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Online Extra: Mark Cuban: Watch Out for "Ultrabroadband"


Mark Cuban, founder of Broadcast.com, is now the outspoken owner of the Dallas Mavericks National Basketball Assn. team. But that doesn't mean he has ceased being outspoken on tech trends, from what broadband needs to become a world-changer to why the music business "is the only industry in America where sales can fall by 10% per year, and everyone yells it's not their fault." BusinessWeek's Peter Elstrom recently talked to Cuban to get his thoughts on the state of tech. Following are edited excerpts of their conversation:

Q: Is the technology industry mature?

A: With what's on the table right now, and in the near future, we are definitely in a period of integration rather than innovation. I happen to agree and disagree with the "tech doesn't matter" premise. Its almost like the efficient stock market premise. All companies have the opportunity to optimize the use of available technologies, but the reality is that most don't.

We still have CEOs who avoid technology, don't understand how it works, and what the implications are, which make it very difficult if not impossible to optimize its use and integrate into the corporate vision or mission.

We are not yet where technology is like electricity. Each company has so many flavors and applications layered on top of standard, even ubiquitous platforms, that trying to equate their output is ridiculous. It's very much like picking stocks. The information is out there for everyone to work with, but not everyone puts in the same effort or uses the information efficiently resulting in variance of performance.

Q: What areas of technology innovation do you think are most promising?

A: There isn't a must-have new technology out there right now. That doesn't mean that technology doesn't matter, what it means is that there is an opportunity for companies to get their arms around what they have, and what they don't have, and make better decisions about what should be in place and how they should be integrated to get the optimal results. Unfortunately, most companies won't make that step.

Q: In the 1990s, much of the benefits of new technology went to tech companies -- in the form of sales, profits, and sky-high stock prices. Now it seems like the companies that buy technology are seeing most of the benefits -- in the form of increased productivity, etc. Is this a good thing, bad thing? Or simply the natural evolution of the industry?

A: It's just real world. The stock market's handling of new technology is kind of a joke. We have seen CNBC, CNNfn, Bloomberg, and the like turn into home-shopping networks for stocks. Fund managers and analysts go on TV and sell what's shiny and easy to sell.

Tech stocks were the cubic zirconium of the market. They looked good and were sexy, but they just were a way for the company selling them to make money. That's always going to be transient in terms of the stock market. What's real is that companies have to compete. Technology used well is a great tool to enable that if only because most companies dont use technologies well.

Q: What does the advance of broadband mean for the Net?

A: Bits are bits. Once data goes digital, then the only question is what's the best means to sell and distribute that data. DSL [digital subscriber line] and current broadband to the home isn't wide enough to impact traditional entertainment. However, it has and will impact content distribution to the desktop as businesses can leverage IP [Internet protocol] to transport information to people rather than people to information.

That said, if there's a disrupting technology I could envision 20 years out into the future it would be ultrabroadband to the home. Once we hit 500 megabits, 1 gigabit, then we'll see our lives change. A high-definition camera and encoder, connected to switched network at speeds of 1 GB or more allows the elderly to be seen by experts as a first line of medical support. Blood can be analyzed. The medical applications could be astounding.

At that point, we can start to see entertainment applications that could change our expectations for fun. I just don't think we're going to see the investment required and then the implementation of that level to the home for quite some time.

Q: A handful of companies, notably Verizon Communications (VZ), are rolling out fiber to the home. This will allow Net connection speeds of 10 megabits per second, clearly enough for them to offer video. How does this change what companies can do on the Net?

A: I don't agree that it gives them much of anything other than a headache when they realize they can't support high-definition TV. Cable and satellite will quickly focus in on the inability of 10 MBS to serve the many HDTV networks, leaving them embarassed and behind. Then again, if they can leverage that fiber to get to the 500 MBS to 1 GBS, than all bets are off.

Q: How are technology developments going to affect the future of music? Clearly Apple's (AAPL) iTunes is showing there's a business model for selling music on the Net. What does this mean for the record industry?

A: Technology won't, people will. One thing I learned in the NBA is that the No. 1 job of a general manager is to keep his job. They are only 30 positions where you make millions and hang around with basketball players all day.

The same applies to the music and film industries. Until the heads of the labels start wanting to make money rather than creating controversy, tension, and excuses about why piracy is making the job so hard that no one could do it but them -- and oh by the way, they need a raise to really focus in on the fight -- the music industry is going to have a very tough time of it. It's the only industry in America where sales can fall by 10% per year, and everyone yells it's not their fault, and their boards let them get away with it.

iTunes is a nice little step. Safe. Simple. But it's incremental. It won't change how the industry does business.


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