Innovation Economy V1

‫‪10/26/2008‬‬

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‫‪WIKIPEDIA‬‬ ‫‪STKI‬‬ ‫מתוך ויקיפדיה‪ ,‬האנציקלופדיה החופשית‬

‫חברת ‪STKI - Schwarzkopf The Knowledge Integrators‬‬ ‫היא חברת ייעוץ בתחום מערכות מידע בישראל‪ ,‬המפעילה צוות‬ ‫טוח‪,‬‬ ‫ם‪ ,‬חברות ב‬ ‫ם בנק‬ ‫ם‪ .‬לקוחות החברה כולל‬ ‫של אנל סט‬ ‫ביטוח‬ ‫בנקים‬ ‫כוללים‬ ‫אנליסטים‬ ‫משרדי ממשלה‪ ,‬חברות היי‪-‬טק ותעשייה‪ ,‬חברות טלקום ועוד‪.‬‬ ‫באמצע שנות ה‪ ,80-‬ד"ר ג'ימי )חיים( שוורצקוף ביצע את‬ ‫המחקר הראשון מסוגו אודות שוק טכנולוגיית המידע בישראל‪,‬‬ ‫עבור חברת ‪ .DEC‬המחקר הכה גלים בשוק הישראלי‪ ,‬ונתן‬ ‫תמונת מצב קונקרטית בשוק שהיה עד אותה עת בלתי ממופה‪.‬‬ ‫ד"ר שוורצקוף המשיך בחקר השוק ובשנת‪1992‬הקים את חברת‬ ‫‪ ,Meta Group Israel‬ששימשה כנציגות בישראל של חברת‬ ‫‪ Meta Group‬העולמית‪ .‬במסגרת החברה‪ ,‬המשיך ד"ר‬ ‫שוורצקוף לפרסם מחקרי שוק בתחום באופן קבוע‪ ,‬וכן לספק‬ ‫ייעוץ לחברות והארגונים המובילים בשוק‪ .‬בשנת ‪ 2004‬נרכשה‬ ‫‪ Meta Group‬העולמית על ידי חברת גרטנר‪ ,‬וד"ר שוורצקוף‬ ‫והאנליסטים המשיכו בפעילותם בישראל תחת השם ‪.STKI‬‬

‫‪Innovation Economy:‬‬ ‫‪Resist the hype but don’t ignore the realities‬‬

‫‪Dr. Jimmy Schwarzkopf‬‬ ‫‪Research Fellow‬‬

‫‪STKI‬‬ ‫‪1‬‬

‫‪[email protected]‬‬

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Inviting you to my office 

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This presentation is dangerous.... It will make people think 

and to my library......... • • • • • • • •

I do not predict because.. Innovation Important books/authors Open source Open source Cloud computing Neo‐nomads METAweb Virtual Worlds 

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If I could have predicted this ??

So: I cannot “predict” any one in particular  but…..

“When the network becomes as fast as the processor, the computer hollows out and spreads across the network.” – Eric Schmidt, did in 1993 All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

Exponential Growth in logarithmic plot 

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www.KurzweilAI.net

www.KurzweilAI.net

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www.KurzweilAI.net

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www.KurzweilAI.net

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Economic progress takes place by overlapping surges DRIVEN BY SUCCESSIVE TECHNOLOGICAL REVOLUTIONS Technological progress

Time

40-60 years

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www.KurzweilAI.net

THOMAS KUHN:  Paradigm Shift 

Prof. Carlota Perez :  TECHNO‐ECONOMIC PARADIGM SHIFTS

• we do not advance in steady, even progress but in a series of peaceful interludes punctuated by violent revolutions, revolutions • each conceptual world view is replaced by another

PARADIGM SHIFT: 1. A change in world view that calls everything you know into question 2. Paradigm Shift Rate is now doubling every decade All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info All Rights Reserved @STKI    Moshav Bnei Zion, Israel  + +972 9 790 7000 www.stki.info

TWO DIFFERENT PERIODS IN EACH GREAT SURGE  Degree of diffusion of the technological revolution

INSTALLATION PERIOD

‘Creative destruction’ Paradigm shift

Turning Point

Institutional recompositio on and role shift

FIVE TECHNOLOGICAL REVOLUTIONS IN 230 YEARS

DEPLOYMENT PERIOD

We Are Here

Reaping of growth and social benefits from the prevailing paradigm

Next big-bang big-

big--bang big

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???

