Although 2001 may be remembered more for the New Economy’s killer lapse than the development of killer apps, technological and business innovation maintained its frenetic pace. We at Context are once again recognizing the most successful of those innovations by handing out our third annual Killer App Awards.

Without further ado, the winners (and losers) are:

 
START-UP BUSINESSES

In geek speak, the 802.11b standard is the family of specifications created by the Institute of Electrical and Electronics Engineers Inc. (www.ieee.org) for wireless, Ethernet local area networks in the 2.4-gigahertz bandwidth space. The rest of us English-language users should think of 802.11b as a way to connect our computers and other gadgets to each other and to the Internet at very high speed without any cumbersome wiring—basically, a faster version of how a cordless phone links to its base station. With 802.11b, electronic devices can talk to each other over distances of about 300 feet at 11 megabits a second, which is faster than most wired networks in corporate offices.

Devices using 802.11b—increasingly known as Wi-Fi—don’t break the bank, either. It costs $500 to buy a network hub that coordinates the communication of all devices within range and provides a link to the Internet. The cards that let a laptop computer or other device “plug” into the network cost $100 to $200.

Providing so much wireless speed at a modest price promises to have profound implications for a world bent on anytime/anywhere communication. Already, Wi-Fi is spreading like kudzu. College students are setting up networks in their dorms and cafeterias. Folks in some parts of San Francisco are building 802.11b networks to cover their neighborhoods. Starbucks Corp. (www.starbucks.com), United Airlines Inc. (www.united.com), and Holiday Inn (www.holidayinn.com), among others, are installing 802.11b networks in their shops, airport lounges, and hotels, in a nod toward their customers’ desire to stay connected.

Telecommunications-equipment maker Cisco Systems Inc. (www.cisco.com), computer makers Apple Computer Inc. (www.apple.com) and Compaq Computer Corp. (www.compaq.com), Japan’s Toshiba Corp. (www.toshiba.com), and chip maker Intel Corp. (www.intel.com) are spending heavily to exploit the possibilities of Wi-Fi, which should improve capabilities while driving costs down. Frost & Sullivan, a marketing strategy firm (www.frost.com), projects that hardware and software makers could generate $1 billion in annual, Wi-Fi-related revenue by next year.

“This is already big and already on course as a killer app. And with no hype!” says David Reed, an editorial board member who was once the chief scientist at software concern Lotus Development Corp. (www.lotus.com).

Portability, economy, ubiquity, always-on access—what’s not to like about 802.11b?

Instant messaging, our other winner in the start-up category, is even further along than 802.11b in becoming a crucial tool for both personal and business communication. For that, plaudits go to ICQ Inc. (web.icq.com), which pioneered instant messaging in 1996.

ICQ, which stands for “I seek you,” was developed in Israel by a man named Goldfinger (honest!) and has been popular since the day it hit the market. Instant messaging, or IM, really began to make strides when America Online Inc. (www.aol.com) bought ICQ for $287 million in mid-1998 and then unleashed it to its tens of millions of subscribers. Radicati Group Inc. (www.radicati.com), a market research firm, projects that the number of instant-messaging accounts will rise by nearly a factor of 10 by 2004, to 1.38 billion worldwide from last year’s 141 million. The firm estimates that, over the same period, the number of corporate IM accounts will jump to 687 million from 28 million.

Businesses are deploying IM to tie their people together in real time even more effectively than e-mail can. (Not that the effects are always as intended: Many people use IM to carry on side conversations while in meetings or on conference calls.) Teenagers use IM for just about everything they used to do over the telephone—which is to say, a lot—and have even developed a new idiom. (Helpful hint: If you are watching your teenager write an IM, and he types “POS,” be wary. POS stands for “parent over shoulder,” so you should assume that everything written after that is solely for your benefit.)

The technology isn’t all the way home yet. IM suffers from the fact that America Online’s IM system doesn’t yet connect to those offered by Microsoft Corp. (www.microsoft.com), Yahoo Inc. (www.yahoo.com), and others. That is a business decision by America Online, though, not one based on any technical obstacles, and users almost certainly will press the online service to let them link to friends using different IM systems. Once over-the-fence sharing becomes possible, IM will make an even more decisive move into the mainstream.

