Monday, June 27, 2005

Structuring Convergence - Slicing The Elephant (2001)

This was written a while back - 2001 to be specific, but I think it still serves to understand convergence better and though the individual elements have moved forward and the piece seems very introductory and "naive" to me today, I chose to not tamper with its original flavour, in this posting.

Written: 2001
We have been hearing of convergence for a while now. The debates have been raging as to whether this is just another hype-cycle or perhaps something deeper. The answer of course is both. Just like the Internet itself, there is a very large penumbra of hype around a very revolutionary core. Those who ride the hype curve may find themselves washed ashore on the sands of disillusionment. But those that ignore the core may find themselves drowning in a sea of change. As managers and business leaders, you need to stay in step with the many faces of convergence - as they could offer you entirely new ways of acquiring customers, servicing them, interacting with them or building operational efficiencies within your organization. If you belong to the media or telecom industries of course, expect a Tsunami.

Depending on where you approach the problem from, you could be seeing a different picture of convergence. Like the proverbial elephant, convergence offers different things to different people, each of them correct though none of them paint the picture completely.

At the core of convergence is, of course, the coming together of voice and data. This sounds basic but the ramifications are really epochal. To dismiss the trend of convergence thus, is akin to dismissing the Internet as a larger network and nothing more. It is, of course much more than that. And like the Internet, as and when it becomes mainstream, convergence will create fundamental changes in the way we communicate, transact and live our lives. It will draw new social patterns and systems. It will cure some societal problems and spawn new ones. It will make telemedicine, tele-government, DTH, Video-on-demand, Videoconferencing and voice activated remote devices a part of our daily lives. In the converged world, your digital music system will not be playing CD's, but will instead, log in to the record company archive in which you have a library membership (probably at the cost of 1 CD), and play any song you select from the approximately 100,000 tracks available. It will also have a memory or index of all the tracks you've played and how many times you've played them, so that it can soon set you free from the task of selecting music to play. More importantly, the pipe that carries all these bits of data back and forth from your home will be the same one that carries your voice when you use the phone. But I'm jumping the gun here. Lets get back to the Elephant as we see it today.
In an attempt to demystify the not-so-white elephant, I've tried to slice it into manageable pieces.

Device Convergence:
This is the front end of convergence. This is the part where your phone is also a memory device and an Internet access device. Or where your TV is also your Internet monitor. Or where your PDA is also your phone. And down the pipeline are devices that we probably cannot conceive of, in our pre-converged consciousness. It is quite possible that the next generation will sit around in the evening watching interactive programming on Interactive-Tele-Entertainment Devices (known today as the Microsoft Xbox), and fighting over not which channel to watch, but over a vote that will decide what the lead character in an interactive soap should do.
Players in all the industries touched by these trends are gearing up for this world of converged devices. Sony, Nokia, Microsoft, 3Com, DirecTV, to name a few. The changes will not be sudden. The products will morph in incremental fashion. Today's avatars may not look like revolutionary products, but make no mistake, these are the harbingers of tomorrows converged lifestyles. DirecTV today is only TV with programming delivered directly to the home via satellite. However its roadworthy cousin - the GM OnStar program is delivering not TV programming, but real time data to and from Vehicles.

Which brings us to the second third aspects of the convergence phenomenon. The access and the Network. Clearly, carrying voice and data together imply a certain minimum pipe-size. They also require unique systems for controlling, managing, estimating and routing the traffic that is flowing through these pipes. If you are going to access the Net through your PC, your TV and your Mobile Phone, it clearly means that each will have its unique connectivity challenges. While the PC is the easiest to hook up to the public network, the TV is not. Enter Cable Modems. And since you want to do more than send text messages - you actually want to see a replay of your favourite game, or movie or sitcom, you actually need a heck of a lot of bandwidth coming into your device. Broadband access promises to deliver this kind of bandwidth in an affordable manner. Broadband itself spans technologies such as XDSL, Cable Modem, Wireless (3G), Fibre to Homes and Satellite. Going one step further, the backbones and carriers (where Fibre is the common messiah) is where the flood of converged voice and data traffic will be rushing around the globe. At the core of this are a new generation of switch called the Softswitch. This is a piece of software that allows switching between (New) IP and (old) Circuit based networks. While the former is the Internet's standard, the latter is the domain of the PSTN (Public Switched Telephone Networks). Cisco, Nortel and Lucent are all throwing significant amounts of money behind Softswitch technology.

Apart from the equipment providers, carriers and last mile providers also jostle for space in this layer of convergence. The carriers are at this point of time recoiling from the excesses of the past couple of years. But players like Level 3 Communications and Qwest, should not be written off just yet. One of the interesting trends in this space is the shift of network intelligence from the "core" to the "edge". This means that routing and traffic management, for example could happen much closer to the consumer than earlier, and very close to the "last mile". The last mile itself, is currently witnessing a plethora of hitherto unconnected competitors. Just think, potentially the competition for your Internet connection could be between MTNL, or your cable connection provider, or your mobile phone company, or a Satellite company that wants to beam you up, Scottie!

Services & Industry: All this dovetails into the next layers, of converged services and industries. Here's where the story gets really interesting. Expect to see many new services being rolled out here. And old services morphing significantly. For example, in the converged world, how do you get billed? Who do you pay? Who exactly owns this pipe into your home? And how do they bundle new services? It is possible that entire industries may converge. Telecom, Media and Gaming, are 3 industries where the boundaries may blur soon. The Time Warner/AOL merger is offers a sneak peek into what may happen across the space. A well known investment bank uses the term "Mediacom" to define a new merged entity in this space. Marshall McLuhan may be proved right in ways that he would not have imagined. The medium and the message are indeed converging.

What everybody wants to do is offer a bundle: a bundle that has access, gaming, news and entertainment. This was, of course the dream of many portals in what is now a footnote of the digital revolution. However in the converged environment, it may become necessary for this bundling to take place at least one step before the customer. Accordingly profile capturing and storage would be narrowed down at this point, and the entity that controls this would in fact own the customer and this would obviously be a goldmine. (Watch this space for Microsoft's move spanning .NET, Hotmail, Passport and Xbox).

ConsumptionThe most understated and potentially the trickiest hurdle that convergence has to cross. The end user and his habits need changing. People speak about the lean-forward nature of the PC and the lean-back nature of the TV. Stance apart, a converged world will essentially blur the lines between entertainment, media and work, in an immersive space. How will we take to it? How will our parents? Our children? It may take an entire generation for this to become a way of life. What will be the societal impact of this? We will be at once, more connected, and more isolated.

Clearly, different parts of this will move at different speeds. Triggers will be independent as well as interdependent. The challenges will vary. Most importantly, the combined impact of all these layers of convergence will definitely stretch our imagination to conceive in any degree of comprehensiveness.


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