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Technology Trends at DEMO 2004

Chris Shipley
DEMOmobile 2003
Thursday, February 19, 2004; 1:00 PM

The annual DEMO conference showcases emerging technology products and services, items customers can't find on the shelves today but which are expected to be introduced in the future. Often, DEMO exhibitors are working on unique or radically different products.

.com columnist Leslie Walker was online on Thursday, Feb. 19 to lead a discussion about this year's expo. Her guest was Chris Shipley, producer of the DEMO series of technology conferences, including DEMOmobile 2003. Shipley offered her assessment of the latest trends in technology. A transcript follows.

Chris Shipley (Gary Wagner Photography)

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.com readers may recall that Shipley has joined Leslie in the past to talk about technology trends. Read the archived transcripts: Feb. 2003, Aug. 2003, 2002 and 2001.

Don't miss Leslie Walker's .com column and her Sunday Web Watch feature.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Leslie Walker: Hello everyone and thanks to Chris Shipley for joining us today to talk about insights from Shipley's annual high-tech trade show. We will start momentarily, so send in your questions now.

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Leslie Walker: Welcome, Chris! Glad to have you back for our annual look at trends on the high-tech frontier. Since DEMO has been running for 14 years, you have some historical perspective that most folks lack.

Let's start with what was new and different this year. Last year we saw optimism rekindling at the show--what about Demo 2004?

Was there a prevailing mood among attendees about the state of the industry?

Chris Shipley: The atmosphere at DEMO 2004 was electric. There is a very clear sense that the cautious optimism of last year was justified and that the industry is on the upswing. That the market is coming back is evident in the 66 companies who came to DEMO, not only with new products, but will customers for them, as well.

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Leslie Walker: Correct me if I'm wrong, but this year's show struck me as the least futuristic of the four DEMOs I've attended. The products struck me as less "far out" or reliant on future technologies, and more about tweaking technology that already exists. Was that by design--or mostly a reflection of what companies pitched you?

Chris Shipley: It is a reflection of the market. There is little tolerance for "big vision" from small start up companies (in information tech, at least). Companies are more mature, and bringing more mature products to market. They are looking to solve immediate needs in order to ramp revenue more quickly.

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Alexandria, Va.: I was struck by the fact that Adobe was one of the exhibitors this year. Isn't DEMO intended for smaller companies looking to make their first big splash?

Chris Shipley: DEMO highlights innovations where ever they are developed. Typically, smaller companies are more innovative by design. They don't have an installed user base or product line that they must maintain. They can invent without the restrictions of a installed base.

But, innovation does come from larger organizations, too -- those that have the R&D budget and the desire to do fresh research. DEMO has hosted large companies from IBM and Microsoft to, as you pointed out, Adobe this year.

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Vienna, VA: What does a company need in order to present at DEMO? Are there any minimum requirements?

Leslie Walker: Also, what's the typical cost to exhibitors? Several people have asked me that.

Chris Shipley: I am looking for companies that are doing fresh and innovative things that I believe will have impact in the market. I like to cast a pretty wide net, and I listen to virtually everyone who has a pitch. You'll find more information on launching a product at DEMO at www.demo.com/demo.

The demonstrator fee is $15,000 which is significant, I realize, but far more cost effective than other product launch approaches.

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Arlington, Va.: A few years ago DEMO featured a little start-up that was hoping to sell broadband connections via balloons released into the atmosphere over the U.S. Whatever happened to those guys?

Chris Shipley: The company is called Space Data Corporation and they are still in business. You can get an update from their web site at www.spacedata.net.

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Fairfax, Va.: Hi Chris,

How is your record in predicting what will catch on and what won't? Did you know Palm would be huge? What about devices that knocked you out but later fizzled?

Thanks

Chris Shipley: Let me start by saying that it is not the intent of DEMO to "pick winners" but rather to highlight new ideas and innovations. Sometimes, as is the case with Palm, they go on to be very successful companies and usher in whole new market segments. Sometimes, the companies aren't successful, but the idea is. (I think of Hot Office who came to DEMO 1997 to show what was, effectively, the first ASP-delivered software set.) And, sometimes, idea and company flop. (Of course, I try not to remember those.)

