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\begin{document}
\begin{center}
{\Large\bf {Smart and stupid networks: Why the Internet is like Microsoft}} \bigskip \\
Andrew Odlyzko \\
AT\&T Labs - Research \\
amo@research.att.com \bigskip \\
Revised version, October 6, 1998. \bigskip \\
\vspace*{2\baselineskip}
{\bf Abstract} \\
\end{center}

\setlength{\baselineskip}{1.5\baselineskip}

Is the Internet growing primarily because it is a dumb network, one
that simply delivers packets from one point to another?  Probably not.
If were a dumb network, we surely would not need huge and rapidly
growing ranks of network professionals.  A more detailed look suggests
that the Internet is succeeding largely for the same reasons that led
the PC to dominate the mainframe, and are responsible for the success
of Microsoft.  Like the PC, the Internet offers an irresistible
bargain to a crucial constituency, namely developers, while managing
to conceal the burden it places on users.



\section{Introduction}
\hsp
The Internet is growing explosively, and is even threatening to take
over transport of voice calls.  Popular press often explains the rise
of the Internet as a result of its greater efficiency in using
transmission facilities \cite{Keller}.  Another explanation, popular among
computing and communication experts, is that the Internet reflects the
migration of intelligence to the edges, and thus leads to a dumb
network that just transports bits (cf. \cite{Isenberg}).

While both of these explanations are appealing and have evidence
supporting them, they are not entirely satisfactory.  Consider costs.
While packet data transmission is likely to eventually become much
less expensive than the circuit switched network, today most
corporations spend more to send large files over their packet networks
than they would if they used modems on the public voice phone network
\cite{Odlyzko}.  As for the intelligence of the network, note that while
the processing power of computers connected to the Internet is growing
rapidly, there has always been more intelligence at the edges of the
network than inside it, in the human brains at the ends of a
connection.  Thus the popular explanations are at best incomplete.

My thesis is that many of the factors powering the ascent of the
Internet are similar to those that led the PC to displace the
mainframe and were exploited by Microsoft to dominate PC software.  In
both networks and computing, the end users typically care just about
getting a few crucial tasks done.  However, end users are not
necessarily the most important players.  In rapidly changing fields,
application developers are the crucial ones, creating tools that
attract users, tools that users do not know ahead of time they need.
Both the Internet and the PC offered developers superior platforms
with low intellectual and financial barriers to entry.  The Internet
won because it could be treated by developers as a dumb network, one
that simply moves packets around.  This led to an outpouring of
creativity, with individuals or small groups creating ``killer apps,''
as Andreessen and Bina did with Mosaic.  In PCs, a similar phenomenon
applied, with Bricklin and Frankston creating VisiCalc and later Kapor
and his group creating Lotus 1-2-3.  Microsoft achieved its dominance
because it was better at catering to the developer community than the
competition.

The Internet and the PC (especially Microsoft with its operating
systems) were superb at serving developers, and reasonably good at
serving the early adopters, the ``power users.''  However, they were not
optimized for the bulk of end users.  Little attention was paid to
human factors.  The result is that both networking and computing are
frustrating for end users.  The complexities of competing systems
(networks like CompuServe and Microsoft Network, and the mainframe in
the computing arena) were lessened, but were not eliminated.  Instead,
most of those complexities were tossed into the laps of computing and
networking support staffs.  Even then, the end users could not be
spared completely.  We can see the results in the statistics of
household penetration.  In spite of all the hoopla about the Internet,
only about half of U.S. households that have PCs (and thus about a
quarter of all households) also have Internet connections, a much
smaller fraction than have phone or cable TV service.  Since Internet
accounts are available to most of the U.S. population for about \$20
per month, cost is unlikely to be a major deterrent, especially since
most PC owners have spent upwards of two thousand dollars on their
machines.  Clearly there is something lacking to the Internet's appeal
that so many millions of PC users stay away from it.

The rise of the PC and the Internet has resulted in a migration of
intelligence towards the edges, in both networking and computing.
Unfortunately this migration has also led to the migration of
administration and maintenance duties towards the edges, and this has
forced wasteful duplication of effort.  I suggest that much can be
learned from the experience with the mainframe and the phone network
that would help alleviate this problem.  I do not advocate the
``Intelligent Network,'' with all functionality provided from inside.
However, we could gain if some of the intelligence that is now
required to make the Internet function either were pulled inside the
network, or else resided at devices at the edges of the network that
were administered centrally.  Intelligence would still be primarily at
the edges, but much of it would be invisible to users and would lessen
their support burdens.

