wires and computers--it's far from the only way. Consider e-mail. Most messages bypass the Web and its billions of pages as they travel along the Internet. Yet it's the Net's "killer app."

As the Web reaches the ripe old age of 10, companies are looking for ways to move beyond it. Sure, the Web has helped make the Net a global phenomenon, attracting billions of dollars in investment and nearly as many dreams. But the Web, with its relatively static pages of text, images, and information, only begins to exploit the Net's potential. A host of new, non-Web technologies should help people communicate more efficiently--and could give birth to the next generation of Internet highfliers. "The Net is a platform around which we will build all sorts of really interesting products and services," says Richard Newton, dean of the College of Engineering at the University of California at Berkeley.

DANGEROUS. But life on the tech frontier is dangerous. So far, backers of most of these technologies, like many of their struggling dot-com predecessors, haven't found a way to profit from them. Some, such as instant messaging--a way to zap quick notes from PC to PC--barely generate a trickle of revenues. Still, Internet cognoscenti are betting they will rekindle the mega-innovation of the Web's early days.

Wireless is the highest-profile of the bunch. While wireless Web applications have been a bust so far, that's partly because most have tried to cram Web pages through the slow connections and onto the tiny screens of mobile phones and handheld computers. Still, there's plenty of opportunity: The number of wireless Net users is expected to soar to 225 million in 2002 from just 40 million last year, according to tech research firm eTForecasts.

Those unwired millions will want services that dish up nuggets of information needed at a specific time or place--but bypass the Web and its big, unwieldy pages. Some companies are doing that already. New York-based mobile service Vindigo pushes info about nearby restaurants to would-be diners' handhelds. Cellular companies in Europe let you pay for a soda from a vending machine by dialing a number from your mobile phone. And software from San Mateo-based AvantGo Inc. alerts today's Willy Loman that an order has been shipped to a client. "Mobility fills in the gaps when a PC isn't appropriate," says Richard Owen, AvantGo's CEO.

Even when PCs are appropriate, they don't necessarily need the Web. Just ask the millions of Napster devotees. The music-sharing service uses "peer-to-peer" (P2P) technology that skirts the server computers where Web pages are stored. Instead, Napster users can peek into each others' PCs, select songs, and download them over the Internet. Although it's unclear whether Napster will survive its battle with the music industry, some P2P startups boast revenues and--their founders hope--will soon reach profitability.

Take NextPage Inc. The Salt Lake City startup expects to be profitable this year based on its sales of P2P technology that helps companies boost collaboration among employees. One of its 150 customers, law firm Baker & McKenzie, uses NextPage's software to link its offices with those of its clients. Baker customers closing a merger can, for example, monitor board resolutions, financial statements, and other documents stored on computers worldwide. That way, attorneys don't need to worry about keeping files in one place, and everyone can stay abreast of the deal's progress. Mark Swords, the project director, says NextPage helps the firm move 25% faster and improves client relationships. "There are tremendous efficiency gains," he says.

It's not just startups that are pushing P2P. Intel has invested in upstart Groove Networks Inc., which sells software that links PCs anywhere in a company so workers can share all kinds of digital stuff via the Net. And Sun Microsystems Inc. in March acquired startup InfraSearch Inc., which is developing a P2P search engine.

Another use of P2P technology: stringing together PCs to create a virtual machine that can attack big problems. The non-profit SETI Institute is using this "distributed computing" model, linking 2 million private PCs to help search for life in outer space. Now, companies such as New York-based DataSynapse Inc. and United Devices Inc., based in Austin, Tex., are hooking up PC owners and selling their combined computing power to corporate customers. "I'm very optimistic about how this technology is going to be used commercially," says DataSynapse CEO Peter Lee.

ROLLER-COASTER. With all this computing oomph, who needs people? Companies are programming computers to communicate with little human intervention. A primitive example is eBay Inc.'s proxy-bidding feature, in which users punch in their maximum offer and the auction site automatically bids for them in preset increments. The biggest users of such machine-to-machine (M2M) e-commerce will be companies automating back-office transactions. Using M2M, a company's computer might order goods from a supplier when inventories run low or schedule repairs when machinery breaks down. "The number of machine-to-machine interactions will dwarf human interactions," says Joe Kraus, co-founder of Web portal Excite@Home.

A form of human interaction that is soaring is instant messaging. Dozens of companies such as America Online Time Warner Inc. (AOL) and Yahoo! Inc. (YHOO) provide freebie IM services to more than 100 million people. Now, they're spreading IM like butter over other services, such as interactive TV and mobile phones. But AOL says making money from the service will be tough. "It's not clear yet where the business model is," says Donn Davis, president of AOL's Interactive Properties Group.

The Web sparked an explosion of creativity and innovation on the Internet that gave birth to the New Economy. Now it's possible to see the first glimpses of the Net's next phase: a world of pervasive computing that lets people communicate more efficiently than ever. But beware: This next phase will likely follow the same roller-coaster of hype and retrenchment as the last--although with the lessons of recent years, the ride may not be quite as hair-raising. By Spencer E. Ante in New York, with Amy Borrus in Washington and Robert D. Hof in San Mateo, Calif.


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