All that said, DEMO has a pretty good track record of picking winners. Awhile back, I looked at the companies that came to DEMOmobile during the boom. Of 35 or so companies, only 2 had gone out of business. Many had been acquired, and the others were still going strong.

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Reston, Va.: When is Paul Allen going to start selling that FlipStart? Looks pretty nifty to me.

Leslie Walker: I believe Allen's Vulcan Inc. said later this year (Then again, they said that last year, too.) Chris, did you look at other "ultra personal computers" like the Oqo, and what's your take on their market prospects?

Chris Shipley: Leslie is right, they believe the FlipStart will be in the market "later this year" and I suspect that it could be in the market before September. Pricing has not been determined.

I am definitely keeping an eye on this market. And not just ultra light computers, but also devices that replace laptops all together. Product's like the one we saw from Key Computing this week that enable you to put your entire desktop configuration onto a USB flash memory stick.

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Phoenix, AZ: After reading some of the press that has come out of this year's DEMO, it seems that a lot of the companies presented "me too" technology and vapor ware.

How do you weed out the demonstrators, besides the cost of the event?

Chris Shipley: I would argue that these companies are anything but Me Too and vapor ware. Some are early, and their products will not be in the market right away, but they are driving to real deliverable dates and I have every confidence that they will make those plans.

On the Me Too issue, the market is much more evolutionary these days. Moving forward in steps rather than bounds, particularly in the enterprise market. That may seem like more of the same, but I think it is actually innovation on existing ideas rather than replication of them.

Cost is the last hurdle that a company clears in the "weeding" process. I talk to hundreds of companies each year and I select those who are doing interesting things, have a team that can deliver them, and a clear vision as to how they will move into the market. I guess it is an informed instinct that is the real "weed wacker" of the demonstration process. When you see as many companies as I do each year, the very best are easily distinguished from the rest of the crowd.

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Vienna, VA: Of all the approaches to fighting spam, which do you think has a fighting chance of succeeding?

Chris Shipley: Let's start with what is least likely to succeed -- legislation. It is virtually non-enforcible, and it only hurts legitimate marketers.

Solutions at the client and server are more effective, but not an ultimate solution because spammers are clever folks who have figured out how to circumvent these systems. Among the client solutions, those that use some form of sender verification are most effective.

I'm interested in the solutions at the service provider level, because I think they have the best chance of stopping spam before it hits the larger network.

And I very much like the TurnTide solution because it so effectively shuts down spammers by creating a sort of reverse denial of service attack on spammers.

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Ann Arbor, Mich.: How many people typically attend DEMO? I've noted that several other big tech trade shows have either folded shop or slimmed down considerably, and I was wondering if attendance at your event was greater this year than in the past? And did it match attendance during 1999 and 2000?

Chris Shipley: DEMO 2004 attendance was up significantly. The Conference is deliberately small, relative to a trade show. Typical attendance in the 90s was at about 750 people. In 2000, it was more than 900 -- an anomaly and too crowded. Since the Internet "bust" we've held steady at about 500, and this year had over 600 people at the event.

The key, though, is that the attendees are the "right" 500 or 600 people -- investors, media, business executives, corporate customers.

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Washington, D.C.: Any big trends in venture capital you're seeing this year?

Chris Shipley: We'll see more investing, but at later stages. It will remain very difficult to get Seed or Series A money. As I have been saying, the risk has gone out of risk capital.

Another trend to watch for is the final fallout of the Internet bust. Small and/or new funds raised in late 99 and early 2000 haven't brought returns on investment. These funds are coming due and the have little to show their Limited Partners. We'll see a lot of those firms closing their doors this year, I believe.

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Washington, DC: I read that blogging was a big theme at this year's Demo. Isn't that old hat by now? Also, where do you rate blogging on the hype scale?

