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January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 1
Where Do We Go From Here?Ten Challenges for a Converging World
John ParkinsonChairman and Managing Director
ParkWood Advisors LLC
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 2
About John ParkinsonChairman and Managing Director, ParkWood Advisors LLC
30+ years in technology 20+ years in consulting Published author and columnist (CIO
Insight) World’s top 25 most influential
consultants (2003) Computerworld 100 Leaders in IT (2005) Retired head of Innovation and Strategy
at Ernst & Young LLP (September 2001) Retired CTO of Capgemini
(July 2005) External Director, TeleGuam Holdings Board of Advisors: Brulant Inc. ; TAP.tv;
InSORS Communications;
[email protected]+1 847 235 1791
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 3
Copyright notice and disclaimer:
ParkWood Advisors LLC 2006. All rights reserved.
Reproduction or translation of any part of this work, beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to John Parkinson at ParkWood Advisors LLC..
This presentation is designed to provide accurate and authoritative information in regard of the subject matter covered. It is made available with the understanding that the intent is not to render legal, investment, accounting or other professional advisory services. If investment advice or other expert assistance is required, the services of a competent professional person should be sought.
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 4
Trivial pursuits questions for converging executives
How much software does it take to run the average automobile?
Where do at least 60% of the long distance telephone calls made in the U.S. end up?
What do a minivan, a fax machine, the “Print Preview” function in software, and a web browser have in common?
What do AIM, the IPOD, 802.11 and Digital Video Recorders have in common?
What was the 20th century’s single greatest contribution to productivity and what was the answer’s most significant unintended consequence?
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 5
Agenda
What have we learned from a decade of technological boom and bust?
What’s coming? Ten questions for a
converging world Questions and comments
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 6
What have we learned from the last decade of technological boom and bust?
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 7
Remember the good times?
“Any sufficiently advanced technology is indistinguishable from magic” Arthur C Clarke
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 8
They’re over – for a LONG time to come……..
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 9
…..With persistent volatility becoming normal
High
LowYears
Rate ofChange
Traditional Mindset
(Lower, stable Baseline)
New Mindset (Higher,
acceleratingbaseline)
5 YearPlanningProcess
NewCEO
“The MajorReorganization”
DivestNon-Core Businesses
Merger
Semi-AnnualReorganization
New Technology Platform
Industry Deregulation
Another NewCEO
Acquisition “A”
Acquisition “B”
Rebuildingthe Supply Chain
NewCEO
eBusiness
Competition for Alliances
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 10
So, what have we learned?
Just because you can do something doesn’t make it a good idea Not all good ideas have viable business models attached Customers sometimes know what they want – and tend to act on
the knowledge whenever they can Monitoring grass roots activity can
be more effective than strategic marketing plans – if you can react fast
Regulation doesn’t stop marketmistakes - even when it’s needed for other reasons
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 11
What’s coming?
““It always amazes me how It always amazes me how consistently we consistently we over estimateover estimate what we can do in two years and what we can do in two years and underestimateunderestimate what we can do in what we can do in ten”ten”
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 12
Predicting the future is hard…..
A model of an easy to use2004 “home computer” as envisaged by the RAND Corporation in 1954
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 13
Technologies shaping the decade
Source: Institute for the Future
INFORMATION
BIOLOGY
EN
ER
GY
MA
TE
RIA
LS
EmergentComputing New
ArchitecturesWireless Technology
WebServices
Presence
FlowTracking
Real-TimeEnergy PricingLocation
Technology
Collaboration
Tagging
SemanticSearching
New Grammars
HumanAugmentation
DistributedEnergy Production
Wave PowerWind Turbines
Photovoltaic ZEST
EnergyStorage
PremiumPower
Eco-Efficiency
Fuel CellsMicro Fuel Cells
ImagingMicro-Turbines
Sterling Engine
Biofuels
CarbonSequestering
Implants
New I/O
CleanNuclear
MolecularMedicine
MetabolicsProteomicsGenomics
Bioinformatics
SystemsBiology
Vectors &Viruses
Nutraceuticals
GeneticTherapies
DiagnosticDevices
Biosensors
Stem CellTechnology
Microfluidics
SmartTextiles
Biometrics
High-PerformanceMaterials
Nano-Science
MolecularManufacturing
MEMS
Robotics
Photonics
Organic/InorganicInterfaces
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 14
The hype cycle
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 15
95 00 05 10 15
Perfo
rman
ce
Efficiency Inside the Business
Efficiency Along the Value Chain
We are here
We are here
Uncertainty
Planning Trajectory
Reality
Expectation Gap
Early adopters shorten the expectation gap by switching curves ahead of the market…
We must avoid being trapped between ‘S’ curves as families of enabling technologies evolve
Adjusting is a continuing challenge
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 16
With lots of surprises….
