Thursday, June 30, 2005

Crazy Frog Bad Frog

I just wrote a simple paper trying to establish what the real value to consumers, of something like convergence should be. One of the areas which I just touched upon in the paper was the need to educate consumers about the dangers posed by unscrupulous providers. Here's a clear example of this - an area where even informed and technologically aware people are prone to risk.

Tuesday, June 28, 2005

A New Light

In 1939, the German astronomer, Johann von Maedler, put together 2 Greek words – “fotizo”, meaning light, and “grafo” meaning writing to create a word popularized by his British counterpart – the British astronomer Dr. Herschell – a word we all know today as photograph. In fact most of us are quite familiar with whipping out a mobile phone to snap a picture of a friend or an incident. Photography didn’t exist before the 1830s, which was strange by itself because both the impact of light on chemicals like halides, and the pinhole-type cameras (or Camera Obscura) were known for a long while by then. Sometimes it takes a bit of inspiration to cross fertilize two sets of skills, technologies and discipline and create an entirely new idea.

Shortly thereafter, also in Europe, a strange thing began to happen to Art. People like Manet and Monet created a new style of art which we know today as impressionism, but back then was ridiculously low in detail. Not only that, it seemed to spark more and more diversions from most forms of realist painting styles. Along came the fauves (Matisse), Expressionists (Kandinsky), Surrealists (Dali), Cubists (Picasso) and the Pop Artists (Warhol).

Now as you know, Modern art elicits strong responses, questioning the very notion of Art, questioning if Tracy Emin’s unmade bed is actually worth calling art any more than the hole in the wall in my friend Joe Schorge’s hallway.

However, the point I’m making here is that there is first, a fundamental connection between the invention of photography and the emergence of Modern art. And second that this is an oft repeated pattern in many aspects of life around us.

With the advent of photography, Art ceased to become a means of accurate representation. Go to any castle or museum – from the Versailles Palace to the Tower of London and you will see the larger than life portraits of every ruler worth his NaCl since time immemorial. By the end of the century, however you would expect to find photographic portraits rather than painstaking oils. Quite apart from the fact that the sitting times were greatly reduced, there was simply too much going for photography, for this even to need explaining. The question for Artists at this point of time whether articulated or not (or even consciously felt or not), would have been “what happens to us now?”

The fact that Modern art has a life of its own and has taken us into many new avenues of social and emotional exploration is a happy outcome of this, but it is my belief that it wasn’t a natural progression, nor was it coincidence. It was in fact, the emergence of photography which pushed artists to find new meanings and expressions for their talent.

The reason this is all relevant today, is just like Photography and Art, there has, over the past few years been dramatic interplays between new and old mediums of expression. It is now a commonly accepted axiom that TV took away the who, when, where and what from print, leaving newspapers to largely provide the analytical “why” for readers. What is less touted and yet absolutely true, that the Internet did exactly this to TV – it took away the “what, when, who & where” - essentially “news” and “information” mantle from TV and left TV largely with entertainment and perhaps the “how”. Actually for any event that could not be predicted – from the attack on the Twin Towers to the tsunami, the Internet has greatly outstripped Television for news delivery. TV still remains a more dramatic medium and so any planned or forecast-able event (like Michael Jackson’s trial) will still draw people to TV. But clearly this has forced TV to change itself over the past years to occupy a news space it now shares with both print and the Net. In fact newspapers have gone through yet another repositioning with the Net. The “tabloid” format – for reading in the commute is a clear & creative response for capturing commuters – another word for audiences without access to TV or the Internet.

And here, therefore is my second key observation, as new changes, new technologies come down the pipe, especially the disruptive ones, they will always reposition the old formats, technologies and mediums.

