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FEBRUARY 27, 2000

© Copyright 2000 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.

Good morning. It is a great pleasure to be here with you this morning.

I will start by saying that I agree with Mr. Friedman that we are just at the beginning. The analogy I guess I would use is: We are at the beginning of an era now where the term 'Cyberspace' has the opportunity to disappear.

Cyberspace to me is a term that implies distance, something that's alien, something that's cold, something that's threatening, something that is hard to adapt to.

I think we now have the opportunity with where technology is going for the Internet, for the information utility, to become something that is personal, that is warm, that is friendly, that is intimate, that works for you instead of you working for it.

Now there are of course many threats to a technology that is that pervasive, that is that ubiquitous, but there are also great promises in that technology. I would like to talk about what I think 'convergence' now means and the promise of this warm, friendly, personal, intimate personalizable information utility.

Today I believe there are three vectors of technology that are coming together, and to understand the full promise of technology you really have to think about what is happening at that intersection.

The first vector is what we call e-services. What we mean by an e-service is we are now entering a time where any asset, any process, can be turned into a service that is available via the Net. Any asset. Any process.

And these services, these assets, these processes that can be made available over the World Wide Web can be dynamically created, dynamically brokered, dynamically located to create a community that works for you.

Imagine e-traffic services. I mean let's pick a really mundane example but the one that's on our mind in California a lot. Let's imagine an e-traffic service that is tuned to your personal commute each and every day. It is technologically possible now, and in fact many of these services are beginning to emerge, or an e-travel service.

So the first vector of technology that we believe is converging now are these e-services. Any asset, any process can be turned into a service over the Web and those services can be dynamically brokered, dynamically created, dynamically located.

The second vector of technology is around appliances. And of course the PC is the most obvious information appliance but it is certainly not the only information appliance.

The cell phone has become an information appliance, not just a communication device. The huge convergence that's going on now is between wireless capability and Internet capability, and cell phones are becoming Internet-enabled devices.

And, yes, fortunately or unfortunately, depending upon your point of view, it is true that toasters will become connected to the Web. Why? Because technology now is so small that intelligence, both computing and storage capability, can be embedded in anything and everything.

We happen to have a lab in HP. We happen to have an environment in that lab called Cool Town. What we are doing in that environment is connecting absolutely everything with its own web page to absolutely everything else: every person, every place, every context, every device.

To give you an example of what is possible here, we are--we're not the only ones, but we believe we are ahead in this regard--we at HP labs are now working on molecular computing and atomic storage. That is, computing and storage that is literally atoms wide and molecules thick.

So you could have, for example, computing or storage capability in your medicine, perhaps a more uplifting analogy than a microchip in your toaster.

So e-services combined with appliances, information appliances that can be almost anything.

And then finally the third vector of technology that's coming together is an infrastructure that can support billions of these appliances and trillions and trillions of transactions. That is why we now call it, along with many others, an 'information utility.'

The term 'utility' suggests something that is as ubiquitous as electricity or water, and frankly as invisible as electricity or water.

Today, let's face it, the World Wide Web is everywhere, but it doesn't work well everywhere. And electricity and water, at least in this country, are so reliable, so secure that we don't think about them until we turn them on and use them. We pay for what we need, and then we turn them off. That is the way we believe this information utility, the infrastructure that supports these services and these appliances is going.

So you have to think about the intersection of those three things we believe to truly understand the potential of this technology.

So going back to the beginning, my statement and Mr. Friedman's statement that this is just the beginning, what we are talking about now is a generation of technology that will not simply replace old technology with incremental advances in productivity as we've seen in the last 20 years, but really this information utility can change in very dramatic ways the way we communicate, the way we learn, with particular emphasis from our point of view and I believe from yours as well on our work force and how we prepare our work forces.

It is almost a clich‚ to say that one of the most pressing issues facing business leaders today--and I believe it is one of your most pressing issues as Governors as well--is how to empower employees to compete in this digital age.

Every corporation, whether it is a dot com or a brick-and-mortar, or as we now begin to say as these two kinds of companies come together, they are either clicks-and-mortars or bits-and-mortars, you pick your analogy, but every company is now dealing with the fact that technology is fundamental to how a company interacts with every constituent it has, whether that constituency are its shareowners, its employees, its suppliers, or its customers.

Again, it is almost a clich‚ now, but technology has become every CEO's job. It is fundamental to how a company works and competes.

It is absolutely true that as the world becomes more networked, as everything, every place, every person, every context becomes networked, that does and should empower the individual. And so access and skills are the key to success.

They are the keys to success for people. They are the keys to success for companies. They are the keys to success, I believe, for states and governments and countries.

And you of course as Governors are facing the same challenge that we as CEOs are. That is, how to empower your constituents to participate in this new digital economy.

And you know of course that the stakes are very high for your economies and the quality of life in your states and for this country, just as the stakes are critically high for those of us as CEOS. It is about whether we prosper and survive or whether we fail.

A skilled workforce is how you as Governors attract and retain businesses and keep your economies vibrant. And the most skilled workers will drive location decisions and quality of life is of course a key factor for them.

