broadstuff

On Friday we looked at the 8 big trends in the networked technology space over the last 10 years (1999 - 2009). Today, as promised, we look at the trends over the next 10. In some ways its easier to think about 10 years rather than 2-3 years out as (i) you can see the big trends more easily and (ii) no one will remember this in 2019 unless we're very right .

A little digression, if I may. Bill Gates once said that things change more slowly in 2 years than people (and their business cases) want, but far faster in 10. My observation is that this is very true in consumer technology, less true in business technology, less again in the public sector, and public behaviour and structures change but slowly. We also have a model that says technology merely provides opportunity, its the economics, user behaviour and legal restrictions that drive uptake,

For example, VOIP was technically feasible in 2000, but it was only in 2003/4 that enough people had good enough bandwidth, and PCs were cheap enough, for it to "piggy back" on top of pre-paid for assets (your broadband connection, PC with microphone and speakers etc).

Anyway, enough of that - what what happens to the 8 trends we saw in the previous decade rolling forward? They were:


1. Bandwidth will carry on expanding

Given we have had a c 30x increase in the last 10 years, projecting that forward implies a mean of c 60 Mbps by 2019 in the UK. From about 20 Mbps per home upwards, you are talking multiple streams of HD video into a household so that allows the exciting prospect of everyone indoors watching their own HDTV channel, instead of TV channel as they do today. Plus ca change.

More to the point is that expanding bandwidth will drive richer applications, which we comment on below in points 2-4.

Critical to this will be whether the "frontbones" - the networks to the home - can take it. In countries where Government diktat has ruled rollout, this will happen. In those using "the market" it will (probably) happen - but later. The Digital Britain hoo-ha pretty much showed that the market will want to sell to the (urbanised, wealthy) 1/3rd of the population off its own bat, may then expand to the next 1/3rd but won't want to touch the last (poorer, rural, older) 1/3rd. Towards the mid 20-teens ("Twenteens"?) even the most market oriented of Governments will realise that to be competitive they need universal high bandwidth access and will force the issue.


2. Talking to each other will remain the Killer App

We don't know with certainty what New New Platforms will come after Twitter or Facebook, or what the successor of Web 2.0 - sorry, Web-squared - will be (though we have some ideas - see below). But what we do know is that it will revolve around P2P - person to person - communication. Always has, always will.

So, we will predict that whatever new platforms, technologies, etc etc emerge - and despite the resurrection of the standard old advertising and e-commerce use cases (see "you can find a great restaurant with your friends" below) - the killer application will remain enabling small world social networks of people to communicate.

This of course does not mean it will make the most money directly, as we saw in the 'Noughties that game went to being able to place low cost Ads against weak buying intention signals. But comms will still be the killer app driving people onto end to end platforms.


3. Our "Social Networks" evolve onto whatever the best platform of the moment is

An inevitable corollary of 2 above - given talking to each other is the killer application - the next need is to enable a "clearing system" to find people you want to talk to. The rate of change of Social Networks in the last 10 years - from email groupware to near real time video chatrooms - has been fairly predictable big picture (same function, different bandwidth), but - as always - it's hard to define at a detailed UI level just which design will succeed. The mayfly like existence of each new social network (2 year half life) means that (i) there is still massive innovation going on and (ii) the ones we have now will pass too.

The next 10 years will see more bandwidth, and more flexible social market-making. Twitter is the current design leader as it is asynchronous, asymmetric and ad-free (for now). Superimposing this on current platform trends we imagine more fixed/mobile convergence, more attempts to link metadata, more attempts to compromise privacy for searchability. Also, there will not be a "Paradigm Shift" - The users will migrate onto the "New" new platforms while maintaining use of the old (we still use email and SMS) - in fact we predict the ability to run "Unified Comms" systems will be increasingly critical.

In addition, as social networks get bigger and marketing zombies invade them, and signal to noise ratio falls, the ability to filter in the stream will be increasingly critical to its uptake - it is our view for example that Twitter clients will increasingly look like email clients (and vice versa - look at the new Mozilla Raindrop ) as the required functionality is proven over time. Another approach to filtering will be to increase the niche-ness of individual networks (this is what happens to the AltNet and GroupWare) - this story today about BeautifulPeople.com firing 5,000 userswho had got too fat over the holidays illustrates this quite well


4. All useful technology and applications commoditise over a 3-5 year cycle.....

Its worth looking at what is commoditising now to get a view of the main trends in the first half of the 20-teens. Low resolution video, fixed-mobile comms and devices, social media (or at least some aspects of it - group comms and basic profiling), the underlying protocols that Web 2.0 kicked off, text search, and even (near) real time services are busy commoditising. Its also easier to make simple payments now than ever before. The most powerful emerging services of the early decade will be built on combinations of these, as its going with the flow. We will be getting more interconnection of commoditising layers (ie the "walled gardens" will forever be climbing up the added value stack)

This is going to really hurt (ie bankrupt) some industries that have existed because parts of the value chain have not commoditised in the past. Those based on expensive physical delivery of data that can be delivered digitally will be under terrific pressure in the next 5 years, there will be major creative destruction there. Think newspapers now, and TV/Films etc as bandwidth increases. Ditto knowledge industries that have avoided global labour cost arbitrage owing to degrees of difficulty of moving the information to and from the markets. Say goodbye to Hollywood, say hello to Bollywood - and will Silicon Valley still have a hegemony in 2020?

The Cloud will be renamed at least twice in the next 10 years, it is coming, but at present the combination of relatively low system reliability, lack of decent SLA protection and too many competing platforms without sufficient plug and play and interoperability will keep it as a niche sport, and users in the 20-teens will mainly opt for hybrid models of Cloud + Own Equipment - though the niches will grow steadily. As with Electricity, the Cloud will have to be "tried and tested" at each layer before widespread adoption. Services on it - the ASP/SOA/SaaS/Whatever the next Acronym is layer - will continue to develop with bandwidth, penetration and sheer cycles of code-writing. Friction will be provided ny attempts to run wllaed gardens (it was ever thus)

Another part of the commoditisation story is the march of Moore's Law (or similar). By and large in this space you get twice the power at half the cost and size every 2 years. This won't change anytime in the next 10 years, and a 2**5 = 30x reduction is a useful tool to think about 2019 with - imagine iPhone and basic PC like functionality for $10, in devices the size of an iPod Nano for example! This is going to drive two other trends onwards:

- ubiquitous multimedia, at least in the OECD (this TED talk by Patti Maes is a sign of things to come)

- the Internet of Things - never mind a billion new mobile users, think a trillion new dumb devices. Say hello to Mrs Fridge!