This leaves organizations with some important strategic choices. First, they need to ask themselves to what extent are we tied to a technology or a delivery mechanism. And second to understand the emerging shape of their industry in the wake of a new and disruptive technology to be able to capture value in the evolving landscape. A good example of this can be found in the music industry. Faced by the wave after wave of music downloads, the ease of duplication, the blurry legal boundaries they can (as they are choosing to do) fight the tide. This is a difficult and and in the long term largely ineffective approach – very akin to trying to hold water in your hands. Or they can consider their role in the emerging space and seek to capture value using new technologies. Consider this thought – if you were suddenly allowed access to all the music that’s ever been recorded – how would you decide what to hear? You couldn’t sample it all in one lifetime and anyway, wouldn’t you love a good recommendation engine? Somebody to tell you what’s good and what’s just all right? Isn’t that what labels actually do and are good at doing? But rather than seek to create mass markets out of a few “stars”, may be there’s a different model based more on profiles. Anyway, the idea is not to theorize on Music Label strategy, but rather to build a case for the recognition of the fact that the old models won’t work in the face of disruptive technologies – and an active and creative search for value creation in the changed landscape is the order of the day.

BBC is one organization that has successfully reinvented itself – from a radio company, to a television behemoth, to an Internet giant, albeit with less constraining factors and risks to contend with.

The bad news is that the new value distribution may simply not be as lucrative for the incumbent market leaders in any scenario. But trying to fight against the dying of light isn’t really the best response. A really useful book to read in this context is Adrian Slywotzky’s “Value Migration” (HBS Press). And it’s not just music labels who are in caught in the cross-hair of technology change. It’s also the traditional TV channels facing entirely new worlds with IPTV, VOD and time-shifting, it’s telephone companies facing a threat from VOIP, and CD Player manufacturers (think Discman) from Digital music players (think iPOD).

The old positions, the old value capture mechanisms (CD sales, for labels and mass audiences for prime-time television) may be on the wane. It’s up to these businesses to look for the new value mechanisms, just like Art did, a century and a half ago. There are of course, many realist-artists working today – most of them work in obscurity or as illustrators. The question for many of today’s media businesses, is, are you headed for obscurity, or could you be the next Claude Monet of your industry?

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.

Sunday, June 26, 2005

Knowing Where to Start ...

Have you ever thought about something for so long, so intensely and so obsessively, that you’ve created an ocean of thoughts inside your own head, with its own ebb and flow, spring and neap, to the point where when you’re asked to speak about it, you just don’t know where to begin?

This is precisely where I find myself today. Somewhere in 2001, I sensed, rather than understood that a series of tectonic changes were afoot, in Media. Tectonic not just because of their seismic impact but also because of their subterranean nature and superficial invisibility.

Over the past few years I have held a thousand strands of this change in my head, trying to weave them into a coherent picture – a task a long way from completion. May be the assumption of a coherent whole needs challenging. This blog is an attempt to give these individual tendrils of thought their own due, without subsuming them into some visionary whole. May be doing this will initiate a debate which will give me some of the answers. May be just organizing my thoughts for communicating to you will be a key force for me to understand it better myself. May be these thoughts will simply find fruition as distinct and discrete elements not requiring the grand synthesis.

One of the reasons I jumped at the opportunity to move to London, when it presented itself, was the chance to be at one of the media epicenters of the world. London is unique in its media density – a fact often missed by people who have spent a long time here and have no reason to reflect on the alternatives. The tapestry of media in London is enriched by the cultural diversity paralleled only, perhaps, by New York. And the presence of institutions such as the BBC, which create an entirely new dimension to the media discussion – every discussion about the BBC invariably ends up as a discussion on very fundamental questions about the role of media in a democracy, the need for free speech and the cost of information in any society.

At the same time the changes I speak about are all around us – in the way media is produced, delivered and consumed. These changes are crudely speaking, technological. But there is a very exciting and emerging interplay between technology and culture which consistently impacts Media in non-linear and complex ways. Is the iPod about technology or culture? Is Time-shifting a technology phenomenon or a behaviour change?

To understand these changes is hard enough. To predict outcomes is near impossible. But the very fact that Media continues to play an increasingly central role in all our lives makes the outcomes significant and the understanding vital to our ability to influence our own lives.

In this blog, I hope to be able to record my observations, identify patterns and initiate meaningful discussions about what these changes are, how to understand them better, and what their impact on us might be.