Peer-to-Peer Pressure

Competing P2P and distributed computing technologies race to gain market share

Napster's rise and fall has garnered much attention recently, but the interest in peer-to-peer (P2P) processing has only received a minor setback. Harnessing the CPU power among networked computers, although not new, offers a potential solution for organizations facing burgeoning user demands for collaboration and resources. A variety of companies are racing to become the dominant P2P solution.

In February 2001, Sun Microsystems revealed P2P-based software called Jxta (pronounced "juxta") at the O'Reilly Peer-to-Peer conference in San Francisco. The intention of Jxta is to provide a bridge for separate P2P applications and link computing tasks across a P2P network.

CNET News.com reports that Bill Joy, Sun's chief scientist, has no desire to dominate the fledgling P2P technology. But the consequences of Sun's unsuccessful attempts to enlist the open-source community for Java and Jini deployments play a definite factor in Sun's decision to make Jxta open source ("Sun Enlists Peer-to-Peer in War Against Microsoft," CNET News.com, February 15, 2001).

Competitive Advantage. Many analysts tout this latest Sun effort as a threat to Microsoft's overly complex and unclear .Net initiative. The mission of Microsoft's .Net is to allow the creation of distributed Web services that integrate and collaborate with a range of complementary services. Although Microsoft has not yet released any P2P solutions, its goal is to be the dominant force in making information available any time, any place, and on any device.

Intel is also moving into P2P with its Peer-to-Peer Working Group. But this effort initially suffered much criticism. The inaugural meeting of the group left many attendees denouncing Intel's efforts as proprietary and self-serving, and Intel has subsequently backed away from a major role.

Ray Ozzie, the inventor of Lotus Notes, illustrates another benefit to P2P. His new company, Groove Networks Inc., recently revealed Groove, a P2P application based on the XML data exchange standard for realtime collaboration.

Called "Napster for business," (David Kirkpatrick, "Software's Humble Wizard Does It Again," Fortune, February 19, 2001) the software has already garnered interest from companies such as General Electric and Intel for use in their Web-based supply chain projects, and from SAP for modules that incorporate data from enterprise software systems into a Groove session. Ozzie foresees Groove in every aspect of business.

Managing P2P. But as these P2P architectures become more complex, the need to manage distributed resources escalates. A group of companies, including Platform Computing Corp., Compaq, Hewlett-Packard, and Silicon Graphics Inc., recently formed the New Productivity Initiative (NPI) with the goal of creating an industry standard for distributed resource management (DRM).

The NPI standard will provide a way for DRM to target all computers from data center servers to desktops, run all types of applications, differentiate computers by their resources, and schedule resources to meet demand, with higher priority work processed first. (The group plans to offer up their work to open standards bodies.)

According to Dr. Andrew Chien, CTO of Entropia Inc., "Not all peer-to-peer applications require distributed resource management [for example, Napster's model], but many do." Chien added that P2P largely focuses on the desktop, but if you ask companies like Sun and Microsoft, it also includes server-to-server connections. "The space is not clear," Chien said. Like several companies, Entropia representatives attended both the Intel Peer-to-Peer and NPI meetings.

Meta Group, in a special to CNET News.com (November 9, 2000), points to the fact that "a highly networked, parallel processing environment is rarely suitable for traditional, general-purpose computing." Instead, distributed computing can provide a cheap alternative to super computers - needed by human genome researchers and designers of automotive parts and chips. Meta Group also points out that designing DRM for heterogeneous environments, without emphasizing a proprietary system, will be challenging.

But Dr. Songnian Zhou, CEO of Platform Computing, which provides distributed computing software, disagrees. He believes that future DRM adopters will include companies that perform financial evaluations and business intelligence in the same way that the Internet moved from universities to corporations. Systems, such as ERP systems, generate a lot of data, and clients want to connect to SAP and Siebel applications. He believes that DRM has the potential to intelligently balance these demands and resources.

Balancing the conflict between strategically positioning a company's product within a technology by influencing a standard and encouraging new development for that technology's growth has long been a tough hurdle. Which technology will dominate - if any - remains to be seen.

Michelle Nichols

Making Sense of the Census

Timing and privacy issues may reduce CRM value of census 2000

Do large, consumer-oriented enterprises have reason to cheer about the release of 2000 U.S. census data? News stories from the Wall Street Journal and Associated Press indicate that businesses are eagerly awaiting the information that the U.S. government culls decennially. They could have written the same story about the 1990 census - and essentially did. But things have changed a bit since then.

This is the age of one-to-one marketing. This is a time when consumer-oriented enterprises are supposedly striving to integrate realtime clickstream analysis with the vast knowledge of individual consumers that companies such as Acxiom Corp. and Claritas Inc. amass - so that intelligent systems can pitch products and services to consumers on the fly.

Census demographic data has traditionally been an essential tool in marketers' handbags, letting them spot trends, such as increasing occurrence of single-person households, or identify geographic targets for direct mail campaigns.

But this data now carries shunned marks of the old economy: lag time and imprecision. Information collected April 1, 2000, will slowly be released from April 2001 through February 2003. The least granular data will come out first. And, for privacy reasons, the Census Bureau will never release data at a more detailed level than that of the "block." It will also purposely "blur" data to foil any marketers' attempts at personally identifying any of it by comparing it to information already known about individual consumers.