5. .....but People are Still People. The more things change, the more they stay the same

The technology changes, we talk and interact with each other in new ways, but what we do remains the same. The human condition will remain to hatch, match and despatch, some will always want to seek power and money, and while running this never-ending circle of life we will still try and scrabble onto higher planes of Maslowian existence, and try and keep ourselves entertained in our downtimes. And being human we will still try and get something for nothing so the dreaded parasite that is advertising will, like death and taxes, remain with us for a while yet. So here are some things that this implies:

- We have a hypothesis (based on our reading of behavioural economics as it stands today) that genetic imperatives drive time value of attention, so people will pay real money for things that help them match and hatch. Anything that increases privileged access to mates, money, status, nest building etc will be seen as valuable. Entertainment media is by and large lowest value time (if you had better things to do with your time, you'd do it) so will continue to struggle to fight free models. Its a volume game with low prices.

- Advertising will move over to online media as attention shifts, but owing to the lower audience sizes and almost infinite inventory, the mean (and I mean "mean") rates will stay lower. Over the decade the best empirical metrics will emerge and establish a better economic basis, so by end 20-teens we expect Online Advertising to overtake "trad" advertising in revenue, if not in profitability (Yes, that means hitting c 50% of value by c 2017 or so). Some of this will be from growth, some will be from decline in the overall market as Advertising is just less relevant in a networked, interactive digital world.

6. Hype (and dodgy economic theories) spring eternal in the human breast
In 1999 there were high priests of the New Tech Age then as now. Anyone churlish enough to be a "New Age Economics Denier" was castigated, lambasted and told they "didn't get it". By 2002 the sceptics had been proved largely right as the dotcom bubble deflated to complete limpness. But by 2004 the New "New Economics" of the Internet was on the rise again with Wikinomics (allowing me to calculate that New Economic memes have a c 2 year refraction time) and by 2009 in full swing with various flavours "Free" etc etc which. We predict most of this will be largely discredited by 2011 and a 2 - 3 year period of a Return to Rational Economics will ensue (it has already to an extent).

Companies built in this period have historically been strong, simple because they are built on solid fundamentals.

Ecclesiastes Law however states that, by c 2014 there will be a new inflationary bubble in something, and cometh the hour, cometh the man (or woman). A new generation of Tech Wonderfulness will thus be declared, that is of course quite unlike anything before, and it will of course herald in a New Economic Paradigm which (oddly enough) will promise to allow you to get richer with less effort, and that people who don't "get it" will of course be labelled as crusty old farts.


7. There is a Google or two in every Decade

In every decade a dominant New Media New Entrant emerges at a new layer that they make their own. In the past they have tended to be West Coast US companies (access to the worlds largest ubiquitous markets for risk capital and customers has pretty much guaranteed that). In the 80's it was Microsoft, in the 90's it was arguably AOL (and maybe Yahoo), in the Noughties it was Google.

Ten years later the last decades Cool Kids are nearly always still around, but now as large corporate entities rather than cool young companies. They are no longer the Innovators of the emerging "new" New Media and typically strategically buy innovation, and try and spoil it elsewhere. The ones for the 20-teens all exist already, the issue is spotting which has 10 year legs. In Social Networking I'm betting that Facebook is the New Yahoo, and something else will be the New Google. Maybe Twitter, maybe something in left field still.

Re Google in particular, we think that their search algorithms are going to be increasingly less useful over the decade - in a way a self inflicted goal, as by adding value to links means an entire parasitic SEO ecosystem has emerged. Given that Google funds itself entirely on its link economics, but subsidises many other ambitions, this is going to make its activities in other arenas harder over time. (I see John Battelle of all people, has come to similar conclusions)

In the next 10 years it will probably still be West Coast US companies that rule, but it will be less certain. China represents another huge, fairly homogenous market with its own barriers to entry, and Baidu seem to be able to hold off Google.

Others that are interesting are around the disruption of very big industries today - the growth of online video (Hulu), the disruption of Olde Print Media (Huffington Post, Techmeme) and the emerging Non-bank Banks (unless they get regulated sooner). Also the change to digital in the basic Telco layers implies the emergence of "Soft" Telcos (Telecoms companies that own no direct assets) - Skype is the first wave.


8. Planet Mobile will always overestimate benefits and underestimate time to get them

Planet Mobile runs on the perennial "You can use your mobile to select a great restaurant nearby for you and your friends" business case. It's been used to flog everything from m-commerce to location and augmented reality based services over the last 10 years. Three things have changed for the 20-teens though:

- The rogue entrant that re-sets the game for the next round has emerged (Apple and the iPhone). (Rogue Entrants use the technology available to build the "obvious gaping hole" system that the incumbents for various commercial reasons refuse to build). Going back in history, Apple always enters a poorly structured game with a well defined complete - and closed - solution, capturing about 15 - 20% of the more profitable market while the rest is then duked over by the guiants, and the lower economics usually means 1 dominant player emerges (Microsoft). Google Android is the early pretender for the Microsoft role in this industry, but its still early days and the shoe (and penny) still have to drop for the incumbents

- Pricing and network mean that the other billion or so of mobile users will come online this decade (Mobile penetration in Africa is now similar to the UK in 2000), but they do not have the economic value. Their entrance, however, will transform the market for follow on services (and quite a number of other Olde Industries in these locations)

- Smartphones do more stuff - which means that (i) a bunch of things PCs and other single purpose devices did will be taken on board, and thus (ii) a whole raft of new fixed/mobile applications will emerge. But "Mobile" will stop meaning "Phone" and mean anything from Handy via Tablet through Netbook to Laptop and whatever else comes along that can connect to the mobile nets (Mobile TV sets anyone?)

So, does this mean that Planet Mobile is now about to enter its (much heralded) decade of hegemony? Yes, it will be a lot better than in the Noughties, but... the rule of thumb of dividing all Planet Mobile projected benefits by 2 and multiply time to get them by 2 is probably as useful now as 10 years ago. apply.

Well, that is the projection of the Noughties going forward, but there are a bunch of "Intersection" technologies (those at the intersection of some of these" and some newly emerging trends which will help reshape things too. In the spirit of keeping things Prime, here are 5 we see emerging


9. Privacy (and a related issue, Trust) will become a bigger and bigger factors.

We thought Privacy would hit the headlines after Beacon, but it didn't - however, right now the buzz about Privacy is higher than its ever been. We expect nuanced Privacy to become a major issue in the design of next generation Social Nets, Web Services and eCommerce systems. Online Trust will see huge leaps forward in quantification, simply because without it a lot of the transactions (social, financial, political, etc) that we take for granted in the real world won't happen online very easily above a very basic level. It will require solving a wide combination of Social Capital, Behavioural Psych/Economic and good old Ownership issues. Plus Privacy, of course.

For this reason, by the way, I am less bullish on Location Based services - they are a privacy timebomb waiting to happen, and you just know some overenthusiastic and under-ethiced entrepreneur is going to build the short-cut system that gets accused of facilitating robbery, rape and worse.