The ideal interface should look simple to users, and conceal the
intelligence within.  By that standard, neither the PC nor the
Internet is dumb enough.  What systems do people get enthusiastic
about?  The Palm Pilot is an excellent example.  It has sophisticated
software and hardware, but that sophistication is invisible, and makes
the few important tasks go smoothly.  That level of user friendliness
is what we should be aiming for.  I advocate making the Internet
appear even simpler than it does now, more of a ``stupid network,'' by
putting more functionality inside the network, and foregoing many of
the Quality of Service developments that would require increased work
for system administrators.  This might lead to lower utilization of
the physical facilities, but should lower total costs.

Finally, a disclaimer.  The analogy between the Internet and Microsoft
is not meant to be carried too far.  For example, the arguments here
say nothing about Microsoft's business practices, nor about the merits
of the antitrust case against Microsoft.  Only some technological,
economic, and sociological factors that affect the spread of new
technologies are conside




\section{What do people want?}
\hsp
People want simplicity and stability, but they also want flexibility.
The IBM mainframe, just as the voice phone system, stressed stability.
The current era has other priorities.  In an insightful piece in the
{\em New York Times,} Edward Tenner \cite{Tenner} points out that
\begin{quote}
Microsoft has triumphed because it has given us what we
asked for:  constant novelty coupled with acceptable
stability, rather than the other way around.  Microsoft
encouraged our impulses to embrace fashion, affirm
conformity, love planned obsolescence.  People talk
simplicity but buy features and pay the consequences.
Complex features multiply hidden costs and erode both
efficiency and simplicity.
\end{quote}

Although there are widespread warnings not to buy any Microsoft
product until at least the third upgrade, they are widely disregarded.
There are even people who pay to be beta testers, helping producers
debug the producers' software.  Clearly there is a large constituency
for the kinds of products Microsoft and other software companies
produce, buggy and user-unfriendly as they are.

In communications as in computing, people want networks that are both
smart and stupid.  Ideally the network should be stupid in the sense
of having a simple interface, yet be smart enough to do what the user
wishes.  The original telephone system had these qualities.  Unlike
the current automated version, the original had operators handling all
calls, operators who could be asked to do a variety of chores.  The
functionality provided by those operators was valued enough to
generate resistance to direct dialing.

Vestiges of the original phone system are still with us.  Those lucky
enough to have access to the White House switchboard rave about the
service they get.  Armed with finely honed skills, a large database,
and the magic words ``This is the White House calling,'' the
professionals there are reputed to be able to find anyone, anywhere,
at any time.  This is the ideal stupid/smart network, with a simple
interface that understands even spoken commands and interprets their
nuances.

The transition from manual operations to the direct dial voice phone
network led to a loss of the flexibility and expertise that human
intelligence inside the network provided.  This transition did lower
the costs, though, and it did provide simplicity.  The phone network
is the most ubiquitous communication system so far, and it does allow
anyone in Tulsa to call Timbuktu with a minimum of fuss.  It has been
adopted for uses far beyond the early predictions \cite{deSolaP}, and it
has become a crucial part of all industrialized societies, much larger
in revenues than even the airlines, and far larger than the
entertainment industry.  However, the traditional phone's lack of
flexibility was an annoying constraint, especially as technology
provided astounding progress in other areas, especially computing.
The phone network required sophisticated technology to design and
operate, but this technology was esoteric and invisible and did not
allow users much control.

The deficiencies of the traditional phone system were partially
remedied by putting more intelligence into the core of the network
(with features such as call waiting) and by attaching intelligent
devices at the edges (such as answering machines).  These attempts
were successful in providing more flexibility, but at huge cost both
in development of the new features, and in simplicity of operation.
Nobody enjoys getting trapped in ``voice-mail purgatory,'' or having to
keep track of a dozen or more numbers (phone, fax, pager, access code,
phone credit card, etc.), many of which change every few months, or
remembering all the commands (``Is it *68 or *86?'')  needed to make the
system work.

Compared to the voice phone network, the Internet is a far more
flexible medium.  It has been described as ``cheap and stupid because
it was being built for smart endpoints called computers'' [Petzinger].
Unfortunately it is neither cheap nor stupid.  If it were, would we
need hordes of network experts fluent in the language of BGP, caching,
DNS, bandwidth management, Layer 3 switching, dual homing, firewalls,
proxies, and other arcane topics?  Would we also have the flourishing
communications outsourcing business that AT\&T Solutions, Andersen
Consulting, and other companies enjoy?