Time

2O - 30 years

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Recurring phases of each great surge

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During the deployment phase: unprecedented opportunities and new business models

10/26/2008

The changing face of the last 100 years

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THE 4 MODELS OF GROWTH ESTABLISHED  UNDER THE PREVIOUS (MASS PRODUCTION) PARADIGM

• Soviet socialism • Fascism (National Socialism) • Keynesian (social) democracy • State Developmentalism (in Third World) All compatible with the centralising and homogenising principles of the mass production (and mass consumption) paradigm All Rights Reserved @STKI    Moshav Bnei Zion, Israel  + +972 9 790 7000 www.stki.info

Three directions of the  current paradigm shift

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FEATURES OF THE CURRENT PARADIGM SHIFT

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Technologies that have experienced  disruptive shifts:

Paradigm Shift =  Disruptive Technologies “Disruptive technologies have enabled a larger population of less skilled or less wealthy people to do things in a more convenient, convenient lower cost setting which historically could only be done by specialists in less convenient, higher cost settings.”

Disruptive technology.. It's trivial technology that disrupts the business model of the leading company, and that’s what makes it so hard.” Andy Grove, Intel

• Film chemical based photography – digital photography • Integrated PC manufacturing (IBM) – Modular PC manufacturing (Dell) • Centralized copy center (Xerox) – desktop workgroup  photocopying(Canon) • In home vacuum tube radios (RCA) – portable transistor radios (Sony) • Department store full service retailing (JC Penney) – D f ll i ili (JC P ) Big box discount  Bi b di retailing (Walmart) • Full service networked airlines (TWA, United) – Low cost point to point  airlines (Southwest) • Drawing based animation (Disney) – Digital animation (Pixar)

Prof. Clayton Christensen All Rights Reserved @STKI    Moshav Bnei Zion, Israel  +972 9 74 444 74    www.stki.info All Rights Reserved @STKI    Moshav Bnei Zion, Israel  + +972 9 790 7000 www.stki.info

Disruptive technologies

Characteristics of disruptive technologies 1.Current customers of established firms are not  not  interested in the technology 2.Profit margins  2. Profit margins associated with the technology are  much lower than existing technology

• Introduction of the IBM Mainframe ( 1960’s)

• Introduction of the Apple II (1978), IBM PC (1981), TCP/IP (1980’s), C/S  Architectures  (1980’s), SUN workstations (1980’s), Internet (1990’s)

• Open Source (2002); Introduction of XML‐based Composite Applications (2006),  Service Oriented Architectures (2005), Virtualized Infrastructures (2004),  Web2/internet 2 (2007), Cloud Computing (2008), METAweb (2008) 

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NEW TECHNOLOGIES COME WRAPPED IN THE OLD . .. The first automobiles still looked like horse carriages

Global Innovation Index Dr. Soumitra Dutta INSEAD Professor GLOBAL I N N O VAT I O N INDEX Your Text here which places:

One of the early automobiles 1898

…AND SO DO NEW INSTITUTIONS including production and consumption habits and norms

1 2 3 4 5

US GERMANY UK JAPAN FRANCE

6 SWITZERLAND 7 SINGAPORE 8 CANADA 9 NETHERLANDS 10 HONG KONG 11 DENMARK 12 SWEDEN 13 FINLAND

14 UAE 15 BELGIUM 16 LUXEMBOURG 17 AUSTRALIA

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18 ISRAEL * 19 SOUTH KOREA 20 ICELAND

3 0 K U WA I T Your Text here

*

Because of HUMAN CAPITAL

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Reproduction: L. De Vries. 1972

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change is the process by which the future invades our lives Alvin Toffler

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Resilience: Not only the ability to recover from a change or shock.

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RESILIENCE: The rate at which any system  RESILIENCE:  The rate at which any system 

ITreturns RESILIANCE RESILIANCE: : to a single steady state following to a single steady state  following a  system perturbation. system  perturbation. The ability to provide an acceptable level of service in the face of faults and challenges to normal operation.

Resilience:: Not only the capacity of people to cope with change, stress or catastrophe.

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History of Innovation 

Stress / resilience in the genes ? Stress/ resilience: • Brain releases serotonin • Kills off neurons if not metabolized

MAOA gene with 5HTT: • Handles better stress and resilience Your Text here Your Text here • Produces molecules better at synthesizing serotonin

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The future is really only an innovation problem How do we find the future we prefer?

10/26/2008

Innovation versus Creativity Vision Innovation is the engine that drives transformation..

Innovation is the ability to move from the existing to the preferred

Desired Future

Present Default Future All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

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TIMING in INNOVATION

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Innovation IS strategy:    from BUILD to CREATE

Ray Kurzweil

“I’m an inventor.   I became interested  in long term trends  because an  invention has to invention has to  make sense in the  world in which it is  finished, not the  world in which it is  started.”                      ‐

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Red Ocean Strategy

Blue Ocean Strategy

Compete in existing market space.

