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Cyberspace is a new domain, overlaying the physical world with a bypass network that allows us to reconstruct many aspects of human activity without respect to geography. It is much more than just Web sites and discussion rooms. It has a multitude of dimensions and trillions of potential variants. Because it allows us to do things in new ways, it will profoundly affect our business and social lives.

Welcome to Cyberspace
In the beginning there was the physical universe. When intelligent life originated with the capability to internalize a representation of the physical universe, mental space came into existence. When it became possible to electrically link together devices that were physically separated, cyberspace came into existence - the notional space where some kind of electronic transaction takes place. A telephone call is a meeting in cyberspace. Strict definitions might demand that some representation of the notional space must exist in the machines at either end, such as a virtual reality environment, but this definition is unduly limiting when considering the potential of this new domain.

In the physical world, geography dominates. In cyberspace, time and connectivity dominate. Geography has little importance in cyberspace.

Physical Space
To date, physical space is the only one of the three that we understand very well (see Figure 1). Governed by laws of physics, it is highly geographical or time constrained. Shops and distribution outlets rely on the geographical limitations in the physical world for their existence. The inconvenience of distance makes direct buying from manufacturers difficult and creates a wholesale industry. Similarly, the physics of displaying many diverse products, in easy-to-compare ways, creates a retailing industry.

Mental Space
We understand our own mental space quite well, but there is much we don't understand since our attention is normally outwardly directed. Understanding and trying to manipulate the minds of other people has been addressed by billions of people and cost lifetimes of effort, still with limited success. There are of course many areas where we all agree. Human knowledge and culture are full of shared concepts. We agree on what to call a red ball, and share the concept of a filing cabinet. From time to time, a new concept is created by someone and spreads to other people's minds to become part of their mental space too. Concepts take a long time to spread and the most original are often modified substantially in the process, so that many people have slightly different views of the same space. This helps creativity and new ideas, in the same way as mutations spur on evolution, but interferes with and degrades the quality of communication.

Today's cyberspace is founded on physical and mental spaces. We already have cyberspace emulations of the physical world: shopping arcades, chat rooms, tourism, virtual cities, libraries, banks, magazines, newspapers. We have complex virtual environments in which we can meet others. Our Web sites are our little patch or place in cyberspace. Some of it is very physically oriented. We don't care that this information is in Australia, this picture in Sweden, and this chat room in the U.S. But in our imaginary meeting areas, it's as if we're still limited by real world physics. Spatial relationships are preserved and objects largely behave in everyday ways.

Until we start the cyberspace reconstruction of our world in earnest, it's in the mapping of existing physical and mental entities and processes that much of the rewards will lie. Since cyberspace is relatively new, this mapping process is still in its early stages, and requires a great deal of experimentation to discover which mappings are worth making and in exactly which form.

What Exactly Is Cyberspace?
Cyberspace isn't just the computer's "mental space," although this is certainly a large component. Some parts of cyberspace can still exist when the computer is off. It's a higher-level construction, of which human and computer mental space are two important types of building blocks, but not the only ones.

It's spatially and temporally disjointed. When someone plays in a virtual world on an isolated machine, that virtual world is certainly part of cyberspace, but is not connected to any other part. By contrast, no part of the physical universe is completely isolated. Some parts of cyberspace spring in and out of existence when machines are switched on and off, or programs activated or closed down. Links in time can be backwards or forwards. Normal physical laws of causality need not be observed, and processes need not be played out in physical time.

It's asymmetric. When the network is reconnected to the above machine, that part may be connected to the rest of cyberspace either uni- or bidirectionally, so that the user may be able to see out, but no one is permitted to see in, or vice versa. Also, a select group of people may be able to see in, perhaps to different degrees. This is no different conceptually from someone providing a group of people with a key to the front door, or being able to go outside without permitting anyone in.

