Magical mystery tour is waiting to take us away
Technology is converging all around us. Where is it headed? Nobody knows. What does it mean to our lives? Nobody knows. But its allure is beguiling. We are living at one of those cusps in human history where no one's quite sure what's next on the agenda. But don't worry, the technologists working for companies as diverse as telecommunications operators, device manufacturers, software developers, networking vendors, online portals and content providers are telling us that this is the age of digital convergence. We are in safe hands; they will take care of us and guide us through. In return they ask of us only one thing, that we lock ourselves in to their products and services.
Watching the technologists espouse their views is like watching people suffering from a contagious fever. If enough of them think something is going to happen, it may become a self-fulfilling prophecy. We may also catch the fever and like them be hot-wired into their "must-have" products. The technology evangelists' only fear is that we might not buy into their vision. This is why they talk about ubiquitous "cloud computing", "intelligent networks" and "smart devices" - everywhere around us but not in any single place. They use these fluffy terms to sell their vision in a non-threatening way.
In the past, technology was not converged - it was infuriatingly disparate and proprietary. Yet every company involved in the value chain knew their place. Telecoms operators knew about how to send an analogue voice signal over a copper line. Newspapers were concerned with paper and printing presses. Record companies knew about vinyl. Everyone was happy with what they had. They also knew who their competitors were. Take the photographic imaging business of the 1980s. In one corner were the camera makers such as Canon, Olympus and Nikon. They were battling it out for customers who enjoyed taking photographs. Over in the photo materials corner of the ring, goliaths such as Kodak and Fuji squared up with one another for the sale of film, paper and processing. All of the contestants understood the rules of the game and who they were playing against.
Then someone decided to change the game entirely. Along came Sony, a consumer electronics company that made radios, televisions and the Walkman cassette player. They launched the first consumer camera based on digital imaging, which broke all of the rules that everyone else had been playing by. Things were never the same again after that. Soon enough, everyone was trying to get in on the act, using disruptive technology innovation as a strategy for revenue growth; so today we have a situation where the largest seller of cameras in India is none other than Nokia. A phone company that started life as a maker of toilet paper.
Companies that are bold enough today to be involved at the cutting edge of digital convergence have absolutely no guarantee that this time next year they will still be in business. Some of the business models are so tightly strung out that the digital equivalent of stray volcanic ash could result in a fatal crash. Without wanting to sound alarmist, but take Google - its entire market valuation is based on the revenue it receives from online advertising. That to me seems like a single point of commercial failure waiting to happen.
As it stands today the soon-to-be-converged technology world has three main strongholds. In one fortress there are content creators, such as News Corp, entertainment industry operators such as Disney and Web 2.0 technologies such as Facebook that enable self-publication on the Web. In the second are device merchants, such as Apple, Sony and Nokia. The third bastion is composed of access channels, such as telecoms operators and the likes of Skype and Google.
Each of these strongholds is now encroaching on the other's territory. And, like a bunch of immortals from the cult movie Highlander, the companies involved in convergence are running around trying to decapitate one another in the belief that "in the end there can be only one". So which one, or ones, will remain? Well, if we use by way of analogy the task of booking a holiday to explain digital convergence then it would go something like this: when booking a holiday, the destination is the most important thing. This is akin to what the content creators own. It's where we want to go. Choosing which airline we want to travel on, whether it's a no-frills airline or one with first-class cabins, is the same as selecting a device merchant. And finally, the flight path that the aeroplane travels on is like selecting the access channel.
The problem for those in the latter category is that the customer really doesn't care about the flight path the aircraft takes to get to the holiday destination. They care most about the destination and somewhat about the airline, which means content rules and device comes second. Unfortunately for all of the telecoms operators out there, the flight path is of no value. It's just a commodity that no one in the future will notice.
That is why shrewd telecoms operators are now lining up to make a wider play in the converged digital space - they are on the right road. They currently have the advantage of brand awareness with their customers as well as an existing billing relationship with them. As to where this road may lead, nobody knows. But what we do know is that the roads are converging. Let's hope someone has got a good sense of direction.
Rehan Khan is a business consultant and writer based in Dubai. email@example.com
Published: May 16, 2010 04:00 AM