Chris Shipley: That's a great question. I debated long and hard about doing a focus on blogging this year for exactly the reasons you imply: that people might see it as old hat or overly hyped. What I realized, though, is that blogging is transforming and transformative in ways that we're only beginning to see.

A survey of DEMO 2004 attendees -- pretty savvy people -- showed that less than 35% maintained blogs and less than 40% read them. Only 11% had any process for monitoring blogs for business intelligence purposes. I didn't as the question, but I suspect that even smaller number use blogs internally for corporate communications and even a smaller number than that have any idea how to lever this new medium in their corporate comm strategy. These latter issues are going to become critical.

Blogging is at the point today where web pages/sites were in 1996. Early adopters and personal enthusiasts have embraced blogging and we're only beginning to understand the power of this incredibly democratic and equalizing new media.

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Leslie Walker: It seemed two-thirds of the products this year were aimed at businesses rather than consumers. Web security was one of the biggest themes. What key ideas or trends were you were trying to show in the security area?

Chris Shipley: The security market is going to be very interesting in the next 24 months. I think we're going to see a lot of consolidation as enterprise customers shift from point solutions to wholistic approaches to security.

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Washington, DC: Sounds like a great event. Was the East Coast represented by innovative tech companies? Today's article seemed to have many CA-based companies and international companies launching visionary products?

- CM

Chris Shipley: In the US, the west coast -- Silicon Valley, Washington, San Diego -- seems to dominate. But we had a strong showing from the east coast. Boston, Philadelphia, Virginia, New York, Winston-Salem, Austin (not exactly "east coast," I realize.)

We also had a very strong international showing: Australia, Singapore, Israel, Canada, France, China, United Kingdom.

Overall, I would say that almost half the companies at DEMO 2004 were NOT from the west coast.

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Leslie Walker: Besides TiVo, which you've previously said has changed your TV viewing, have other technologies from DEMOs past become staples of the Shipley lifestyle?

Chris Shipley: The most recent and significantly impactful products are the Mirra server, which debuted at DEMOmobile 2003, ActiveWords, which debuted at DEMO 2003, CopyTalk, which was a DEMOmobile 2001 company. From this year's crew, I'm actively using SightSpeed's video conferencing service, and I like BigOnTheNet's and Groxis's web search categorization technologies a lot. On the less practical (non-business) side, I'm very interested in Akimbo.

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Falls Church, Virginia: What were some of the more original ideas at this year's show?

Leslie Walker: Personally, I saw less originality than in years past, and I think that's a good thing! There were original tweaks, though, and sometimes a slight change to an old approach can open a whole new market.

For instance, I liked the plan to identify hacker activity by sending bogus data to bait hackers into identifying themselves. (Global Early Warning System from ForeScout.) I also liked the way antispam companies are adding new email tools to identify and isolate fraudulent "phishing" emails aimed at stealing your personal data. (MailFrontier showed this.)

Chris, any thoughts on the truly original ideas this year?

Chris Shipley: Leslie's right that there is more incremental work here this time, but I think the TurnTide anti-spam product is an original idea. X-key is a new way to think about portable data. Akimbo a unique approach to Internet broadcast. Total Immersion is definitely cool and fresh. And I think AllenPort, which is changing the personal computing metaphor from hardware and software to services -- that's a brave new view.

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Rockville, MD: Were any really bad ideas presented this year?

Leslie Walker: I'm curious about how many "really bad ideas" Chris screens that never see the light of day. Of course, you can't expect her to call the ideas she puts on stage bad! And I didn't see any "really bad" ideas on stage, either.

I did see some far-fetched ones, though. Sometimes it seems entrepreneurs use overkill to tackle problems, or get too far ahead of the public. A company called BravoBrava is developing software to let us access all our digital content from cell phones, PDAs and other devices in our personal networks. Sorry, but I have to laugh at the idea of beaming TV shows we record on TiVo at home to our cell phones. Maybe in 2020, but not now.

Chris Shipley: That was my initial reaction to BravoBrava, too, but what changed my mind was the fact that so many cellular carriers are vying to adopt that application.