(I rather liked Greg Battle's post and his comment that "there will be a sea of people paying for a decade of crimes of youthful oversharing. Credit services will ingest social profiles/footprints as a behavioral overlay to your FICA score and a new industry of removing those indiscretions will be born."


10. How Green was my Valley again?

The sheer amount of money being thrown at Eco-Science todasy - whether you believe in it or not - will ensure that all the networking technologies we know and love will be thrown at trying to make us, our goods and chattels, and by extension the planet, Greener. Some innovations will be very valuable, some will be total Greenwash. Most will come and go and be superseded by newer, better stuff as its very early days for most ICT based Greentech.

If I were to make a guess, its that the Greenwave will be more prevalent in the next few years and recede towards the end of the decade. This is because I (personally) believe much of the current climate change/AGW hoo-ha will be seen to be over-egged and the massive rampups in funding its had over the last 10 years will recede. Bt 2015 the colour of Green will be more "classic"

Anything that makes more efficient use of existing energy assets (renewable or un) is probably a real win. There is also so much money and interested vested in the whole Carbon Trading arena that no doubt many maths PhDs' time will be spent adapting systems from the financial industries to game this one.


11. Enterprise 2.0 will be rebadged with a Three Letter Acronym by 2011.

No one implements big new systems in corporates without a TLA Besides, Enterprise 2.0 as it stands is too limited. It reminds me of Office Automation in the 1980's - a great set of new technologies that aren't yet quite hitting the really big economic levers of the business. By the time Enterprise 2.0 is attacking the big levers - sales effectiveness (CRM), business operations efficiency (TOC, JIT), Churn reduction and Customer Satisfaction (TQC, 6Sigma), reducing CAPEX bills (BPR) and massively improving information flow (MRP2, ERP, OODA) then it will need a new name.

This is not to say that Enterprise 2.0 is not relevant, just that its still a very early day story with immature technology. What comes after is (literally) a 64-billion dollar question.

The Enterprise 2.0 movement will stand or fall on its ability to do 3 major things

- gain new customers/users/donors/whatever,
- keep them
- service tham at lower costs than current and "Good Enough" new systems will.

12. Government 2.0 will be a slow train coming

There are no doubt efficiencies to be gained by moving Governments services onto teh Web, however we believe it will be slower than many anticipate as:

(i) Those with power hate giving power away.

(ii) Governments, by and large, do not have stellar records in adopting new IT systems early, nor in rollling them out fast and successfully. Potential cost savings will be counterbalanced by the costs of purchase and implementation in cash-strapped public services. There will no doubt be Digital Inclusion lobbies arguing for 100% access to new services - a worthy aim, but it will serve to further slow things down. But full inclusion is expensive - however, so long as there is not Digital Inclusion, you can't take the savings. This is the Catch 22.0

(iii) Privacy is a major headache with public data, and current 2.0 systems are far from secure

(iii) Also, current networked systems are too simplistic to deal with the 5% of unpleasant people who will lie, cheat and scam. We can easily design Government 2.0 systems for the 95% of (usually) honest citizens (95% of the 2/3rds of the population who will have Broadband access) , but to do so will be to accept higher risk, and probably more collateral damage from the bad guys. And given how risk averse and lawsuit-keen We The People are en Mobbe, it will be hard for governments to do this. Even if they wanted to, which they don't

13. The Internet of (Moving) Things

Aka Robots. The combination of Moore's, Metcalfe's and .... Law means a lot of ICT power can be put on a fairly sophisticated yet inexpensive moving frame today. The Internet of Things is not the endgame, some of these things will be quite smart, some will move, some will do other fairly complex, unpleasant tasks (like fighting foreign wars, cleaning houses and dealing with low price service needs).

Anyway, that concludes a heroic set of guesses. I should add of course that our methodology is to write scenarios, calculate critical paths, milestones and "points of no return", attempt to understand the game theory of the scenario - and revise it every so many cycles with new evidence - so we will have changed our minds in a years time

There has been quite a lot of discussion in the last few days and weeks about what precisely a Social Media "Expert" is these days (or even if its wise to call oneself such a thing), and naturally this discussion came up at the Tuttle Club this morning (one of the outcomes of that is a decision to write a few posts on Social Media Economics, part 1 being here.

Anyway, I've tried to encapsulate my thoughts in the above diagram, but in essence the storyline is:

In the Beginning....Social Media (The Web 2.0 variety, that is) is not at all well known, a variety of techniques are being explored, and the emerging tools are pretty rudimentary. The Pioneers (bottom circle) in the space come from a wide variety of backgrounds and blaze the trail, inventing much of the early area from scratch. (I would also note that in this phase a lot of practitioners have an evangelical, semi-religious tone which is great for creating passion in the early stages, but lousy for the practicalities later on)

However, this very activity of blazing the trail brings two other constituents into the game, namely:

(i) Those who build the tools and techniques - the Digital Media technologists and consultancies (I'd count us as one of these) that get pulled in. For example in 2005 our first clients were asking us to build - or integrate - Social Technologies, either standalone or, with increasing frequency, to graft onto existing Web 1.0 digital assets. In 2002 you're reading Barabasi and cudgelling your braincells to recall 10 year forgotten maths, by 2005 it's "what are these social network things and can you build us a blogging platform", by 2007 it was "can you build a social network system and blog that connects to our existing systems" and by by 2009 its "how do we filter all the stuff coming off the Social Network?" (Drupal now having a social network module). Ditto the User Interface / User Experience people start to get sucked in as it becomes clear this also drives competitive advantage. And did I mention mobile, or location.....

(And of course in the course of this you delve into social network architecture theory, economics, algorithms*, system dynamics etc etc - and then to implement you dig out all those helping model, influencing, change management and program management skills that any consultant uses)

(ii) Early Day customers - typically from the Marcomms side of clients - tip off their existing suppliers by dint of their activity that this new field is emerging, so the Marcomms suppliers (PR, Marketing, Digital Media) start to build in this capability. In Social Media's case this was exacerbated as the "SocMed" industry initially believed it could fund itself from Advertising so there was even more reason to become involved (there has been little call yet for e-Commerce plays in Social Media, for example - but it will come).

As the market expands, new operation start to form at the intersections. So, for example the Systems Houses and Marcomms suppliers both find that the ROI issue is key, and that the metrics don't yet work to measure impact - and immediately start to work on this, and thus you see the emergence pf what I'd call "Social Media Strategists" - its no accident that Will McInnes (of Nixon McInness) kicks off something like MeasurementCamp, nor that those involved are mainly a mixture of Marcomms and Tech ( or MarcommTech) operations. Its no accident that you're sitting in a late night bar with Porter Novelli's Mat Morrisson arguing influence algorithms on paper napkins, or that ideas like VRM emerge from Cluetrain authors, or that the Tuttle Club's hivemind adapts Wisdom of Crowds and "Tribes" into Crowds, Tribes and Teams", or that Anthropolgists start to seriously look at the behavioural psychologies of Online communities and you find yourself mapping Maslow's laws to Social Graphs ..... these are the intersection industries emerging.