Appearances aren't fixed. While we all might agree that a ball is red, a cyberspace entity might present itself differently to different viewers, in different conditions, or at different times. A virtual shopping arcade might be a cosmic landscape with floating shops staffed by weird aliens to one user, while being a conventional 1980s mall to someone else. Both could buy the same products, though perhaps in very different ways.

Physics is optional and customizable. There are no God-given rules as to how things should behave or interact, and there is no absolute requirement for consistency of behavior. Imagination and skill are the only limits and behavioral variability may be a desirable option.

What Use Is It?
The main advantages of cyberspace are the absence of real-world restrictions such as time and space, its potentially infinite extent, and the resultant scope for facilitating physical and mental business, social, and personal processes that would otherwise be impossible because of the constraints of these two domains.

Cyberspace allows people to share a meeting even though they are geographically dispersed. It allows a limited form of telepresence, where a user can see or do things as if he or she were in a remote location. The only real limitation is that  it doesn't allow for direct manipulation or transfer of atoms so the user has to rely on signaling to persons or machines to do this for him or her.

It allows conceptual entities and processes to interact freely, independent of their physical location or manifestation. This is tremendously important as it means we are unconstrained by today's business and social structures. Companies that have evolved in the physical world may have no reason to exist in a cyberspace-dominant world, and certainly we should challenge every aspect of our familiar world to see if there is a better way of achieving our goals.

Institutional Evolution in Cyberspace
So cyberspace is different from the geographic world and need not be constrained by geographic-world thinking. Over the next decade or two we will see a massive deconstruction and reconstruction project as we make use of cyberspace to get the most out of our world.

First will come the decomposition phase of the Internet (see Figure 2). If we look at most companies today, we see a mixture of functions. Some of these have to take place in a particular factory, building, or place. These are the statics. They are fairly immune to the impact of the Net, since they can't easily be uprooted and moved elsewhere. They will change slowly, as they do today. The actual manufacturing processes in an industrial company are a good example. However, the organization of this, right down to the date for the machine tools, is not static.

If we look at other functions such as procurement and distribution, they certainly have a geographic element, but they can be organized from anywhere. A truck has to drive along a road, but might get its route information from anywhere. The other processes in a company such as finance, personnel management, sales, R&D, and so on, could be based anywhere. Decomposition will allow a complete disassembly of the functionality right across our business and society. From now on, there is no reason for all these processes to exist in the same location. Outsourcing was the beginning of this process. The Net will allow processes to be combined in optimal ways regardless of historic business structures.

Decomposition will be succeeded by recomposition (see Figure 3). We'll still need most of the functionality of today's systems, it's just that they'll be organized differently. It's likely that statics will remain mainly as they are today, though we'll see more of the ongoing processes of automation and collaborative manufacturing.

The logistics side of businesses will be revolutionized. With a mature and ubiquitous e-commerce/e-business infrastructure, organizational units and processes will mostly have standard interfaces. Super-efficient logistics companies will organize processes on a global scale for millions of businesses. They will be the best of class, and we won't need very many of them. Wholesaling and retailing exist today only because most manufacturers don't have the means to organize delivery to the individual customer. In a cyberspace world, this will be organized by a remote logistics company. Customers will decide what they want and the logistics company will find or organize its manufacture, collection, and delivery. This will rely on many physical distribution and storage providers, but their selection and coordination can reside anywhere.

But most of the departments in today's companies might just disappear into history, or change beyond recognition. Many of the administrators just aren't needed in a cyberspace-dominated world with masses of machine intelligence in the background. E-commerce will produce easily traceable audit trails, and statistics by the database load. It will be able to arrange and record most things automatically. We'll need very few accountants or auditors, very few managers, and very few clerks. Almost all of their roles can be automated. Most sales will be arranged between agents, and the organization of the system needs far fewer points of sale in any case.

