Wanted: one killer application

Outside the Box

It’s a tough market out there right now. Information technology spending is on the decline as corporate customers everywhere struggle to meet the combined challenges of the recession, high levels of scrutiny by increasingly unhappy and distrustful investors, and the hangover of the Y2K and initial e-commerce spending booms.

There is also a view that many technology companies have shot themselves in the foot by allowing customers to become satisfied with what they have. According to proponents of this notion, resellers of Microsoft products should find that many users do not mind sticking with older versions of Microsoft operating systems (such as Windows 98 or Windows 2000) and applications (such as Microsoft Office 97 or Office 2000).

These users apparently don’t feel a burning desire to spend more money on upgrading to Windows and Office XP.

Similarly, Pentium III systems are probably considered quite adequate for their needs right now – and the amount of RAM and hard disk capacity they have is also sufficient to handle most of the day-to-day tasks that they currently undertake. They also likely have access to all the broadband capacity they need – and their biggest worry on this score is whether or not their broadband provider will go under.

But inside every major challenge lies an opportunity. And the opportunity may not lie in the most obvious place.

In the past, these lulls in the market have been eventually swept away by the demand generated by a “killer application” that demanded more processing power, new associated applications and so on. In the early days of the personal computer, the Visicalc spreadsheet provided one such driver – and a good many Apple II systems were sold exclusively for that reason.

Applications such as dBase II, WordStar and Lotus 1-2-3 drove sales of the IBM PC. And the arrival of Aldus PageMaker and a variety of other desktop publishing applications arguably saved the Apple Macintosh from an early demise.

Technology has, of course, come a long way since then and there are many more tasks that it is equipped to meet. And it is likely that the next great killer application will finally be a revenue-generating one.

It had better be. Most of the innovations and breakthroughs in mainstream productivity applications have been around helping individuals and corporations become more efficient – to help them save money by working smarter and faster.

Web-based applications were supposed to be the Holy Grail of this all important sea change, when software would change from being an instrument of cost-saving or time-saving to being something that you could actually use to generate income. On the whole, however, it didn’t turn out that way.

To start with, the idea of charging people money for products and services delivered on the Web came rather late in the game. Most content-based Web sites, for example, started out offering everything for free. Napster popularized music distribution on the Web – as a peer-to-peer service that offered users the chance to download a tune anytime they wanted. And again, it was free.

A few e-commerce models did manage to succeed – such as Amazon.com, Yahoo! and eBay. But it was only really eBay that actually pioneered any kind of new business model in doing so. Amazon.com was really just catalogue shopping revisited – and it would have likely failed were it not for the billions of investors’ dollars that were pumped into it. Likewise, Yahoo! was and remains primarily a publishing venture supported by advertising – and subject to all the whims and changes of an advertising-based business model. And making a profit has been tough for most of these operations.

Ironically, the country’s large banks were amongst the few to realize from the beginning that you needed to charge money and make a profit when you create a new service for customers. While some consumers railed against the notion that they should have to pay for a service that made it cheaper for the bank to deliver its services, the banks probably had it right.

Online banking these days is a rock-solid and reliable service – and you pay for it, one way or another. Meanwhile, most of the other services delivered on the Web “for free” are disappearing fast.

The point of all this is to say that the next big driver for the technology sector – which many suggest could be Web services (a la Microsoft .Net) – will have to finally cross the line from being a tool that helps companies achieve efficiencies to being one that really helps them make money. And that really would be a killer application.

Wheelwright is a freelance journalist, author and broadcaster. He most recently served as editorial director of StockHouse Media Corp.