In addition, some of the PR/Marcomms companies start to look at the work the pioneers have done, sort out the promising wheat from the chaff, and then start to use their own know how to build "next generation" offerings for the clients that the Pioneers have had sole influence on to date.

This exact same process occurs from the technology side as technology system designers, consultancies etc increasingly build and integrate new tools into ever more sophisticated offerings as clients demand more automation to increase productivity. (We did our first real time social media search engine design 2 years ago, for example)

And in the middle, at the point of the convergence, it increasingly becomes clear that the endgame is a combination of strategy, technology, operations, economics, marketing, human factors etc - and it also becomes clear, like ERP, 6 Sigma, Lean Operations and other cross-company systemic fixes that have come before, it requires a whole set of cross-company activities and starts to look like good old Business Process Re-Engineering.

And this requires a whole range of new skills like program management, systems analysis etc and a new industry is born.

Also, while this is happening there are two other shifts in the market:

(i) The increasing market size attracts new entrants, many of whom are not particularly good (my favourite is a recently self declared Social Media Expert who only got on Twitter in March this year). Sadly, as is the way in all service industries, in these hectic days it is hard to tell charlatan from competent, and Akerlof's Law suggests in this case the market assumes all players are charlatans - and prices accordingly. So unless one can prove otherwise it is a time of poor margins. Proving otherwise then becomes an issue of exposing track records, customer referrals, and good old marketing - ie the cost of doing business goes up. You also get the reverse problem, as the market expands very respected players enter....when the McKinsey Quarterly drops its first articles its market validation, but its also just raised the bar several feet!

(ii) Also, as the market size increases, the tech hype machine is attracted like a moth to a candle, and so the space begins its steady progress up the hype curve until promises are being made the the current sate of the art cannot fulfil, and the aether becomes full of sillier and sillier stories. Akerlof would again point out that all sorts of Animal Spirits get involved, and a hype bubble emerges and inflates way past its pop-by size, and when it bursts the fall is a long way down, into the mud of the Slough of Despond.

At some point, all these players start to face the same strategic issue, but because of their positions on the gameboard will play it differently:

Initial pioneers face a tough choice. By and large the early skills are no longer sufficient, and in fact the body of knowledge has moved on and is expanding and fragmenting rapidly. They either need to get some depth in an area (the classic "T" shaped person - broad overview plus one area of deep skill) or move again to the next new frontier where pioneering work is required.

The other two players - Technologists and PR/Marketing - face the opposite, and need to expand from their areas of expertise to encompass more breadth so they can play systemically, holistically across the space. Not only that, but their companies need to decide if they will dedicate themselves to these new market niches - the intersections (to compete with the new startups springing up there) - or retreat back into their traditional areas for now.

This is my view of where the market is poised now, roughly. Where does it go? Well, this is my view based on the familar progress along the Hype Curve:

(i) The Hype Bubble pops, and all the buzz in the area disappears. No one invites you to cool conferences anymore. The last thing you want to be at this point is a standalone "Social Media Expert" - you need another schtick to beat clients with.

(ii) In its dive into the Slough, it doesn't go backwards to Pioneerville though - what it does is sloughs off the stuff that doesn't work (and a lot of the "religion"), adopts other stuff that does, and starts to adapt, and adopt to get to where the emerging experience says the real value lies. At some point, in a few years time it re-emerges - often re-branded with a new name - as an industry that is creating value.

Also, if I were to put my 20 year "been here before" hat on, I'd say that Social Media at the end of the day is a set of tools, not a new way of doing business, and as such those tools will be adopted and adapted to integrate with existing systems. If I may give an example. Intranets were once upon a time going to change the ways companies did business, were going to tear down the walls, create open, collaborative societies - you name the social media hype object, Intranets had them 12 years ago. Didn't work that way, they got adopted, adapted, used where they worked, rejected where they didn't and are now just part of the enterprise's knitting.

That my 2p worth anyway - this is a "straw man" so thoughts/criticisms/etc welcome.

*Social Media has been fun in that those dusty old Ops Research and System Dynamics textbooks have seen the light of day again and sit alongside Barabasi et al, along with bits of Sociobiology, Behavioural Economics and Marx (Karl and Groucho)......

Update - looks like fellow Tuttler Benjamin Ellis was also mulling over the debate, here is his post on the subject - his thoughts around the naive consumer problem (Akerlof's Law corollary) is interesting. Also, Suw Charman Anderson wrote her thoughts on the matter over here. Any others blogged the debate?

Given that we're in the middle of a major piece of research on the future of online video, seeing a piece by Chad Hurley of Google/YouTube on The Future of Online Video was very interesting:

Today, 13 hours of video are uploaded to YouTube every minute, and we believe the volume will continue to grow exponentially. Our goal is to allow every person on the planet to participate by making the upload process as simple as placing a phone call. This new video content will be available on any screen - in your your living room, or on your device in your pocket. YouTube and other sites will bring together all the diverse media which matters to you, from videos of family and friends to news, music, sports, cooking and much, much more.

Sounds positively Gatesian, but so far this is fairly standard fare for the video uber alles optimists - convergence, mobile and huge penetration and attention! The only way is up:

In ten years, we believe that online video broadcasting will be the most ubiquitous and accessible form of communication. The tools for video recording will continue to become smaller and more affordable. Personal media devices will be universal and interconnected. Even more people will have the opportunity to record and share even more video with a small group of friends or everyone around the world.

And yet this all appeared on a Google text blog.

The evidence to date anyway is also that this scenario is unlikely to be correct - we use different media for different roles. At Broadsight we use economic analysis to predict future technology takeup potential, (seems to work) and the problem with video is that it is quite a high cost medium - creation, aggregation, distribution and consumption all have higher cost than "thinner bandwidth" media. This means that:

- There will probably always be types of communications that are too expensive to do via video (not just in creation costs, but in listening cost - just like voice mail is far less efficient than email)

- Where video is cost effective, it will still compete with media that is cheaper still, and easier to use in some situations

Video no doubt has comms benefits, being a richer media, but it will be a cost/benefit tradeoff when to use it. Existing comms technologies will also improve, and by definition will probably be easier to use than video. In other words, video will probably not be the most ubiquitous and accessible type of communication going in 10 years. That said, it may be more valuable than the others (looking at the value spread in more traditional media) - assuming they can find a better business model than ongoing Google subsidy.