Create uncontested market space.

Beat the competition.

Make the competition irrelevant.

The New Economic Age Exploit existing demand.

Create and capture new demand.

Make the value-cost trade-off.

Break the value-cost trade-off.

Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.

Align the whole system of a firm’s activities in pursuit of differentiation and low cost.

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Innovation:  which one?

METAweb pushes need for “new CIO”

Innovation

METAweb

Water drum

Time Mini disk

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THE POWER OF BEING CONNECTED  CONSUMER 2.0  Co-Creators Cash

Control

Some background

The birth of Generation C Communicate

Your Text here

Connected

Your Text here

Creativity Creative Class

Content

Conversation Community

Channel Consumer 2.0

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New era 

Books of the 1980‐90s -” No institution can possibly survive if it needs geniuses or supermen to manage it. it It must be organized in such a way as to be able to get along under a leadership composed of average human beings”Your Text here

Your Text here

“It is the means by which [organizations] create valueproducing resources or endows existing resources with enhanced potential for creating value”

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BOOK OF 2003

BOOK OF THE 1990’s • Introduced the business world  to rethinking operations.  • Demonstrated how process  redesign can yield  breakthroughs in performance  breakthroughs in performance • Put the word "reengineering"  into the English language.

copied: “The Myth of Real Time Information”, HBR 1966

Plus 10,000 rebuttals And 20+ books

Plus 2000+ rebuttals And 5 books

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Book of 2005 • Thomas Friedman – 3 billion people (consumers & producers)  entered the world economies • Eastern Europe (ie: Rumania) • Asia (ie: China, India)

– Now we have a “new” economy: • • • • •

Interconnected (fiber everywhere) Standardized (Open Source) Supply Chains Management Out‐sourcing, In‐sourcing, Off‐shoring Info sourcing All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

Math based word cloud

Book of 2008 • Stephen Baker introduces us to the  mathematical wizards who are digging  through our data to decode us as  patients, shoppers, voters, potential  terrorists terrorists—even even lovers. lovers. • translate the complexity of highly  intelligent knowledge workers into the  same types of equations and algorithms  that are used to fine‐tune shipping, sales  and other BI applications.  All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

Moving from PRODUCT to a SERVICE ? • Represents a change in BUSINESS MODEL ? • Represents a “disruptive” change ?

YES CLOUD COMPUTING and SOA are basically new  “disruptive” ways of delivering IT

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Wisdom of Clouds : "cloud computing"  "cloud computing"  What's revolutionary is not cloud computing itself but how the pieces have come together to make doing business in the cloud seem increasingly like an economic inevitability Cloud Cl d Your Text here computing ti is i a simple i l concept: t

What is Cloud Computing? 1. data and services reside in massively scalable data centers 2. accessed from any connected devices over the internet.

Your Text here

• Software and services are delivered over the Web and through a browser. • No servers or client software to install. • Available anytime, anywhere, from any device connecting to the Internet 4+ billion phones by 2010 61

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Web 2.0enabled PCs, TVs, etc.

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Businesses, from startups to enterprises

Cloud Computing Architecture Apache

Virtual Machine

Virtual Machine

Virtual Machine

Virtual Machine

Monitoring Agent Open Source Linux with Xen Data Center – 64 bit X86 Provisioning Baremetal & Xen VM

Monitoring

Monitoring

DBMS

Provisioning Manager

Virtualized Infrastructure based on Open Source Linux & Xen

Application Server

Management Stack All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9  790 7000 www.stki.info

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Cloud Computing Modularity Desktop as a service Software as a service (standard applications) Platform as a service (custom applications) Infrastructure as a service (compute, storage, network) All Rights Reserved @STKI    Moshav Bnei Zion, Israel  + +972 9 790 7000 www.stki.info

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Computing and Communication Technologies  Evolution: 1960‐2010!

Which road should we take ? Alice came to a fork in the road. “Which road do I take?” she asked.

Cloud   Computing

“Where do you want to go?” responded the Cheshire cat. “I don’t know” Alice answered. “Then” said the cat,

Centralised

Decentralised

“it doesn’t matter”.

Lewis Carroll, Alice in Wonderland

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Defining the new world 

Nomad worker: Maslow’s hierarchy of needs

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Access Proliferation

• • • • • •

Video games Email XBox LIVE Websites IM Search

• • • • • •

Radio DVD Ring Tones TV Blogs Magazines

• • • • • •

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Source: Darwin Day Conference, Google

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and the effect on IT…….