Managing personnel in such a world can be very lightweight too. Not because they'll be any more pliant, but because most of us will work on short-term contracts on particular projects, freelance. People with appropriate skills will log them in e-commerce databases, and they will be contracted when a job for which they are suited needs to be done. Of course, their "suitability" includes a host of factors. Even the board is not guaranteed survival. People will lend money on the Net according to various parameters. Loss adjusters, risk assessors, and so on will help this process. Virtual companies will spring up using this capital pool, and managers will be employed on the same virtual company basis as any other staff to implement or oversee the implementation of the system.

We might see an alternative structure - the knowledge guild. The guild simply guarantees the quality of the workmanship of its members. Members get work. These might evolve from today's guilds and professional institutions, but will be far more powerful, because they'll be global, with all the advantages of a network community.

As we move from statics to nomadics, we'll see increasing volatility. The cyberspace world will be very dynamic. Empires will rise and fall with great regularity.

The value chain in cyberspace will evolve too (see Figure 4). Customers will have a wide choice of interfaces through which they enter cyberspace - whether mobile communicator, 3D booth, interactive TV, a computer screen, or whatever. Providing a wide range of usable interfaces to cyberspace functionality will be a big business. The interface will take the user into some sort of personal cyberspace environment, which could be anything from a simple list on a cell phone to a 3D virtual reality space. Translating a multiplicity of forms of Internet data into a wide variety of personalized interfaces will keep interfacers very busy indeed.

The Internet already has a huge amount of functionality and it's rarely obvious which is the best site to go to or the best product to pick. Guides will therefore play a very important role, as will facilitators, who'll help users do what they want.

Assimilators will bring together the functionality that the user wants. Today we have portals that do some of this, but really, with increasing complexity in everyday life, users will want a one-stop shop that offers to unload all the hassles of organizing their everyday lives. Outside this customized personal cyberspace, knowledge creators, guilds, and quality assessors will provide service to the one-stop shop. Logistics providers will organize the acquisition of goods and services that the user buys, including collaborative custom manufacturing and its distribution.

Tomorrow's Cyberspace
It's clear that many of today's institutions are unnecessary in such a world, where an almost optimal system will meet our every need at minimum cost. We won't need banks, building societies, or insurance companies, just the risk assessment and loss adjustment that they provide. With digitized cash that can be stored in secure databases enabled only by digital signatures, our computers can manage our cash easily, buying and selling it, calling in appropriate services as necessary.

Most people will have their own little patch of cyberspace, even if it amounts to no more than an answerphone message. Usually they will interface with the rest of the Net via their own area. They may maintain many zones with a variety of privacy attributes, echoing the range of different roles that the person plays. Some will be completely personal and secure, others shared with family or close friends, others with business colleagues or members of a club. Users will be shielded from the cacophony of information noise by a multiplicity of smart filters and translators.

But people like to talk more than to listen and we can expect people to want to make their mark by transmitting into cyberspace as well as receiving from it. This ego-echo will challenge the assumption that lines to people's homes should be asymmetric with more data traveling to the home than from it. It may be the other way round! Their personal area would appear differently to other people depending on who they are, where they are, and when they are looking, as well as on that viewer's personal interface characteristics.

Personal cyberspaces will interact with each other and of course we will have group cyberspaces too.

Future Opportunities
There are still plenty of opportunities (see Figure 5):