When I first looked at Google Knol, I felt a pay-the-writer-via-Ad-clicks was the wrong game theory / biz model for an information service. At the time I reckoned the following would happen with the system as it currently is:

- people will write about topics that are highly trafficked regardless of cultural value
- they will write content that aims to drive traffic - ie it will be sensationalist, not factual
- because anyone can put up a soapbox, it will be far harder to discern fact from fiction, opinion from reality.
- voting and other feedback will be largely irrelevant as people vote for what they like, not what is correct or valuable

Add to this is another one which in hindsight is obvious - given that the money comes from traffic driven advertising, why bother to keep content current and accurate at all, in fact why bother with your own content when you can just lift it from Wikipedia and make money yourself?

As the Technologiser blog notes when they looked at the copied, pasted and non-current data on Knol article they surveyed:

Much of the power of Wikipedia, of course, comes from its collaborative nature. And within moments of news breaking such as McCain picking Palin, you can be sure that someone will add it to the appropriate Wikipedia entries*. When someone makes a mistake in a Wikipedia piece–and it happens all the time–there’s a good chance someone else will come along and fix it.

Knol is fundamentally different: It’s designed to hold entries written by individuals. “[No] one else can edit your knol (unless you permit it) or mandate how you write about a topic,” states the Knol entry about Knol. Which means that information that’s inaccurate or stale may stay so forever–you gotta think that if the person who added the Knol on Sarah Palin hasn’t gone back to update it by now, there’s a strong chance that he’s lost interest.

The article goes on to catalogue a series of poor performance practices on Knol, showing examples of all we mention above plus wholesale lifting of (out of date) Wikipedia articles. Tom Lehrer would be proud

Plagiarize,
Let no one else's work evade your eyes,
Remember why the good Lord made your eyes,
So don't shade your eyes,
But plagiarize, plagiarize, plagiarize -
Only be sure always to call it please 'research'.

Not only that, but the rating mechanism for one of the articles (surprise surprise) had 5 stars. No idea of how many votes, of course.

This system must have just about the worst set of "game" rules to deliver useful content that one could imagine devising, in fact its sort of hard to imagine how one could consciously design better rules to design cr*p content. The thing is, Googel is full of very smart people so you either have to believe that (i) it really is meant to be this way, (ii) they are not as smart as we imagined, or (iii) - and my fron-runner - is that internal politics drove all sorts of compromises from various internal power holders, as Wenka Booij noted in discussing KPN's web redesign (see our previous post about that here)

So how to fix it?

The thing about Wikipedia is reward for writing (in karma) is positively linked to content quality, and reward is at least neutral in terms of topic chosen. Knol however rewards with ads based on hit volume (assuming a % of hits = a % of clicks), and volume is driven by "pop" content value and volume, not quality. Rewarding people based on "user rating" would just lead to gaming of the system, so thats a non-starter.

The only way to make it work is to treat it the same as all other webpages (there are suspicions that Google favours it in searches) and Google also use it's considerable "spam analysis" arsenal to at least warn writers when they are spam-blogging that they will be removed. And then do it. That gives a carrot and a stick to at least write quality material. Getting people to write on less popular items is still an issue, maybe a declining % rate of payout as traffic rises will reward more obscure topics?

How to make them keep their stuff current is another matter - maybe a "last updated" signal on the page or something like that?). Maybe make writers authenticate themselves via having an "about me page" so that they cannot hide behind clearly anonymised names like "Jean Jacques Frapsauce"

*Or before even - see here.

Nice article by Umair Hacque on the shift in platform economics as the underlying technology moves from closed to open, and as the convergence / consolidation increases:

Today, platform wars ain't what they used to be. On the one hand, there's Facebook - playing a textbook game of platform strategy, but slowly suffocating the utility of its own network. On the other, there's Apple - ignoring many of the rules of platform strategy, but radically redesigning the long-suffering mobile value chain with the iPhone App Store.

I think calling Apple an "open" market is a misnomer - the iTunes end to end value chain is pretty locked down, which is Apple's traditional approach - an iConic consumer device with a locked down supply chain behind it. Nonetheless, I think Umair is directionally correct when he notes that:

Let me advance a simplifying proposition: platforms are markets. The most useful way to think about platforms today is simply as markets.

The App Store's name is revealing: it tells us that Apple doesn't see a platform to be manipulated, but a market to be made. It is that understanding that's at the heart of Apple's furious domination of the mediascape.

We have done quite a lot of work with various clients in the last year or so on how platforms can best be operated as market ecosystems, but (frustratingly) are bound by NDA's in various areas - but one can always nod vigorously (albeit raising the eyebrow to temper the Apple-o-philia) when Umair notes that:

- Markets alter the basis of competition. Apple took something terminally closed - the mobile value chain -and pried it radically open. Facebook - still thinking in yesterday's terms - took something radically open - the www - and is trying to make it a little bit more closed.

- Markets cause strategic domino effects. Markets are strategically radical: once the basis of competition has been altered, an economic tsunami is unleashed, often unstoppable. The dynamics of competition shift irrevocably.

- Markets atomize the value chain. The App Store is radical, ultimately, because it atomizes the value chain: where once a handful of scale-driven players could produce and distribute mobile apps, today, any number of players can enter. What was once monolithic is shattered into a million pieces. If the market can coordinate those millions of pieces effectively, the new value chain is hyperefficient.

(As an aside, this is also our view with approaches such as VRM - until they create new market forms, we think it will be hard for it to get traction).

[ Update - I think its necessary to make clear that market here - in my view - does not imply just a simple buy/sell relationship. More that it is open to trading, in a range of models, from a variety of players. I think the word ecosystem - where eco is also for economy - is possibly the better word, which is what I tend to use - but Umairs' phrase is more pithy]

As we also showed in our work 2 years ago on Advertising models for Telcos, the convergence also forces different business models onto hitherto safe platforms - so media ad -based models start to impinge on Telco rental models (hence Blyk, for example).

I'll let Umair end off this post with another point, which I will discuss in more detail in a later post and at the O'Reilly Web 2.0 Expo in Berlin.

This conclusion also helps us answer another critical question on the minds of today's investors, entrepreneurs, and would-be revolutionaries: when will today's crop of startups start making serious cash? The answer: when they shift from platform logic to market logic.

Quite - ending FreeConomics and charging money will create an Akerlofian revolution, and allow quality to chase crap out of so many of the digital 2.0 markets.

Forget Grids, and the "network is the computer", and Distributed Computing and all those ideas from yesterday. We now have Cloud computing, which will solve all those tricky problems the last N iterations of networked server computing could not. The zeitgeist is upon us, with posts on my reader from far and wide, and has even made Techmeme via Businessweek:

The term "cloud computing" encompasses many areas of tech, including software as a service, a software distribution method pioneered by Salesforce.com about a decade ago. It also includes newer avenues such as hardware as a service, a way to order storage and server capacity on demand from Amazon and others. What all these cloud computing services have in common, though, is that they're all delivered over the Internet, on demand, from massive data centers.

