Tech sector has questions, few answers

The execs at the AllThingsD tech conference are at a strategic crossroads.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Adam Lashinsky, editor-at-large

evan_williams.03.jpg
Twitter co-founder Evan Williams.

CARLSBAD, CALIF. (Fortune)-- -- Here's how scary the times are in the technology industry: Nobody, not even the visionary, congenitally optimistic smartypants who invent the technological future, has a clue about where we're going next.

The Twitter guys don't know how they're going to make money. AT&T (T, Fortune 500) doesn't know how the ever-increasing universe of smart phone operating systems will consolidate. Yahoo (YHOO, Fortune 500) (still) doesn't know who it is. Even John Malone, the veteran innovator of the communications business, isn't sure how producers of content will get customers to pay them for their wares.

A step back. The scene is the Wall Street Journal's AllThingsD conference near San Diego. The subject is the tech business, hammered by the economy and otherwise in the middle of one of its traditional periods of transition. That there are more questions than answers arguably is a good thing. From confusion typically comes the great, unexpected successes of this business. But it's unsettling all the same.

Take, for example, Twitter the "it" site of the consumer-technology world, which also happens to be the pinata of techdom. It's popular because people love the immediacy of sharing 140 characters worth of information with friends and strangers alike. Yet Twitter is under attack because there's no visible strategy for the young company to make money. (See: Twitter: Buzz first, profits later)

Founders Evan Williams and Biz Stone had a wonderful answer to their badgering interviewers Walt Mossberg and Kara Swisher (the conference's impresarios) as to what Twitter will do next and when it will make money: "We don't know." What was cool about Williams and Stone is that they didn't seem to care what Mossberg, Swisher or the high-falutin' tech audience thinks about their progress.

Famed investor Roger McNamee begged Twitter to build their 45-person company more quickly to take advantage of its rapid growth. Williams politely suggested McNamee check out the jobs page at Twitter's web site. Where will Twitter go next? Williams and Stone boldly suggested they'll follow customer preferences, an explanation you'd think techies would appreciate. By and large the techies weren't satisfied.

AT&T CEO Randall Stephenson says his company's churn rate - the speed with which customers ditch the service - has gone down in relation to the competition. He says this is because of the massive investments AT&T has made in its network. Could it also be the success of the iPhone, which AT&T distributes exclusively in the U.S.? Sure it could be.

He also said the heavy and (unquantified) subsidy AT&T pays to sell iPhones relatively cheaply is worth it to AT&T. It's an assertion he can't yet prove. Most interestingly, Stephenson said he can't predict how many smartphone operating systems will survive among the many in the market today:Apple's (AAPL, Fortune 500), Palm's (PALM) WebOS, Blackberry, Google (GOOG, Fortune 500)'s Android, Microsoft's (MSFT, Fortune 500) Windows Mobile, Nokia's Symbian, and more. It's an unsatisfying analysis. Most smart observers of the mobile world think the industry will consolidate around about three systems. That shakeout will be ugly, and it serves AT&T - which can sell phones made by every manufacturer - to let its suppliers slug it out rather than to have an opinion.

Carol Bartz became the third Yahoo CEO, after Terry Semel and Jerry Yang, to try to explain Yahoo's mission at this conference. Bartz wowed the crowd by projecting an image of confidence, competence and decisiveness. But she had little to say that truly was all that different from what Semel and Yang said in earlier years about what Yahoo is, how it's truly different from Google or what she'll do to change the company. "My job is to ask questions," Bartz said.

That's undoubtedly true for a while. Eventually, though, Bartz will be paid the big bucks to have the answers, not just the questions. (She did forcefully suggest she'll sell Yahoo's search business to Microsoft for the right price. That's an example of the decisiveness people love about Bartz.)

Some people at least have partial answers, an example being Liberty Media's John Malone. He helped create the cable industry, and he explained that cable operators got people to pay for television by offering them something they were willing to pay for, connectivity, with premium content (like HBO) they were then willing to pay even a little bit more.

"Advertising has been insufficient," Malone said, to pay for the production of high-quality content online. There has to be something more, and though he too had no answers, he offered at least a framework: Sell users something they'll buy, then upsell them more.

Unsatisfying answers in difficult times. But a start. To top of page

Company Price Change % Change
Microsoft Corp 136.62 0.20 0.15%
Bank of America Corp... 29.40 -0.08 -0.27%
Advanced Micro Devic... 32.51 -0.49 -1.48%
Micron Technology In... 45.52 0.85 1.90%
Ford Motor Co 10.20 -0.06 -0.58%
Data as of Jul 19
Index Last Change % Change
Dow 27,154.20 -68.77 -0.25%
Nasdaq 8,146.49 -60.75 -0.74%
S&P 500 2,976.61 -18.50 -0.62%
Treasuries 2.05 0.01 0.49%
Data as of 9:41am ET
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.