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Riding the next technology wave

Last modified:October 2, 2003, 4:00 AM PDT
By Dawn Kawamoto
Staff Writer, CNET

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From where he sits, John Sculley enjoys a panoramic view of the IT landscape.

As an investment partner with venture firm Sculley Brothers, Sculley does not count himself among those subscribing to the school of thought that IT is headed for a dead end. Rather, he sees a technology business on the brink of change. Known as an idea guy during his tenure as CEO of Apple, Sculley has a short list of promising new technologies that he believes are already transforming the IT industry in subtle--and not so subtle--ways.

Sculley spoke with CNET before his planned trip to California to participate in the Silicon Valley 4.0 conference.

Q: As the IT industry restructures, how would you describe its turnaround?
A: I think we're going through more than just a cyclical change. We're going through a systemic, secular change in high technology. We saw, in the 1990s, the commoditization of hardware. Now, we're going to be seeing the commoditization of almost everything, including software and services. This makes a lot of sense because, as the technology world moves from being computer-intensive to communications-intensive, you have to have open standards, which means innovation is going to have to take place in different parts of the value chain.

The things that we used to think of as the areas for "wow" technology, like computers, have become commoditized and even transparent, as they are embedded into systems. The innovation now is taking place with things that are largely being driven by market opportunities and customers.

Do you think the IT industry is as relevant now as when you were CEO of Apple Computer?
I think, today, we take for granted the things that amazed us 15 or 20 years ago. Back in the 1980s, every few months, someone would be able to show someone something that no one had ever seen before. It might be a color display, it might be laser printing, it might be desktop publishing, or it might be video running on a personal computer display. Today, we're not particularly amazed by these kinds of demonstrations anymore, because the technology has come so far, and people's acceptance of the world becoming digitized has become so well understood.

I think where the amazement is going to be is in the ability to do things with information and content that was never possible before. There are huge opportunities for search technologies to deal with information, and they are increasing in orders of magnitude over the next decade. If you take something as simple as sensor devices, like RFIDs (radio frequency identification), and, if Wal-Mart put RFIDs on every item on their store, it would generate something like 7.5 million terabytes of new data every day. So as we move to real-time systems and sensors and robots, and all of these things that have been kind of like experiments over the last decade are turned into things that can be productized over the next 10 to 15 years, the world of real-time information, and how it becomes incorporated into more parts of their lives, is going to be where the amazement is going to take place.

At Apple, you were in some ways perceived as the person with "next big thing" ideas. And, in some ways, people say you were ahead of your time with the Newton. Where do you see the next big thing?
I am personally interested in high-definition television, and multichannel VPNs (virtual private networks) are going to be very practical within the decade. I think we're going to see a lot of innovation in the areas of television being reinvented, a huge opportunity with mobile wireless. In fact, I think wireless is the biggest landscape for innovation and business creation. I am personally involved in two mobile wireless companies, and I can see that while we are successful in what we are doing, we're at the very beginning of the possibilities.

In the wireless world, especially Wi-Fi, how do you think the industry will make some real money out of it? On the hardware side, the profit margins are slim and, on the services side, we haven't seen a highly lucrative business model yet.
I think a good way to think of Wi-Fi is to think back to the 1970s, with the introduction of citizens band radio. And what citizens band radio did was it whetted people's appetite to the possibility that mobile communications could be available to everybody. But citizens band radio wasn't the business that ever got commercialized into a business success. What became the real commercial implementation of that dream was the cellular telephone industry. That started off originally with analog and today has moved into mobile digital services with PCS and either GSM or CDMA platforms. I suspect the same thing will happen with Wi-Fi. It's whetting our appetite as to what you can do with things like 802.11A, B and G. But I believe there will be a follow-on generation of even more interesting technologies that will increase quality of service and add real value in terms of the security to work in a wireless world and the ability to extend the range. Everything from last-mile solutions for fixed-base wireless, to all kinds of mobile wireless applications, will be the descendents of what we know today as Wi-Fi.

The beauty of Wi-Fi is nobody has to buy spectrum--it's public, open, available spectrum.
There is one thing I think is totally right on with the Wi-Fi model--nobody has to buy spectrum. In the 1980s, the government was selling spectrum and carriers had to pay huge amounts of money for it. The beauty of Wi-Fi is nobody has to buy spectrum--it's public, open, available spectrum. It is a much better model for innovation, because the focus then is on lots of people creating things that would be impossible for any one company to try to dream up. For example, in the computer industry, the best applications really came from entrepreneurs who became real innovators. These kinds of applications didn't come from the big established companies. I would suspect the same thing will happen to Wi-Fi, or the descendents of Wi-Fi. The chance for entrepreneurs and innovators to create new things will probably come from start-ups, not from giant corporations.