A Sea Change in Computing

Some analysts say cloud computing represents a sea change in the way computing is done in corporations. Merrill Lynch (MER) estimates that within the next five years, the annual global market for cloud computing will surge to $95 billion. In a May 2008 report, Merrill Lynch estimated that 12% of the worldwide software market would go to the cloud in that period.

A fortnight ago I was on a panel at the Wealth of Networks Conference talking about the evolution of Service Infrastructures (Disclosure - we strategise, design, build and fix these infrastructures for a living), of which Cloud Computing is the current topic du Jour (Service Oriented Architectures being so 2007). I think I was put on as the token sceptic . And I must admit to being a little nonplussed - about once a year we tend to pick up a client assignment predicting the future of the overall service infrastructure market, and what is required for it to progress - and whether it's Top Meme is Clouds, or Grids, or SOA, or PaaS or whatever, its all comprised of the same basic submarkets, comprising of the Digital Logistics - the "trucks n' sheds" of the internet. The datacentres, backbones, OSS/BSS, middleware, and client side software subsectors to make all this happen.

And if I were just a bit skeptical (surely not) I would argue that this is merely an attempt to rebrand this overall area yet again, as it hasn't really taken off the last times. Nothing has really changed conceptually - we have datacentres, we have the internet, we have PC's (and increasingly mobiles etc) on the receiving end. They are all getting cheaper, bigger, faster etc but that is all pretty predictable (in fact, the $100bn market 5 years from now is pretty much a constant part of the story as well - it comes from aggregating all these submarkets up and hitting it with 5 years projected GDP growth globally).

So what has changed this time - what is the real difference between "The Cloud" and what has come before? There are some subtleties, as Wikipedia notes for example:

Cloud computing is often confused with grid computing (a form of distributed computing whereby a "super and virtual computer" is composed of a cluster of networked, loosely-coupled computers, acting in concert to perform very large tasks), utility computing (the packaging of computing resources, such as computation and storage, as a metered service similar to a traditional public utility such as electricity) and autonomic computing (computer systems capable of self-management). Indeed many cloud computing deployments are today powered by grids, have autonomic characteristics and are billed like utilities, but cloud computing is rather a natural next step from the grid-utility model. Some successful cloud architectures have little or no centralised infrastructure or billing systems whatsoever including Peer to peer networks like BitTorrent and Skype and Volunteer computing like SETI.

I await with interest to see how "monetisation" will happen without a billing system (except flogging yourself to eBay )

But technically this is still not much more than the inevitable progress of innovation learning curves, and economically not much more than the inevitable progress of Moore's and Reed's Laws. It is hard to see why this is a step change from what has come before.

Strategically its far more interesting, because what we are seeing is The Convergence, and corporates of various stripes scrabbling for the high ground (and in Dell's case, the Right to Brand). Consider the stripes - from the Web 2.0 corner comes Google, from the Web 1.0 corner comes Amazon, from the Web 0.0 corner comes Microsoft, and from the 4th corner come the resurgent Telco 2.0's who have networks and think they may as well be computers too.

In the centre sit a host of "traditional" ICT incumbents - the hardware and software companies, who are finding these large tanks increasingly parking on their (and each others) lawns.

The prize they all believe is worth winning is that moment of magical Enterprise 2.0 Enlightenment, when large corporates and SME's outsource all that infrastructure to them. Just in time, for today's outsourcers, to avoid the crippling race to the bottom of pricing in that market that has occurred in he last 5 years or so.

And of course they are all hoping that they can get the benefit of network effects - aka the rich get richer - in which early leaders find they get a positive feedback loop going and pull ahead of les autres. Similarly, the risk of not getting in early is being consigned to the long tail of Also-Ran's.

But in this noble rush for the New Outsourcing Eldorado, the cloud enthusiasts are prone to being a bit dewy eyed over its benefits, and try and pull the mist over the eyes of customers as to why - by and large - these efforts have failed in the past. The issue with Cloud computing is that its a new tech fix, but core reasons for failure in the past have had little to do with the technology, and everything to do with business risk:

(i) Risk of service failure - you need high service availability. Students of probability theory will know that to get 99.999% reliability in a one chain link system (from your computer to your server) is "interesting". To get it in a 2 chain link system requires each chain link to to be 99.9995% reliable, which is most kindly described as "challenging". Clouds usually have more links in the chain, especially those envisioned by enthusiasts where the functionality is distributed all over the cloud. The transaction messaging required for this distributed scenario is still in its early days.

(ii) Risk of Service Centralisation - because of the above issue, the most rational architecture is not a cloud, but to centralise all the services somewhere. But then you run into the problem of "who owns the service". It works like this:

- Hand service over to supplier
- Sign supplier's Service Level Agreement
- Hand your data, workflow, etc to the supplier (after considerable cost & effort to systemise it for a 3rd party to be able to run)
- Find the SLA is more for the supplier's, not your benefit, and their response to your needs as a company is not as flexible as you may desire. Get used to filling change requests!
- Find, in disputing the SLA, that the supplier has a tight grip on your corporate testicles - switching you off sends you rapidly down Swanee, sans paddle

If you have been around the block more than once, its possibly the opposite case - you negotiate such a good SLA with the supplier that they can't actually afford to maintain it, and things slowly fall apart.

(Or, you find that its a startup and there is no SLA in effect)

(iii) Risk of security compromise - when there are multiple parties in the transaction, even of good faith, then breaching security becomes far more of a possibility. It just does.

(iv) Risk of Handing over Control - the reason the PC was so popular vs the mainframe (the "first cloud" architecture) was that the user had control of the operating environment.

There is a more subtle version of this last one - ie Who Do We Trust with our data (as in who won't peek / datamine / resell) . This is a battleground that will be interesting to watch, as in general the lower cost the service, the more its costs will potentially be offset in this way (see this post on FreeConomics - why your data is free but everywhere in chains)

The issue quite simply is this - in my business, I am committed. The infrastructure partner is only involved.

Now, I hear you argue, Outsourcing has done very well - and it has - but it is instructive to look at what is usually outsourced and by whom. By and large its non core, non customer facing applications (we have in fact done a number of pieces of work re-insourcing customer facing services). So Email, HR, Sales Analysis and Order Management etc are outsourced, but core workflow far less so. Also (whisper this who dars) outsourcing is often a piece of financial, not technical, engineering. Smaller companies do tend to outsource more critical services, but its driven by their economic necessity (lower resource levels, lower cost plus trying to get a jump ahead of large players) rather than choice in many cases.