Runners-Up

The other finalists were: Celera Genomics Group (www.celera.com), which mapped the human genome; 3Com Corp.’s Palm Computing unit (www.3com.com), which developed the ubiquitous Palm personal digital assistant; and Power Paper Ltd. (www.powerpaper.com), which developed a battery the thickness of a piece of paper, for use in disposable games, smart cards, and medical devices.

Of those, Celera easily won the broadest support. Celera—the name comes from the Latin word for “swiftness”—is a pioneer in the nascent field of bioinformatics, which uses computer applications to analyze biological systems. Deciphering the human genetic code probably will foster the development of treatments for such stubborn diseases as cancer and Alzheimer’s. Understanding the workings of the genome also should allow for the development of medicines customized to individuals, for ultra-accurate diagnostic tests, and for software to study genetic patterns and their implications.

We held off on giving a Killer App award to Celera because it isn’t really an app; it is a platform on which Celera and others can build applications. If we eventually do induct Celera into our Hall of Fame based on the treatments it develops, we may have to create a new wing: the Living—rather than Killer—App Hall of Fame.

 
ESTABLISHED COMPANIES

General Electric Co. (www.ge.com), whose assets range from NBC television to gas turbines, light bulbs, and aircraft parts, wins induction into the Killer App Hall of Fame as the most impressive innovator among established companies.

Sure, it is BigCo Inc. And save for Jennifer Aniston of Friends and the Today show’s Matt Lauer, it isn’t very sexy. But GE’s launch into the online universe should set a strong example for the rest of the world’s corporate giants still lumbering along in the analog age.

Jack Welch, who spent two decades as chief executive, didn’t get Internet religion until 1999. Yet once he saw the light, he didn’t look back. As he wrote in the company’s 2000 annual report to shareholders: “Digitization is transforming everything we do, energizing every corner of the company, and making us faster, leaner, and smarter, even as we become bigger.”

One of the best examples of what GE has been up to is its Global eXchange Services, a network for electronically buying or selling goods that is stretching the boundaries of information management. The exchange counts more than 100,000 trading partners in 58 countries, including manufacturing concern 3M Corp. (www.3m.com), soft-drink maker Coca-Cola Co. (www.coke.com), food and consumer-goods company Sara Lee Corp. (www.saralee.com), and retailer J.C. Penney Co. (www1.jcpenney.com). There are one billion transactions annually over the exchange, accounting for an astonishing $1 trillion in goods and services.

Auctions, reverse auctions, demand forecasting, electronic invoices, indirect material procurement—pick a link in the supply chain, and GXS probably offers it.

Overall, GE estimates that it will sell $15 billion of its own products and services online in 2001—twice last year’s figure. What’s more, Jeffrey Immelt, who recently succeeded Welch as GE’s top gun, says digitization will save his empire $1.6 billion in costs in 2001.

GE is far from done. One of this year’s primary goals is to eliminate the 12 internal channels that a supplier’s invoice must navigate before being paid, a change that is expected to generate significant efficiencies.

As Welch declared this year, “Only the naive CEO cuts spending on IT in hard times.”

Runners-Up

The other finalists were: NTT Communications’ I-mode system for sending short text messages via cellphone (www.ntt.com); and Progressive Casualty Insurance Co. (www.progressive.com), primarily for its Autograph system, which calculates insurance premiums by tracking how a car is driven.

There was a great deal of support for Progressive, whose Autograph system uses Global Positioning System satellites and a monitoring device to track precisely how a car is driven. This is a drastic change from the current system, under which insurers have to rely on drivers’ answers to the normal questions about, for instance, how many miles a car is driven each year. Progressive, which gets customers’ permission before installing monitoring devices in their cars, knows not only how far the cars are driven but also at what time of day and how fast. Premiums are customized for each driver. Progressive reported great acceptance by customers when it tested the system in Houston.

B. Joseph Pine II, a member of the editorial board whose most recent book is The Experience Economy: Work Is Theatre and Every Business a Stage, says: “Progressive has progressed (pun intended) through a long series of innovations, from being the first company in its industry to do 24/7 call centers, to its Immediate Response Vehicles that adjust claims on the very site of the accident, to now letting customers manage their own repairs using a set of tools Progressive provides, and to this latest innovation of charging by the mile—charging for access to the insurance service only when needed.”