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A process of mutual shaping  in a constantly changing context

The Peopleware Ecosystem Identity Management Composite App. Framework

WCM

Wireless

Security

SSO

Application Servers

Expertise Location & Mgmt.

EAI

Collaboration

TECHNOLOGY

SOCIETY

Web Services

Peopleware

BPM E-Forms/Workflow

BAM Directory E-Learning

Search

Development Tools

Business Intelligence DM

Knowledge Mgmt.

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Neo‐nomads :  new Bedouins flourishing in  the coffeehouses of central Israel

Nomad Worker (2008) vs.  Paris Existentialist (1950s) Tel-Aviv geek with earphones and laptop in Arcaffe (2008)

• A new breed of worker, fueled by  caffeine and using the tools of  modern technology • They are typically armed with  laptops and cell phones, paying for  laptops and cell phones paying for their office space and Internet  access by buying coffee and muffins • This neo‐nomads see themselves  changing the nature of the  workplace, if not the world at large. 

• simultaneously cramming for exams, napping, instantmessaging, researching, reading and discussing, listening to music, browsing and e e-mailing mailing Your Text here

Paris existentialist watching the world go by at the café Les Deux Magots (1950s) • puffing a Gitane, napping and jotting down notes about being and nothingness

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• infrastructure makes it possible  for people to work where they  want, when they want, how they  want • SIX  abilities needed:

Time is primarily spent in : • First (home) place: isolated • Second (work) place: isolated • Third places : neutral public space to connect and establish bonds.

Big Changes now:

1. 2. 3. 4. 5. 6.

Your Text here

• Between 1990-2006: people went to anonymous locations such as malls • Starting in 2007: good third place makes admission free or cheap (the price of a cup of coffee), offers comforts, is within walking distance and draws a group of regulars.

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Infrastructures influence work 

OLDENBURG:  how infrastructure…

Your Text here

Your Text here

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Design – Beauty and uniqueness  Story – More than mere facts  Symphony – Seeing the big picture  Empathy – Understanding others  Play ‐ Enjoyment  Meaning – Fulfillment  All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

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2007:   the year of my discovery 2007 :   the year of my discovery

An example:  my romantic attachment to my “GPS”

• “SACRED ORDER OF THE EXTERNAL MIND” I could outsource mental tasks Life is a math problem and I have a calculator

GPS

• MAGIC OF THE INFORMATION AGE Not that it allows us to know more It really allows us to know less

• EXTERNALIZE GEOGRAPHIC INFORMATION FROM MY  BRAIN • OUTSOURCE  MAP READING SKILLS • ALLOW CALCULATION OF DRIVE TIME  79

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I have outsourced  outsourced  part of my life  to external cognitive servants external cognitive servants:

Pinpoints a supermarket in MEXICO ? my son is calling from there

• No longer need a  memory – Google – Yahoo – Wikipedia

• Personal Information – Smartphone tells me  about birthdays, phones,  addresses

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• Musical taste: – ITunes

• Books and others: – Amazon

• Social Capital – LinkedIn – Xing – Facebook

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Jimmy’s Touch Points Blog Sites

Music Sites Reads his friend’s postings

Reads up on new cd releases

Movie Sites

Downloads Songs

Buys y tickets online

Sports Sites Gets the latest updates on favorite teams

Gaming Sites Looks for information about Nascar games

Checks scores

Google.com Searches for “what’s cool”

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Beware of errors: internet full of them 

“A Pattern Language”, Christopher Alexander Each pattern describes a problem that occurs over and over again in our environment Then describes the core of the solution to that problem, in such a way that Your Text here you can use this solution a million Your Text here times over

Without ever doing it the same way twice 86

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And with access to these tools I can answer  ANY question in less then 30 minutes Banks Insurance Travel “Amazon” “e‐bay”

YOUtube Slideshare Blogs Newspapers WIKIPEDIA

Transaction Sites

Multimedia Sites

Average person: 10‐15 intimate 150 social 500‐1500 weak  links

Business  Simulations Training Second Life Sales Game Sites

Social Sites

Websites can  no longer be  islands

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A powerful global conversation has begun • Through the Internet, people are discovering and  inventing new ways to share relevant knowledge  with blinding speed. • Networked markets are beginning to self‐organize  faster than the companies that have traditionally  served them.  served them. • As a direct result and thanks to the web, markets  are becoming better informed, smarter, and more  demanding of qualities missing from most business  organizations.  • markets are getting smarter and getting smarter  faster than most companies All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

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Users want  bridges  elsewhere