The other point about existing outsourcing and webservicing is that it has - in our view - still scooped up the 80/20 economic benefits from the low hanging fruits (I'm looking at a McKinsey study from 2006/7 as I write this, I can't see where the next "step change" comes from via Cloud Computing. In other words, the existing "good enoughs" are probably good enough to prevent most Cloud business cases from passing corporate muster in the near term, and the real next level benefits are still in the "hard to do" category.

So what to do?

For larger companies, our view is that this a technology to try out in some small, non core activity - maybe an area that does need a certain bit of sizzle. It feels to us like a "prepare to be a fast follower" game at the moment. For SOHOs and SE's its more of a gambler's advice gambit - make sure that you can afford to lose what you stake (and even better, back it up to the nines).

Update - Gapingvoid has posted an article on this that I liked - ( it comes to similar conclusions ) and Confused of Calcutta has an interesting argument, that Open Source will be the antidote to the "Rich Get Richer" dynamic. I don't think so - Open Source is a tool here, we have built various pieces of service infrastructure using Open Source in this space - the key issue is who is willing to take on the SLA - ie under-write the Risks

Two interesting new articles indicate a potential new zeitgeist. First, TechCrunch wants a web tablet:

I want a dead simple and dirt cheap touch screen web tablet to surf the web. Nothing fancy like the Dell latitude XT, which costs $2,500. Just a Macbook Air-thin touch screen machine that runs Firefox and possibly Skype on top of a Linux kernel. It doesn’t exist today, and as far as we can tell no one is creating one. So let’s design it, build a few and then open source the specs so anyone can create them.

And another NYT article describing the emerging micro-laptop :

A Silicon Valley start-up called CherryPal says it will challenge the idea that big onboard power is required to allow basic computing functions in the Internet age. On Monday it plans to introduce a $240 desktop PC that is the size of a paperback and uses two watts of power compared with the 100 watts of some desktops.

It wants to take advantage of the trend toward “cloud computing,” in which data is managed and stored in distant servers, not on the actual machine.

Every few years the "extra thin client" play comes along, its been around since PC's were called microcomputers, and the idea was always that the network would be the computer. However this has always - to date anyway - foundered on the eventual realisation that the server/network/cloud is not reliable enough, a point ironically brought home by the simultaneous failure of Amazon's S3 cloud.

The other approach to this micro-PC market is via the beefed up mobile / PDA, and as RWW notes, its now game on between Apple and Nokia.

Now we did a feasibility study of such a multimedia device a few years ago, when everything was quite a bit more expensive - and it was feasible then, so its been curious to me since then that despite all the Convergence conversations, manufacturers have by and large not stepped up to the plate, until very recently.

The reason was probably economic - all our research at the time implied although there was huge latent demand for such devices, what was harder was to work out how it could be particularly profitable as device margins here will be wafer thin, and the incumbents were all making more money doing what they did at the time. However, all those markets are now overcompeted, driving startups and various existing manufacturers into this new arena

In this game, we thought it unlikely the traditional mobile ploy of device + large and long lasting contract would work if it was competing with the PC market's fairly unfettered sales model (except for all the onboard crapware of course, but that may be receding).

Clearly some form of offset funding will very likely emerge at this point of the market, its just hard to predict which.

Update - interesting take by Confused of Calcutta arguing that these devices will have a similar impact to the low cost PC in developing countries. Connection charges are another issue that holds these areas back, however.

From Marc Andreessen, commenting on the days of the early Internet in Vanity Fair:

“When Al Gore says that he created the Internet, he means that he funded these four national supercomputing centers. Federal funding was critical. I tease my libertarian friends—they all think the Internet is the greatest thing. And I’m like, Yeah, thanks to government funding.”

Exquisite

Still trying to work out What It All Means when Vanity Fair runs a 9 pager on The Internet. The Convergence clearly goes further than I thought - I look forward to the first reviews of the Paris catwalks on TechCrunch.

Marvellous - watching a whole set of spats about the Brave New World of PR 2.0. On Techcrunch I read Brian Solis talking about the Secret Rules of PR (12 eh - hmmm - not a Prime thing then .

Anyway, in the comments section some wag weighed in with a response largely rebutting them:

Secret #1
Understand You Probably Have Nothing

Your startup is probably a whole lot less special than you think and will probably fail. This is obvious to most journalists and bloggers.

Secret #2
Pick a Friend to Lead PR

If you have funding and have a friend that works at a PR agency, retain their firm. Spreading your funding around to friends and family is a crucial part of getting the most out of the startup process.

Secret #3
Don’t Participate

Most technology journalists and bloggers are idiots who wouldn’t know an interesting story even if it hit them in the face. Therefore, don’t waste your time trying to befriend them. Not only are they likely to ignore you anyway, but you’ll have to put up with their egos and stupidity.

Secret #4
The Blogosphere Is Not Your Audience

Bloggers and first adopters are not mainstream and if you want to achieve success, don’t believe the hype - appeal to mainstream journalists and most importantly, mainstream users.

Secret #5
Launch Anytime You Want

If you have something truly interesting, people will notice. If you have something that isn’t interesting, it doesn’t matter what time you launch - nobody will care.

Secret #6
Most Bloggers are Not Journalists

Focus on real journalists, not bloggers.

Secret #7
Don’t Measure

If you actually get any coverage, it will probably be short-lived so don’t place too much weight on any measurements you take after your PR launches. Instead, come back a couple of months later and see if the people who found you through your PR are still around and still talking about you.

Secret #8
You Don’t Need to Customize the News

If you’ve written a good pitch, it will appeal to people. Period. Customizing a PR is about as useful as customizing your toilet seat.

Secret #9
Don’t Get a Spokesperson, or Do

You probably won’t need one and if you can’t be a good representative for your company, you’re probably not going anywhere.

If you have lots of money, on the other hand, consider hiring a highly-attractive female who is willing to wear skimpy outfits. This probably won’t do much but you’ll get the satisfaction of having an attractive woman talk to you for once in your life.

Secret #10
Your Company Blog is Less Powerful Than You May Think

Unless you’re a high-profile Fortune 500 company, the number of people who will read your company blog is so small as to be meaningless to your company’s prospects for success.

Secret #11
Blogger Relations Are Worthless

Even a review on TechCrunch is unlikely to give you lasting results, so don’t give yourself a hernia trying to reach bloggers.

Secret #12
Follow the Conversations But Don’t Join In

If people like your product, they’ll talk nicely about it. If they don’t, try to take their feedback into consideration but recognize that you usually only get one chance to make a good first impression and if the response to your startup is poor, you’re probably doomed and trying to talk to people to convince them otherwise will be useless.

I am available for PR consulting. $5,000 per month retainer.

I must admit to having a certain sympathy with this chap, the original was - in my opinion anyway - maybe useful if you are already a Silicon Valley Superconnector and funded, but of limited use to the average small company. I later noted PR Natural Loic Le Meur calling Mr Solis's stuff Bullsh*t and coming up with his own 7 points (7 of course is Prime)

I then noted Mr Scoble weighing in with his own 7 points.