\section{What can people be made to want?}
\hsp
It is often said that ``the people'' or ``the market'' demand a particular
product or feature.  This may be appropriate for established
categories such as cars, but less so for rapidly evolving fields such
as information technologies.  How much demand was there for a Web
browser before Andreessen and Bina created Mosaic?  The secret of
success in the communications and computing areas has been to divine
what people might want to use.  In that environment, the dominant role
belongs to those who create new products.

How can innovators create markets for their products and services?
The easiest way to introduce a new technology is as a substitute for
another one, a substitute that is better in cost or features.  The jet
engine replaced the turboprop that way.  However, such simple
substitutions are possible only in some markets.  In general, it is
hard to dislodge an established technology.  It is far easier to
develop unique new applications.  The PC did not gain primacy over the
mainframe through a frontal assault, by taking over banks' data
processing centers, say.  Neither did the Internet overshadow the
switched voice network by carrying voice calls.  Mature technologies
usually are well adopted to their main task.  It took over almost a
decade from the introduction of the IBM PC, which set the industry
standard, until it became accepted wisdom that the PC would be
dominant.  Even now, after a reinvigorating shot of PC technology, the
mainframe continues to fill a substantial market niche.  The most
ambitious goals that the IBM executives had for their PC creation seem
laughably modest today.  However, those goals were set in a world
dominated by mainframes, where the role of a PC was indeed limited.
It took the development of new applications, especially spreadsheets
like Lotus 1-2-3, to power the growth of the PC market.

Similarly, the Internet was dominated initially by email, and more
recently by the Web, services that the traditional phone network could
not provide.  Furthermore, while the Internet has grown at astounding
rates, it has done so largely by utilizing the infrastructure of the
phone network.  Twelve years ago, the NSFNet backbone (which evolved
into the current Internet) consisted of a few dozen 56 Kbps circuits, 
of the kind that can carry a single phone conversation.  Even today, 
the Internet is still considerably smaller than that phone network.
Despite its fantastically rapid growth rate, the Internet carries
little voice traffic, and its growth has come from the development of
novel services.

As the Internet matures, it is worthwhile to see whether it can
benefit from the lessons of the development of the phone system.
After all, the phone also started out as a niche product, unworthy of
the attention of the Western Union telegraph giant.  Initially it was
an extremely expensive service for limited uses.  In 1896, the basic
monthly fee for a phone connection in New York City was \$20.  A
century later, an Internet account is also \$20 per month, but the
purchasing power of this \$20 is vastly different.  In 1896, \$20 was
more than half a month's pay for a worker, comparable to about \$1,000
today.  How many Internet users would there be at \$1,000 per month?
To attain its ubiquity, with over 700 million lines around the world,
the phone network had to lower costs and become sufficiently user
friendly for the vast majority of the population to accept it.







\section{Platforms, users, and application developers}
\hsp
When the search is on for compelling new products, it is the potential
creators of these ``killer apps'' who have to be catered to.  From the
perspective of the innovators, the shortcomings of the mainframe and
the phone network were that applications were extremely hard to
create, requiring extensive knowledge of these platforms and expensive
equipment, neither of which could be possessed by the proverbial
teenager in a garage.  Modern mainframe and phone switch development
teams employ hundreds of software experts for many months at a
time.  The PC offered a better platform for applications developers
than did the mainframe, and Microsoft offered a better platform than
did competitors such as Apple.  Small groups or even individuals could
create novel applications with minor investment.  This is crucial when
the success of an application cannot be predicted beforehand, and most
efforts fail.

It is worth noting that Microsoft's revenues have stayed around 10\% of
those of the entire PC software industry.  It is true that Microsoft
has taken the lion's share (around 30\%) of the profits in that
industry, and that other companies tend to oscillate between hope of
being bought by the Redmond giant and fear of being crushed by it.
However, that is not directly relevant to this essay.  The point is
that Microsoft succeeded by catering to developers, and its success
has rested on their ability to craft new products and services on the
Microsoft platform.  Microsoft's victory over Apple, and later over
IBM with its OS/2 operating system, owed much to gaining the support of
developers.

The success of the Internet was also due largely to its offering a
superior platform to application developers.  Remember the
introduction of the Microsoft Network, and the fear that it would
dominate communications?  It simply could not compete with the
Internet, with its open standards and economies of scale.  The big
attraction of the Internet to developers was that it could indeed be
treated like a dumb network, one that just carried packets from one
point to another.  Often only minimal knowledge of TCP/IP was required
to develop products for the Internet.