Unexploited areas

  • Some of those identified earlier in this article - the one-stop shop, guides, facilitators, organizers and assimilators - are largely untapped today.
  • Lifestyle management is a completely green field today but will be an essential component of our lives in a decade.
  • Huge resource databases - almost nonexistent today - will be needed to support the standard business procedures and interfaces that are developing.
  • New niches could be identified almost on the fly by the e-commerce environment. It would be fairly easy to spot areas where local distribution is a problem, for instance.
  • Providing interfaces that maximize what can be achieved through a thin medium such as portable communicators will be very lucrative.
Different models
  • Knowledge guilds exist but are using the wrong models.
  • Teleworking centers where people can work for virtual companies from a nearby "hot desk" instead of trying to work from home. They barely exist, and the few that do often use the wrong models.
  • Putting customers in touch with the best-customized manufacturers is an obvious application, but is almost invisible. Today's Net models are still almost all minor adaptations of conventional retailing.
Underdeveloped areas
  • Historic quality guarantors exist but aren't well developed on the Net, yet the Net can never achieve its full potential as a reliable information source without them.
  • Competent proactive search engines have been on the horizon for years but still haven't happened. Push technology is a failed attempt in this direction.
  • Building and renting visual cyberspace environments exists and is developing well. However, there are huge associated markets in tools and assistance.
  • Standard business procedures and interfaces are developing but there's still no easy way of automatically linking existing resources and facilities together into virtual businesses. There will be.
Back in the physical space, companies need to focus on customer service: trust-based distribution, in which someone has to provide the function of delivering at a convenient time, instead of expecting householders to stay at home waiting for delivery.

Bandwidth and Access
Today, people access the Net via an Internet service provider. Tomorrow, the network will be IP based so any computer or communicator will be able to access the Internet directly. ISPs will have no reason to exist. Some may survive as portals or one-stop shops.

Asymmetry might be the reverse of the assumption underlying ADSL. People running their own cyberspace presence from home may need more upstream bandwidth than downstream. The network will have to cope with this.

Privacy and security will be important factors. We can't expect each individual to be an IT expert, so the infrastructure will need to provide the simple means of guaranteeing these hygiene factors.

Finally, mobility will be important. UMTS will allow people to access the Internet at relatively high rates within a few years. As people become accustomed to always being in touch with the Internet, they'll become more dependent on it.  Today being in an area with a poor signal is annoying; tomorrow it will be intolerable. Providing truly ubiquitous access will be an essential characteristic for mobile networks that wish to survive.

Where to Next?
The economist Paul Romer suggests in his book Economic Growth that "Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable." He points out that the number of ways resources can be arranged is multiplicative, not additive. Thus, in a simple model where there are n resources, each of which may or may not be used to form a new economic good, the number of possible combinations is 2n. Of course, not all combinations will make commercial sense, and there's more to a product than simply "mixing ingredients," but the message is clear: the more technology develops, the greater the number of goods that can be combined for an explosion of new possibilities.

There's a constant interplay between the products and services created and marketed in the physical space and the needs they meet in the mental space. New products create new needs. For example, the Sony Walkman is a classic example of a new product that created an unrecognized (and probably nonexistent) "need." In the future, Danish social researcher Rolf Jensen suggests we will live in a "Dream Society" in which successful products are those that appeal to people's emotional needs and aspirations (The Dream Society, 1999).

We already have two spaces - physical and mental - in which products and wants are coevolving. Cyberspace opens up a third space that can interact with the others. Cyberspace changes the way we interact with each other and the way we can interact with the physical world. As new ideas are developed in cyberspace, they can create new consumer wants in the mental space, and also interact with the physical space to create a vast new range of possible hybrid products and services, which in turn create new needs in consumers, and yet more product ideas.

Developing the Cybereconomy
As the cybereconomy expands, some areas will start to stabilize. At present, all cyberspace is frontier. But eventually, more permanent business forms will emerge and the frontier will move to new areas of human and business needs. As the environment becomes more stable, the focus of companies will alter. Instead of a focus on change and constant innovation, there will be greater emphasis on efficiency and cost reduction.

Change is always a threat. Even in the physical world the average life of a company is around 25 years. As Arie de Guess points out in The Living Company, companies that have histories of a hundred years or more have survived by radically changing their core business over time. They often set up small subsidiaries in new business areas. Some will fail, some will be sold off, but one or two may grow to become the company's new core business. In cyberspace, change will always occur more rapidly, as there are no fixed assets to be depreciated or sold off.

Because there are no physical assets in cyberspace, it's easy and quick to set up new businesses. This fact, coupled with the primacy of innovation in maintaining competitive advantage, means power will shift away from owners of physical capital toward those who possess the intellectual capital. The trend, especially in the U.S., toward paying people by stock options reflects the reality that the true owners of a 21st-century company are its employees.