Still, we held off because Autograph has a long way to go before it has a revolutionary effect. For one thing, Progressive must overcome concerns about how the information on driving habits could be used. Could it be used in court cases? Sold to advertisers? How will the 50 state legislatures, as different as bananas and coconuts when it comes to insurance-regulation issues, buy into the concept? Can auto makers be persuaded to make Global Positioning System technology a built-in item in new cars?

Nonetheless, we certainly agree that Autograph has the potential to revolutionize the automobile-insurance business. Watch this space.

 
ROAD KILL HALL OF SHAME

Talk about getting shot at from all sides. The long-distance telephone business is trapped in a box canyon with almost no way out, which is why it is this year’s inductee into the Road Kill Hall of Shame that honors, so to speak, those left behind by the Digital Age.

Remember the days when calling someone long-distance was a big deal? When your secretary would interrupt you to say that Mr. So-and-so was calling, then add meaningfully, “It’s long-distance”? It is amazing how times have changed.

Long-distance service used to be a gold-plated monopoly, but advances in technology, as well as deregulation, globalization, and entrepreneurial ingenuity have thrown open the game to everybody and their aunt. Even though we all are making more long-distance calls than ever, nobody can make much money on it. Telecommunications giant AT&T (www.att.com), for example, lost 13% of its consumer long-distance business in 2000. During this year’s second quarter, revenue was down a staggering 24% from the year-earlier period.

“There is more to messages, conversations, and social/business intercourse than the point-to-point connection” that telephone companies see themselves as being in the business of providing, says Andy Lippman, an editorial board member who is a co-founder of MIT Media Lab (www.media.mit.edu). “There are kids who flirt via instant messages in one window, while talking about it with their girlfriends in another. [The availability of] multiple simultaneous connections is eroding a communications system that has been second only to television in its global impact.”

It is time to hang up on long-distance.

Runners-Up

The other finalists were: videocassette recorders and Silicon Valley. VCRs received considerable support as road kill, but new types, such as those sold by TiVo Inc. (www.tivo.com), have left a little life in this product. Silicon Valley also collected many votes. Mostly, though, that seemed to be meant to pay back the venture capitalists and entrepreneurs there for acting so high and mighty in recent years. Nobody argued that Silicon Valley was going to go away. So we will just give the area a little dig for now and wait to see how long it takes to snap back.

EDITORIAL BOARD OF JUDGES

JOHN PERRY BARLOW is a retired cattle rancher and former lyricist for the Grateful Dead who has written extensively on how business and society are becoming more virtual.

GORDON BELL, a senior researcher at Microsoft, led the development of the first minicomputer at Digital Equipment Corp.

MEL BERGSTEIN is chief executive of DiamondCluster International Inc.

GEORGE DAY is a professor of marketing and co-director of the Mack Center for Technological Innovation at the University of Pennsylvania.

JIM DUDERSTADT is president emeritus of the University of Michigan. Since retiring from the presidency, Duderstadt has returned to teaching and research, where his interests have spanned a wide range of subjects in science, mathematics, and engineering.

TIM GALLWEY is the author of the best-selling Inner Game books on learning. His latest: The Inner Game of Work.

JAMES H. GILMORE is the co-founder of Strategic Horizons, a management-consulting firm.

KEVIN HARTLEY is chief executive of Green Planet Partners, a consulting firm that focuses on branding and strategic marketing.

ALAN KAY is widely regarded as a principal inventor of the personal computer. He was a founding principal of Xerox PARC.

ANDREW LIPPMAN is a co-founder of MIT’s Media Lab.

HEIDI MASON is a managing director of the Bell-Mason Group, with Gordon Bell.

ANTHONY PAONI is a vice chairman of DiamondCluster and a former professor of technology at Northwestern University’s Kellogg Graduate School of Management.

B. JOSEPH PINE II, an authority on mass customization, most recently co-wrote The Experience Economy: Work Is Theatre and Every Business a Stage.

DAVID P. REED is a consultant on information architecture. Previously, he was chief scientist at software concern Lotus Development.

MOHANBIR SAWHNEY is a professor of e-commerce and technology at Kellogg.

JIM SPIRA is president and chief operating officer of American Greetings Corp.

JOHN SVIOKLA is a vice chairman of DiamondCluster and a former professor at Harvard Business School.