"The census might tell you more older couples are having babies, but not who's going to need a stroller soon," said Charles Nicholls, general manager of the Ithena Analytic Applications division of e-BI vendor Business Objects. Nicholls added that census data is "good for spotting large and slow-moving demographic trends," but not much else of interest to marketers.

What place does U.S. census data have with marketing in a one-to-one marketing world?

Richard Tooker is senior vice president of the Database Marketing Group at DMW Worldwide, a direct marketing company, in Wayne, Penn. He said that 2000 census data will have a fairly negligible effect on customer relationship management (CRM), which is well established as essential to profitability. CRM has moved toward an ideal of profiling individual customers and prospects in order to retain valuable customers and identify poor customers who aren't worth keeping.

"CRM is all about the customer's existing relationship with the enterprise, including what the customer has already bought, what services are used, the frequency with which those products or services are purchased, how long the individual has been a customer, channel preference, what touch points the customer uses to initiate communications with the company, and what the customer is likely to want to do next," Tooker said. "These are all behaviors that have nothing to do with the census, and their importance outweighs census demographics by several orders of magnitude. Even in situations in which demographics are used, household-level data is far more predictive than census information."

Census data can't hurt, and marketers are likely to superimpose its geographic and demographic data onto other consumer data. However, the Internet's double-edged sword - growing quantities of consumer data coupled with growing competitiveness requiring more personalized and responsive interaction - has pushed businesses to find much better sources of information than what the government issues every 10 years.

Jeanette Burriesci

Online Brokerages Branch Out

E-traders, banks, and securities firms compete on- and offline

The Web-based securities trading business has taken a hit along with the rest of the stock market, leading e-investment firms to adopt the time-tested strategies of their more traditional counterparts, such as opening branch offices, to survive fluctuating market forces. However, brick-based trading firms and banks have retaliated with e-commerce initiatives of their own, resulting in more competition and a greater variety of financial services.

A Fall 2000 Jupiter Media Metrix research report revealed that traffic to online trading sites declined by 20 percent following the initial Q2 2000 market reversals, even while activity at general business and finance sites grew by 11 percent and consumer banking sites saw 37 percent growth in unique visitors. A February 2001 Extraprise report, The E-Financial Services Shakeout, concluded that banks have taken the lead in adopting the "click-and-mortar" business model and offering integrated financial services online and offline.

E-Trade Group Inc. was one of the first online-only brokerages to step into the real world when it announced in Fall 2000 that it was opening an E-Trade Zone financial service center at a SuperTarget store in Georgia. Based on the success of the first E-Trade Zone, the company recently said that it will open an additional 20 branches during 2001, including one in Manhattan. The zones will be stocked with customer service staff, E-Trade Web site workstations, and E-Trade-Bank One Corp. ATM machines.

Other e-brokers are following E-Trade's lead, as noted by the Wall Street Journal at WSJ.com Web Street Inc. has click-and-mortar locations in Boston, Denver, and Beverly Hills, Calif., while Credit Suisse First Boston's CSFBdirect company has a Florida outlet.

At the same time, mainline brokerages such as Charles Schwab & Co. Inc., TD Waterhouse Investor Services Inc., and Merrill-Lynch & Co. Inc., already well-represented in the physical world, have increased their Web business substantially by offering new services and free information via their financial portals. The established trading houses clearly have the customer-facing edge; Waterhouse alone has more than 170 branches.

Jaime Punishill, a senior analyst at Forrester Research Inc., said in the Forrester brief, Internet Brokerages: Let's Get Physical, that Schwab and Waterhouse get more than 50 percent of their new account business from branch activity. Punishill added that trading transactions increase in areas where branches open, bringing in more of the transaction-based fees that have been the lifeblood of online brokerages.

In addition to expanding their physical presence, online traders will have to alter their Web presence to capture more market share, according to Punishill, who predicted in another Forrester brief, Sizing Online Brokerages, that more than 21 million U.S. households, or about two-thirds of U.S. retail investors, will trade online by 2005, nearly double the number doing so in 2001. Extraprise estimated that online trading assets will reach $3 trillion by 2003. However, in order to attract the type of conservative customers that will account for 89 percent of these new investors, e-traders will have to tailor their Web sites and content to suit people who are not technology-savvy or sophisticated about investing.

As they retool their business models, e-brokers will face continued competition, not only from traditional securities firms, but from banks as well. Merrill Lynch recently topped two lists in Financial NetNews' annual survey of the best financial services Web sites, earning the "Best Institutional Brokerage" Web site for its MLX e-commerce portal and "Best Full-Service Broker" Web site for its Merrill Lynch OnLine portal for individual clients.

Banks will also be contenders. For example, PNC Financial Services Group Inc. recently launched a PNC Bank branding effort that includes sponsorship of the new PNCPark baseball stadium, which houses not only the Pittsburgh Pirates team, but a PNC Bank branch with free Internet access to stocks, PirateBall.com, and other services. When even banks are marketing financial services in such creative ways, upstart e-brokers have their work cut out for them in the real world. (Also see "Breaking the Bank,").

Claudia Willen