Individual geographies
If one source of power is the intellectual capabilities of individuals, another source derives from the ability or inability of individuals to navigate through cyberspace. Although there is no geography in cyberspace, in the sense that there are no fixed relationships between entities, all who inhabit cyberspace will need to navigate within it to access information, services, and other inhabitants. Because there are no fixed relationships, each inhabitant will develop his or her own geography. In one sense, this gives considerable freedom to individuals. Because there will be so many routes to any entity it will be impossible for a government, or even a single cyberspace authority, to control what's accessed. If it's in cyberspace, then anyone can access, duplicate, and publish it.

Getting attention will be key
While access may be uncontrollable, search isn't. The very size of cyberspace means that a considerable power will reside in the portals and search engines people will use to explore it. In the future, the key problem won't be getting your message across, but winning enough attention from people to even tell them your message. As more information is thrust at people, they'll become more adept at ignoring anything that doesn't grab their attention. Those who control the portals have the ability to determine whether or not most of your potential customers will ever know of your existence.

In this world, branding will also be important. A brand won't be a product, but an assurance of quality for a wide range of products and services (rather as Virgin is attempting to be). But brands may not be owned only by large corporations. Groups of small companies could join forces under a common brand (rather like Best Western in the hotel industry). Such groupings would not just guarantee quality and possibly provide navigating/portal facilities to potential customers, but would also actively market their members and provide a route for new entrepreneurs to enter the cybereconomy once they had satisfied the membership requirements. Here we have the economic equivalent of the herd.

The Future of Cyberspace?
At present, our pictures of cyberspace are heavily influenced by the physical world. As we spend more time in cyberspace, our mental constructs will evolve and in time influence the way we think about our mental and physical worlds.

Unlike the natural world, cyberspace was devised by humans. Therefore we have to think in terms of "engineering" cyberspace in the same way we engineer other complex human artifacts.

Until recently cyberspace has been devoted to the relay of text, numerical information, graphics, and simple video. But electronic spatial environments themselves will increasingly become subjects for design. A fundamental feature of cyberspace is its interdisciplinary nature. Cyberspace is particularly rich in artistic content and in many ways has more affinity with media than engineering.

Cyberspace is a dynamic, developing concept. It's the information space of modern society. Mathematicians use the term "space" to describe complex systems. In very complex systems, spaces acquire their own unique dynamics, as they require extremely high dimensions to be described. Many complexity theorists describe cyberspace as an emergent phenomenon whose properties transcend the sum of its component parts.

The conventional architecture of the physical world can only pro-vide passive amenities. The architecture of cyberspace is a dynamic, changing environment that, if well conceived, attends us in everything we do. Cyberspace has to reflect the intrinsically human quality of space and its role in thought, communication, and identity. Through its perceptual and cognitive realms, cyberspace extends us beyond ourselves to others. This is the potential strength of cyberspace - that it will allow us to integrate within a single architecture, personal, social, economic, and political considerations, as well as technical ones. and social lives.

About Ian Pearson
Ian Pearson joined BT Laboratories in 1985, and since
1992 has worked on mapping the progress of new developments throughout
technology, considering their technological and social implications.
Ian currently works as BT's futurologist in C2G, BT's new Communications
Consultancy Group.

About Dave Greenop
David Greenop recently left BT after working for a number
of years developing the company's future network and technology visions.
He is now an
independent consultant and a senior research fellow with the telecommunications
department at University College London. He has special interests in the
future developments of human-centered communications and the multidisciplinary
development of cyberspace.

About Michael Lyons
Michael Lyons currently leads ACE's Business Modelling
Group working on economic and business models of the future telecommunications
industry. Michael has over 20 years' experience in telecommunications
research, including device
development for optical communications systems
and studies of display technologies and the
environmental impact of telecommunications.

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