And you are, as we corporations are, you are competing every day with other locations the quality and the skill of your workforce and the quality of life in your state.

Fundamental to all of this of course is education. People will follow where education reform achieves successful economic participation we believe.

Now let me come back to a comment that Mr. Friedman made. Education is critical, and it is how to compete in this new age. Teachers as well as students need electronic tools. They need services. They need Internet access, and they need skills.

E-learning can help extend the abilities of teachers to help students. E-learning can be a developed ecosystem of partners that can rapidly expand to include additional partners, worldwide partners.

Remember I said at the outset that any asset, any process can be turned into a service that is available via the Net. That is as true of education as it is of anything else.

Last month, as an example, I gave a community address at the Bay Area Council where I shared with an audience a glimpse of one of the first, we believe, handheld learning appliance. It was a prototype of an Internet-ready device that could take children on a worldwide trip if they became bored in a particular class. It could take children on a worldwide field trip from a device about the size of a calculator that was priced at several tens of dollars.

It is an example of turning education into an e-service.

At the same time that education is critical, we must acknowledge Digital Divide concerns and use education as a means of eliminating them.

I believe we should shift the debate, frankly, from talking about the Digital Divide to beginning to talk about what I would call e-inclusion: How to make sure that everyone is included.

At HP we are committed to help make this change, as HP has been committed to education for decades and decades.

E-inclusion is our obligation, but frankly it is also very good business. We are playing on a worldwide field and we need everybody to make this work, to succeed, to grow.

It is why HP started an initiative called "Diversity In Education" about four years ago, and this initiative is focused on improving math and science education of minority kids. We have recently granted $4 million to work with four K-16 teams of schools and a university.

Technology has the power to erase the boundaries of time, of space, yes perhaps of politics as well, but it certainly has the power to erase the boundaries of prejudice and bias.

Anybody can play in this new age as long as they have the skills and the access. For us to remain successful as corporations and I believe as well as states and as a country, we need the creativity that springs from diversity and we need everyone to be able to play.

I believe we have a great challenge in this country because we are in danger of leaving a generation of kids behind. That is bad business for us. I believe it is bad politics for you.

The basic infrastructure for commerce and communication have essentially been built in this country, and now we are starting to see the promise of all this technology kicking in.

It means that the price of entry is dropping to zero. Anyone can play. Everyone can participate in this emerging economy. Technology does level the playing field. It levels the playing field in business. It levels the playing field in education.

Teachers and students will have new tools to master and to use. I believe one of your great obligations, one of our great obligations as well, candidly, in corporate America, is to help them. Help them use these new tools and master them.

So here is what I would humbly suggest might be three strategic priorities for each of you as Governors looking to remain competitive in this new age.

And as I mention these three, I think it is very important to keep something in mind again that Mr. Friedman said earlier. Time means something different now. We simply do not have the time we think we have, whether we are CEOs or whether we are Governors.

My belief is that in this new economy faster is always better than slower, and sooner is always better than later. Always. Always. Always. Because technology has changed what time means in very dramatic ways.

So the three priorities that I would suggest again:

First and most importantly from my point of view, continue to make education central to your agenda. Education is at the heart of everything I believe. You must, we must together continue to reinvent and re-engineer our education systems to achieve higher standards of competence and skill. We must reinvent and re-engineer to develop digital competency because lacking digital competency is a severe disadvantage. In fact, it is an insurmountable obstacle going forward. Help your teachers be competent to use the digital tools that exist. More are coming to the e-learning space, but teachers must be able to use these tools if they are to help children gain the skills and the access they need.

Second, set an example. Make technology central to how you communicate with your own constituents. Any service, any process can become an e-service over the Net. Deliver state services over the Net. Think global. Think borderless. Think interdependent. Think interconnected. But use the technology to transform your own government as an example to your constituents and to your students and to your teachers.

In this environment I believe we will only be able to protect constituents on the Net by collaborating with other governments. And in this digital environment borderless open-trade policies will be critical to plug your states and our Nation into the new economy.

And third, foster a climate where the Internet is allowed to flourish. That means a couple things.

First, it means of course enabling your communities with access and with infrastructure for everyone.

It means collaborating with industry to apply today's rules thoughtfully across jurisdictions.

We happen to believe that industry's self-regulation and credible third-party enforcement is the best model for developing the necessary trust that private data will be protected and the consumers will be protected.

Opening international global markets is essential. A flourishing Internet promotes social and political freedoms, and yes I believe this is true including in China.

And I also believe on that note that the U.S. must approve Permanent Normal Trade Relations with China.

So I believe it is incumbent on us as corporations, as CEOs, and on you as Governors to promote e-inclusion actively and aggressively to assure that all of your residents find success in a Century that is now rolling rapidly towards total connection.

I think the technology offers great promise. I think we can in fact move from a world where Cyberspace is an opportunity to make millions for some but remains tremendously threatening and intimidating for many, to a place where technology does help all of us participate more actively and more democratically.

But it will take I believe a focus on the things that we have just talked about: education, using the Net to transform your own governments, and making sure that your state is one in which the Internet can flourish and e-inclusion is at the foundation of your politics.

Thank you, very much.

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