The Internet's Next Big Win

Delivering Software-on-Demand over Broadband Networks
By Don Rogers, Into Networks, Inc.

Broadband networks are enabling a whole new host of emerging applications. Services like streaming media, music on-demand, videoconferencing and distance learning are being powered by bandwidth availability and throughput never-before available with narrowband. These new capabilities will be a big win for the Internet marketplace. End-users will benefit from innovative services, content publishers will gain new ways to distribute their work and network operators will acquire additional broadband customers on top of incremental revenue streams.

One of the most exciting new applications riding on this wave is software-on-demand. It makes software as easy to use as clicking on a Web site, eliminating the need for floppy disks, CD-ROMs, timely downloads and installations. Just a click of the mouse and it is possible to use any software anytime you want. Thousands of multimedia software titles -- as varied as financial planning, games, education, cooking, wine, business, flying lessons, French -- become usable on demand directly from the Internet.

It’s this kind of convenience that made pay-per-view video a ubiquitous offering across the hospitality industry. Similarly, software-on-demand over a private broadband or wireless network is a compelling service offering for hotel guests, business and residential tenants, employees and students who want access to software with the convenience, choice and ease of use that is only possible over the Internet.

The Technology is Available Today

New technologies, coupled with broadband’s fatter and faster pipes, are making software-on-demand a reality today. Because many rich media applications require fast disk access, they cannot operate over conventional narrowband connections such as dial-up POTs, ISDN service, or 56K leased lines. As more commercial and multi-tenant buildings are equipped with broadband networks, including cable data services, xDSL, T1, wireless and private fiber networks, they now have the necessary bandwidth and quality of service to handle an application such as software-on-demand.

The technology behind software-on-demand has also become more efficient. Software can now be delivered over a broadband connection from a central server in real time. The consumer simply downloads a desktop "player," and then accesses the software title from a server, which resides in a central location within the broadband or private network.

The race is on to build broadband networks, and software on demand is a unique service to leverage its capabilities. Companies like Road Runner and Excite@Home are deploying nationwide cable data networks, and partnering with local cable companies like MediaOne, Comcast, Time Warner and AT&T to offer broadband services locally. Excite@Home estimates that its broadband customers will total nearly 3 million by the end of the year. National DSL providers such as Covad, NorthPoint and Rhythms NetConnections are building the DSL infrastructure, and then marketing the services to both businesses and homes through regional competitive local exchange carriers (CLECs) and internet service providers (ISPs).

Private networks are also being built out rapidly, as local governments, educational institutions, large business campuses, healthcare organizations and the hospitality industry discover that broadband is a better way to network and distribute services to their constituents economically. According to International Data Corp., only 6 percent of online households have access to broadband. The dramatic growth in broadband subscribers suggests that demand has outstripped supply. The growth opportunities will continue to be significant.

Software-on-demand is one of the first services to deliver on the promise of broadband. It is more than just getting Web sites faster. Broadband promises content and capabilities that were never before possible with narrowband. This is what software on demand delivers, and it will re-shape the Internet landscape.

The Market Potential

Software-on-demand will have a significant impact on the software industry. In 1999, over $12.3 Billion was spent domestically by consumers who purchased PC and console games, education, edutainment and home productivity software titles. Now, those same consumers can access the latest software without having to leave their house or hotel room. The efficiencies of this new distribution channel, and its lower cost model, will drive overall software sales in a similar way that the video rental business drove overall entertainment sales in the 1980s. Video rentals had become 38.6% of the total film business by 1990, while domestic theatrical sales had increased 78% since 1980. In sharp contrast to many who predicted video rentals would destroy the theatrical movie business, video rentals both grew the total film market and contributed to increased theatrical sales. An efficient, low cost distribution alternatives for the software business, will similarly grow the entire software market.

The software-on-demand market opportunity is not a far off dream. The service is being deployed to paying customers today. Consumer software-on-demand offerings are already available to hundreds of thousands of cable data customers through Road Runner, MediaOne, Time Warner, Comcast, AT&T, Excite@Home and others. Software-on-demand will be available to more than a million customers by year end, with that number increasing rapidly both domestically and internationally.

The Technology Behind the Service

To deliver software-on-demand, a special server is put into the broadband network. That server contains software that has been encoded for real-time distribution. The encoding process essentially breaks existing software into small pieces so it can be delivered efficiently over the broadband network. The consumer simply installs a lightweight software player on their hard drive, a one-time process, which communicates with the server to deliver a real-time experience. The end-user’s PC is essentially tricked into performing as if the software were installed and running on the disk drive. Reality is, the data moves over the broadband network from the server to the PC as required by end-user actions. Because this involves a two-way data stream, this is a far more complex task than simply streaming media one-way from the server to the desktop. While more complex, software on demand puts less burden on the broadband network. Unlike streaming media that requires constant, high bandwidth throughput, software on demand is "bursty". That means bandwidth requirements fluctuate, at times requiring no data to move over the network at all, which lightens the network load over time.

All Constituents Are Winners

Distributing software over broadband has tremendous benefits for end-users, content publishers and companies that manage broadband networks. Consumers get the convenience of any software, anytime. Content publishers get immediate access to millions of demographically valuable customers at a lower cost of distribution. Broadband service providers, meanwhile, get value-added services that help acquire and retain customers as well as receive a percentage of revenue generated.

For end-users, software-on-demand expands broadband beyond just faster access to web sites. For the first time, content and services are available to broadband users that were not possible with their narrowband connections. End-users can eliminate the need to shop at a store or perform lengthy downloads and installs. It now becomes possible to rent and subscribe to software, which delivers increased convenience and value. And customers are clearly communicating they like it. In one market, subscribers are using software on demand services for an average of 43 minutes per session. That kind of "stickiness" delivers tremendous value in the fast-paced Internet market to sites, publishers and advertisers. Broadband service providers benefit by becoming the conduit to such value-added services. They can use this benefit to acquire and retain new customers.

Software-on-demand is also a win for software publishers who get tremendous distribution that only the Internet can offer and new opportunities to optimize their products for online distribution. Today, software-on-demand can provide an alternative outlet for current software libraries. That means incremental revenues and a wealth of content for consumers that is immediately available today. In the future, publishers can leverage the Internet for new services like immersive CD-ROM-like games played together by thousands of people over the Internet.

Software-on-demand over broadband is the next logical step in the Internet's development. It takes Web content and computing sophistication beyond static html. Best of all, the whole Internet marketplace wins: consumers, publishers and network operators. It is particularly beneficial to broadband service providers because it requires no additional capital investment, and can be used to acquire new customers while adding incremental revenue. It's coming to an area near you, so don’t be surprised when your favorite software package, game or productivity title is available from the Internet on demand.

About the author

Don Rogers is Director of Business Development with Into Networks, Inc. Into Networks offers the first of its kind platform called SmartPlay that delivers software in real time to users’ desktops. The author may be reached via email at drogers@intonet.com