Now watching an A list blogwar is all very entertaining, but the conclusion to take from this is that no one really knows what the heck "PR 2.0" is or is going to evolve into. But, having worked in the last year or so with a few PR companies, In fact, I think these chaps are in danger of all looking under the lampost of the existing industry luminaries to find the future of PR.

I don't think that's where it will be - I think PR 2.0 will be run far more by physicists than publicists, because the killer fact about online interaction - whether website, social network, advertising or whatever is that it is very, very measurable and thus lends itself to serious data crunching.

The future wll be less Arcane and more ArcTan methinks.

This was brought out well in a session I attended early this week at the Convergence Congress, where one of the speakers showed how various "experts" in the company (PR, marketing, UE) - armed with opinions about what the customer would do, combined with executives (with sales targets) to pervert the web experience design that the customer research said they wanted. However, it is of course possible to test various website designs live, and that quickly tells you what customers really, really want despite all the fluffy theories.

To an extent this use of heavy maths has already started to attack the Marketing / Ad industry with Google, and in fact metrics are the major issue that - in my view - the smarter blades in this space are really focussed on now, so I suspect that we will see a lot more long equations rather than long lunches in future.....

(Shameless Plug - Last year we had to write some material to get a few PR agencies up to speed with this New New World, and even gave a few workshops - I was giving a session to an Agency last Friday in fact - we are available for consulting on PR 2.0 at our standard very reasonable rates )

I gave a talk at the Converged Services Congress this week, and it gave me an opportunity to reflect on “The Convergence” over the last 5 years or so, and on what we all thought would happen then versus now.

Convergence is a fascinating area as its where Telcos, IT Co's, IP Co's and Media Co's all...converge, and is thus a fairly frothy area. I don't know many people apart from us who work with Telcos, Media Co's Web Co's etc - at least I don't see many other people across these various spheres at conferences - but by and large they are all doing the same thing.

What is also interesting to me is to to see how "Convergence" changes over the years - my impression is it hit the top of the "Hype Curve" about 2 years ago and we are now in the downsliding, "reality finding" stage as people increasingly realise they are Crossing the Chasm.

Some thoughts from this year's conference:

1. The Future will come more slowly than you think

The first thing – clearly – is that it would happen much slower than the breathy predictions of 5 years ago. From IPTV to Mobile Web the Analysts’ projected growths of 5 years ago have been woefully short in most areas. There are a variety of reasons for this (as there always are) but a general rule of thumb – I propose – is to immediately halve any Analysts forecasts for 5 years out, for anything. Except good old broadband – for that, there is an insatiable demand.

2. The Future will happen differently to the best laid plans of mice, men and Mobile TV - and will be Over The Top

Things that were hot hot hot a few years ago have been quietly dropped by the wayside – IPTV, Mobile TV, Mobile Web, IMS, Femtocells in Europe were all examples. What is interesting is in each case there was a reason that, in hindsight, was clear – a service point not met, a difference in the way customers actually solved a problem rather than used a service, etc - that was clear at the time but hope (or desperation) over-rode experience.

Take Mobile TV for example - every Telco thought it was a saviour in 2004, as trialling in 2006, and quietly dropped by 2008. We predicted this in 2006 for a client (sadly before we started the blog) simply because the market confusion / cost benefit didn't work - but we summarised this last year in a post on the game theory in mobile and why it would fail here

And we predicted that the future of mobile TV would therefore in future be in over-the-top services in this post here - And we are now living in a world of Qik, Seesmic etc - its Mobile TV, but not as the Mobile Telcos know it.

3. You can't get convergence by just stapling together existing services

Stefan Volck of Deutsche Telkom presented what I thought was a very useful analysis of the future history of Convergence - he was talking about IPTV / Web TV specifically but I think its good generally I have reproduced it below with my generalised interpretation:




4. Advertising is not going to be a cure-all

Although advertising will be a part of the converged business model, there is increasing evidence recorded across the piece that (ab)using advertising kills the thing it loves - customers don't like it, no matter how hopeful the purveyors of targeted/ unique / personalised Adspam - and the over-reliane of advertising cripples the offering, much like overdeveloped beachfronts eventually drive sun seeking tourists away. (On a related note, I see that Facebook is showing its redesigned service less poking we are told)

5. The Convergence business model is not going to be a saviour driving large increases on new customers or even new ARPU

The evidence - from the conference anyway - is that much of the benefit at the moment is in increasing "stickiness" (ie reducing churn) - which for existing large players is a key thing as in a competitive market (think mobile, XDSL, mature Social Networking) the benefits of customer retention far outweighs the new customer acquisition costs

6. Its all about the Customer, stupid

More and more the realisation is that its all about giving the customer what they want, not want companies want to give them - customers have an irritating habit of ignoring stuff they don't like. I posted earlier on a good summary of lessons learned from successful services from Daniel Holle, over here. Wenka Booj of KPN gave a very good study of how messages from customer research can be subverted by internal interests within an organisation.

7. Twitter etc are interesting, but can these things scale?

Contrary to the (sometimes smug imho) view among the Web 2.0 fraternity that Telcos etc "don't get it". the reality is more that they do (most people had heard of Twitter, and this was besuited TelcoLand) - what they don't get is how you hope to succeed with networked services if they don't scale. They also know a thing or two about scaling, so services like Twitter interest them, but they scratch their heads as to why one wouldn't design such a service to scale from day one. (This is a classic tension between the IT heritage of Web 2.0, which is more the "get it out there and let customers fix the bugs", and of Telcos who are more concerned with "Right First Time")

8. Don't underestimate the Laptop

The laptop is moving from humble corporate workhorse to being a fashion item, and a mobile tool - nearly 90% of mobile 3G data in Europe is sold to laptops. The iPhone is essentially the closest current mobile that looks like a laptop (ie works on the mobile 'net without you noticing) but the Eee PC is the beginning of the Mobile PC play.

9. Overcomplicating converged services is a no-no

The example given was the humble washing machine - the industry has moved away from all singing, all dancing devices to simpler ones again, as customers just don't like that level of complexity. There is a subtrend, in that Moore's Law is driving devices to commodity pricing - how does the industry change when the $5 disposable phone emerges - which it will by 2010 we believe

10. Large companies will continue to be sold pups because they lie to themselves

A combination of not being able to match VC/Offset/Free backed business models with traditional business hurdle rates, plus unrealistic profit targets, internal politics, and "mainstream service" priorities will continue to make it very hard for large corporates to launch the correct ripostes to new startups, even though people in these companies know what they need to do. The only way to solve this is to develop services off to one side that cannot be smothered by the Mothership.