The PC and the Internet have benefited from the clean functional
differentiation among service layers.  This has allowed specialized
players (Microsoft and Intel being the obvious examples) to exploit
economies of scale and network effects to greatest advantage.
However, this specialization has created its own costs, which we will
consider in greater detail below.  As a result, it is not clear if
there were any real costs savings in carrying out traditional tasks.
The main advantage of the Internet and the PC appears to have been in
stimulating creativity among applications developers.

Of course, new products do have to be accepted in the marketplace.
However, it is not the reaction of the vast majority of potential
users that matters the most in the early stages of the development of
a new product or service.  For application developers, the first task
is to hook the ``early adopters,'' the people who are sophisticated and
willing to devote time and energy to learning new tools and fitting
them into their environment.  Once these folks are on board, one can
then worry about the mass market, where human factors are more
important.






\section{The hidden and not so hidden costs}
\hsp
The PC and the Internet are great creations that have stimulated
creativity, invigorated the economy, and represent the future.
However, they carry substantial hidden burdens.  As an example,
Microsoft gives developers the freedom to overwrite DLLs at will.  The
hapless users who suddenly find that crucial programs no longer work
have to figure out what went wrong, in what order to reinstall all the
packages, etc.  Usually they end up searching for somebody
knowledgeable to do it.

A prominent industry analyst likes Windows98 because he thinks it will
cut in half the 26 minutes per week he spends booting up and shutting
down his Windows95 PC \cite{Dodge}.  If other owners of the more than 200
million PCs save similar amounts, then, at a modest average valuation
of their time of \$15 per hour, the annual savings will come to over
\$33 billion, more than twice Microsoft's annual revenues!  Yet, so
far, such factors have not been a serious concern for Microsoft.

The main hidden costs of both PCs and the Internet are in the support
operations.  A Gartner Group study estimates that in a PC/LAN
environment, total cost of ownership is 80\% labor and 20\% capital,
while in a data center, the percentages are reversed \cite{KirwinC}.  As a
result, both PCs and the Internet are not ``cheap and stupid''
\cite{Petzinger}, but expensive and intelligent, because they all require
plenty of time from smart human brains to make them work effectively.
These costs have been bearable in the past largely because they were
not visible, often carried by some support organization.

Rapid change always carries substantial costs.  Schumpeter, the
apostle of ``creative destruction,'' championed capitalism not for
efficiency (as, lacking our extra half a century of experience, he
thought socialism could be more productive \cite{Schumpeter}), but for its
innovation.  The problem is how to lower the costs that innovation
carries.



\section{Conclusions, recommendations, and predictions}
\hsp
The computing and networking industries are changing, and are paying
more attention to their hidden costs.  One reason is that those costs
are getting harder to hide, and corporations are waking up to the
\$10,000 that it costs a company to operate a PC for a year.  That is
why the idea of a network computer (NC) was received so
enthusiastically.  Even if the NC does not make substantial inroads,
it does appear to have frightened Microsoft and other software
producers into paying more attention to total system costs.  They are
working to simplify administration of their systems.  Typically this
involves profligate use of resources, such as hundreds of megabytes of
disk space for software installations.  As the saying goes, ``What Andy
Grove giveth, Bill Gates taketh away,'' with the hardware provided by
Intel quickly filled by bloated software from Microsoft.  From a total
system point of view, that is the preferred way to go.  Economies such
as using two digits to designate years are more likely to harm than
help, when resources grow at an exponential pace.

Another reason to expect change is that growth in computer users is
slowing down.  To increase household penetration of PCs and the
Internet, it appears that greater simplicity is desirable (and simpler
devices such as WebTV may be one way to achieve it).  This will
require intelligence primarily at the edges of the network, not inside
it, but intelligence that does not require extensive involvement by
the users or systems experts to make it work.


Although there are forces that are pushing the IT industry towards
simplification, other forces are working in the other direction.  The
industry is still searching for the next ``killer app,'' and application
developers are in control.  Further, attempts to provide
differentiated service levels on the Internet are complicating the
scene for both developers and users.  Whether the result will be more
or less complexity is hard to predict.  However, the fundamental
attraction of a dumb-looking network and dumb-looking computers is
undeniable, and the most successful companies are likely to be the
ones that can deliver in this area.  The trouble with the PC and the
Internet is that they are not dumb enough.  We should gain from
putting more resources and intelligence into computing and networking
to make them seem dumber.



\paragraph{Acknowledgements:}
I thank Phil Agre, Dave Belanger, Marjory
Blumentha, Art Deacon, Bob Frankston, Amy Friedlander, David Isenberg,
Jeff Lagarias, Ed Tenner, Ed Vielmetti, and Bill Woodcock for
stimulating correspondence and conversations.




\clearpage
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\end{thebibliography}
\end{document}