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Companies wake up !!!!!!! Customers are: • • • •

writing about products on blogs recutting commercials on YouTube defining companies on Wikipedia gganging g g up p in social networking g sites Your Text here like Facebook

JOSH BERNOFF

CHARLENE LI

Your Text here

MOST COMPANIES SEE IT AS A THREAT 89

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Social Technographics™ 

METAweb

Josh Bernoff, co‐author of Groundswell

METAweb phenomenon (fi-nom-uh-non) noun -noun 1. a rare or significant fact or event in the web that happened in 2007 2. something that is impressive or extraordinary that happened in 2007 All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

METAweb

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Google versus ??? Humanity emits the data (words, pictures, clicks, and searches are the raw material) Handful of cloud-wielding Internet giants like Google, Yahoo! or Amazon.com transform the info into insights, services, and, ultimately, revenue. Your Text here

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http://labs.google.com/

Your Text here

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Cloud Computing 

A. IBM Introduces 'Blue Cloud' Computing CIO Today ‐ Nov 15 2007 B. IBM, EU Launch RESERVOIR Research Initiative for Cloud Computing IT News Online ‐ Feb 7 2008 C. Google and Salesforce.com in cloud computing deal Siliconrepublic.com ‐ Apr 14 2008

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Why does it bother me ?

Google 10 years of innovation Core Search

1995

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1998

Ads

2000

Monetization

2003

Communications

2004

2005

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Collaboration

?

?

2007

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Google ad

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Open for Business

Internet 2  is not  Web 2

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WEB 2  WEB  2 are WEB   are WEB  Technologies

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Leveraging the Web for  Measureable Business Results

Internet2: 2.4 Gbps plumbing

• Gone are the days when  merely having an online  presence was a  business breakthrough. • Today's companies  MUST leverage the  power of the Web if  they're to gain and  maintain a competitive  advantage. 109

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In 2010: all new WEB experience Soon each website will become a 3 dimensional room that can be experienced alone or with friends

Your Text here

Your Text here

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Create your own virtual space Chat and interact with your friends in rooms you design Express yourself Customize your avatar and stream personal photos and video Add your room to your site Invite your friends to chat and help decorate All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

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Ramona: 

Second Life is the  biggest virtual world

first live virtual performing recording 

artist.

40,000 concurrency (at any time) 450,000 active users (last 7 days) 1.4 m  active users (last 2 months) 10.6 m total accounts 2 m assets created per day 35 TB of user‐created data 800,000 unique items sold or traded  per month  • 500 events per day • 15 m concurrent scripts • 10 Gbps peak bandwidth

• • • • • • •

Million Square Meters of Second Life Land

Total User Hours (millions)

Source: Linden Lab 116 Source: http://secondlife.com/whatis/economy-graphs

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Economy

Currency: Linden$ • LindeX exchange operated by  Linden Lab

US$ Spent by Users (in Millions)

• Reuters • Banking and credit • Stock markets

– Buy: USD $.30 transaction fee  – Sell: 3.5% transaction fee

• Monetary policy

– – – –

270 L$ =$1 USD

SL Capital Exchange (US, 20 listings) World Stock Exchange (Australia, 15 listings) World Stock Exchange (Australia 15 listings) VSTEX (Italy, 7 listings) Ancapex (US, 3 listings)

US $ Exchanged on Lindex (in Millions)

Advisory/Analyst  firms

Business IBM

Preen

H&R Block Island

Cisco

We hope that during 2009 STKI will be b present there h and d will ill have h it’s i’ first SUMMIT

Motorati SpokesAvatar: caLLie LLi cLine Li

Preen Principal: Aimee Weber

Dr. Dobbs Life 2.0 Conference

KAWG&F (Baltimore MD CPA firm), CPA Island

BDO Stoy Hayward Island

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Accenture

Best Buy’s Geek Squad

H&R Block

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Academia, museums, non‐profits

Princeton

Government, politics and collective action

US Congress – hot topic legislation

Science Friday

Art Gallery

US Congress

International Spaceflight Museum

Computer History Museum

American Cancer 121 Society Relay for Life

European Community

Campaign HQs

Davos protest

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METAweb REVOLUTION The real, long-term change is just beginning to be felt, and anyone thinking about our economic future should consider this: • access to information is a democratizing force • makes it inexpensive and easy to collaborate and share information information. Your Text here Your Text here • even the smallest companies can now have as big a presence online as a multinational corporation

The revolution may have started in a garage in California  but it has already crossed every border moving as freely around the globe as a cloud All Rights Reserved 2008@STKI    Moshav Bnei Zion, Israel  +972 9 790 7000 www.stki.info

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