On the software side of Wi-Fi, where will be the potential beyond VPNs and security?
I believe that the first phase of really commercializing Wi-Fi will be moving into application areas that are already being served in a tethered world. But they can be served even better when you have highly reliable, high-quality services that are secured for everything from health care to financial services to business processes.

The addition of domain expertise and the recognition that technologies are often developed faster than you can change people's behavior to adopt them have to be put into the equation. So, while a lot of technical brilliance will be focused on improving the technologies, I think there will have to be parallel tracks on developing the domain expertise, as well as developing the ways of making consumers motivated to want to use these kinds of products. So, the user interface will be just as important in the mobile communications world as the user interface has been in the personal computer industry for the last 25 years.

As an investor and partner with Sculley Brothers, what areas are capturing your attention?
We actually have been harvesting some investments...I am personally interested in the whole area of high-definition television, so we're doing some experimental development at a very, very early stage. There are some possibilities there, but only time will tell whether that will actually turn into a commercial opportunity.

Why have you decided to harvest some of your investments at this time?
I think that the opportunity for young companies has shifted from IPOs to M&A. This is actually a very good time to be a seller or buyer of surviving companies that have made it through the last three or four years.

I think that the opportunity for young companies has shifted from IPOs to M&A.
I think the M&A activity will only increase. I have been involved in a couple of businesses that have been able to do M&As this year, but I suspect the amount of M&A activity will only increase in the next several years, where I don't see much opening up in the IPO market, except on a very selective basis for probably several more years.

When you watch the technology field, are there any times when you say to yourself that they really got it wrong in this area, or they are hitting it on the nose?
I think the computer industry now is almost like the fax industry or printer industry, in that it has been totally commoditized. The only exception to that is what Apple has been able to do with just beautiful products, well-thought through, no compromises, great styling. And that, at least, so far has not turned into a mainstream industry. It's much more of a selective market industry. Taking an automobile analogy, it's more like a BMW selling inside of a much larger mainstream automobile industry.

Any missed opportunities that you wish you could do over?
As I look back on things that I wished we would have done differently when I was at Apple, I think one of the biggest missed opportunities, and it was on my watch, so I feel responsible and disappointed that we didn't do more with it, was Hypercard. It was created back in 1987 by Bill Atkinson, Apple's first software programmer. We could never figure out exactly what it was. We thought it was a prototyping tool. We thought it was a database tool. It was actually used by people as a front-end communications device for TCP/IP to connect the Internet to large Cray computers.

We weren't insightful enough to recognize that what we had inside of Hypercard, essentially, was everything that later was developed so successfully by Tim Berners-Lee with HTTP (Hypertext Transfer Protocol) and HTML (Hypertext Markup Language). We didn't call it that. But essentially, we had all that hypertext, radio buttons and linking capability architected in the original Hypercard. In hindsight, I wish Apple had recognized that we had a huge opportunity to go take our user interface culture, and our know-how, and applied it to the Internet. I think we would have had a very different story for Apple during the 1990s. But that, of course, is hindsight.

Do you see other similar cases of missed opportunities at other companies?
I just don't have the view into the research labs at what a lot of companies are working on, so I don't know if I can add a lot of perspective to that. I can look back at something like Newton and feel that it could have had a very different future than what had turned out. Newton could have been one of Apple's most profitable investments ever. Most people are aware Apple spent over $100 million developing Newton, but Newton was a chance for Apple to start with a clean sheet of paper and to be able to license both the chip design, as well as the software. We had a number of partners who had already signed up with it. The software didn't live up to the early ambitions that we had and the handwriting ended up being a pretty big embarrassment because it just didn't work.

But the hardware inside of Newton, which was the ARM processor, has gone on to be incredibly successful, and it actually enabled Apple to make this huge amount of money out of the original Newton investment. But it's so easy to look backward on things and see decisions that could have been done differently. It's obviously a lot harder to look forward.

Do you ever see yourself stepping back into the role as a CEO of a large corporation, or at a start-up?
I think it's pretty unlikely I would go back to being a CEO, or step into a corporate environment, other than as a board member. My interest now is really more in coaching CEOs and management teams and also enjoying life a lot more. I take time off for a lot of travel. I spent several months this year traveling throughout Asia and, really, Australasia. I intend to do more traveling in the coming year. I'm really much more balanced in my life now. Probably, you could call it semiretired. I like working on a project basis, as opposed to actually being involved in directly running something myself.  

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