And Leslie is right, I look at the really bad ideas so that you don't have to. One good thing about the tough fund raising market today, though, is that bad ideas rarely get through any more. Much of what I see today is very high quality, unlike the flood of companies that came through my office in 1999 and early 2000.

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Washington DC: What is your thought about Microsoft's role in the high-tech universe? Is its dominance on the desktop permanent--or do you see signs of real vulnerability?

Chris Shipley: I asked that question to the DEMO audience -- again, a pretty plugged in group of people. Almost half the audience -- 46% -- said they believed that Microsoft could lose its dominance in the desktop software market.

I think the biggest threat to that dominance, though, isn't in the US, but in broad new markets where no dominate player has yet emerged. China, for example, is a huge market and completely open.

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Washington, D.C.: Why no social networking startups this year--isn't that one of the really hot Internet investment trends?

Chris Shipley: Social networks have shown that they can generate a lot of hype, but I'm still waiting to see where they demonstrate value. Only one of the companies - Spoke - seems to have a real business model for business, and only Friendster seems to be able to make any money in the consumer space.

That's one reason Social Networking wasn't represented at DEMO. The other is that these services and systems are currently in the market and DEMO looks to bring things to the conference that are fresh and new.

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Leslie Walker: Just FYI, that Total Immersion "augmented reality" software Chris reference was eyecatching. The company projected a "virtual helicopter" on top of live video of the audience, so it appeared the chopper was flying over our heads. And then it zoomed in on the helicopter--and there was Chris Shipley in the cockpit, flying the chopper!

You might be wondering what it's good for. Total Immersion said it's D'Fusion software will help car and airplane manufacturers as well as marketers envision their products.

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Metro Center, DC: Any reports of new laptop/notebook PCs with Athlon 64's coming down the pike? I know Intel has (until this week) been trying to sell the line that there's no need for a 64-bit CPU in the consumer space, but they seem to have backed off of that. The other impediment was a lack of support for 64-bit CPUs at the OS level, but MS has now released a downloadable "customer preview" of Windows XP 64-Bit Edition, and of course the various Linux distros have been incorporating support for 64-bit for some time now, so all the technological roadblocks seem to be slowly disappearing. 64-bit CPUs are fairly common in the server/workstation space, less so at the desktop level, but seem to be basically AWOL in the mobile market. Any developments to look forward to on this front?

Chris Shipley: I suspect you'll see a range of new machines later this year, when laptop makers bring their next generation products to market.

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Washington, DC: What areas in the nation's high-tech R&D labs are you watching most closely? Any insights into tomorrow's tech trends?

Chris Shipley: I keep an eye on both corporate and university labs, which tend to be looking very far into the future. I've moved a single atom at an IBM research facility, seen the entire text of the New Testament etched in silicon the size of a postage stamp at Stanford, engaged in interesting location based communications concepts at Fuji/Xerox. All very mind boggling things, but also very far from becoming every day useful products. For example, nanotech is quite hot, but is also a decade or more away from delivering useful products.

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Leslie Walker: Can you wrap up with a little crystal-ball gazing? What is on your short list of the most important technology trends to watch for 2004?

Chris Shipley: This is a year of strong but careful steps for the tech industry. In the enterprise, we'll see a range of products that promote the efficiency of the IT infrastructure in order to bring costs down dramatically and enable the IT organization to be more responsive to business needs.

On the consumer side, we'll see a lot of new ideas in digital media and entertainment. Still a lot of experimentation, and likely no one big stand out, but rather a lot of interesting new ideas on which the "next big thing" will be built.

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Chris Shipley: As always, Leslie, it's been great chatting with you and your readers. Great questions and insights.

You can follow the progress of DEMO 2004 companies at www.demo.com/demo.

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Leslie Walker: Well, that's all for today. Thanks to everyone who submitted questions and a big thanks to Chris Shipley for answering them. Let's hope Chris has fun this year looking for more stuff to show everyone in 2005.

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