10 Billion minutes
300 Billion minutes
Sources: Atlantic ACM Researchand Telegeography Inc. 2005
IP Telephony traffic growth, 2000-2006
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 17
…and disruptive behaviors….
Online Advertising Growth
Internet Advertising in Belarus
Source: Lightningcast.com white paper
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 18
….which are not equally distributed globally….
WORLD INTERNET USAGE AND POPULATION STATISTICS
World RegionsPopulation
( 2005 Est.)Population
% of WorldInternet Usage,
Latest Data% Population
( Penetration )
Usage% of
World
Usage Growth2000-2005
Africa 896,721,874 14.0 % 23,917,500 2.7 % 2.5 % 429.8 %
Asia 3,622,994,130 56.4 % 332,590,713 9.2 % 34.2 % 191.0 %
Europe 804,574,696 12.5 % 285,408,118 35.5 % 29.3 % 171.6 %
Middle East 187,258,006 2.9 % 16,163,500 8.6 % 1.7 % 392.1 %
North America 328,387,059 5.1 % 224,103,811 68.2 % 23.0 % 107.3 %
Latin America/Caribbean 546,723,509 8.5 % 72,953,597 13.3 % 7.5 % 303.8 %
Oceania / Australia 33,443,448 0.5 % 17,690,762 52.9 % 1.8 % 132.2 %
WORLD TOTAL 6,420,102,722 100.0 % 972,828,001 15.2 % 100.0 % 169.5 %
NOTES: (1) Internet Usage and World Population Statistics were updated on November 21, 2005. (2) CLICK on each world region for detailed regional information. (3) Demographic (Population) numbers are based on data contained in the world-gazetteer website. (4) Internet usage information comes from data published by Nielsen//NetRatings, by the International Telecommunications Union, by local NICs, and by other reliable sources. (5) For definitions, disclaimer, and navigation help, see the Site Surfing Guide. (6)
Information from this site may be cited, giving due credit and establishing an active link back to www.internetworldstats.com. ©Copyright 2005, Miniwatts International, Ltd. All rights reserved.
Source: http://www.internetworldstats.com/stats.htm
With less than 10% penetrationAsia already represents over 1/3 ofGlobal Internet usage.
North Americawith nearly 70%participation is less than 25% of global use
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 19
….or entirely desirable: Half of all Internet Traffic is P2P File Sharing.
This graph shows the North America Traffic Index for the past 24 hours
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 20
So what’s coming?
Demand for more mobility and a progressively untethered world
More content and a demand for wired bandwidth
Either a customer service backlash or continuing customer indifference to indifferent customer service
A breakout brand The need for an acceptable
approach to effective content management
India, China and Southeast Asia as sophisticated consumer markets
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 21
Ten questions
“It may not be possible to predict the future, but it is certainly possible to invent it”……. Alan Kay
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 22
Question One
Is it possible to run a consistently profitable, highly regulated, consumer business with undifferentiated commodity products and services?
Understanding the Economics of Ubiquity, Speed & Convenience
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 23
Question Two
If Content is King, who wins in a world without monarchies and with Personal Content Recorders everywhere?
Reinventing Digital Rights in the post-Tivo Age
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 24
Question Three
Is it better to have dull technology that works reliably everywhere or the next big thing that occasionally works somewhere?
The Continuing Quest for “Invisible” Infrastructure
“I don’t know what it is but you need a new one”
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 25
Question Four
When will we eliminate the foolishness of Region Codes and Roaming arrangements in a supposedly connected Global Economy?
Promoting Collaboration and Co-existence
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 26
Question Five
How many standards do we really need? And how can we get them faster?
“If you don’t understand how it works, can you trust it?”
“if nobody understands how it works, do you want to depend on it?”
“If you haven’t finished paying for it, should you be allowed to change it?”
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 27
Questions Six and Six (a)
If spectrum is so valuable, why do we waste so much of it?
If bandwidth is so important, why don’t we offer more of it?
PROBLEM
Winning the War with the FCCLoosing the War with Asia
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 28
Question Seven
What happens if your cash flow gets hijacked by a Hedge Fund?
Fighting the War with Wall Street
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 29
Question Eight
If consumers can easily create their own content, why would they pay to (see) (hear) experience yours?
Winning the Creativity Wars
TV's New Visual EffectsTechnology Changes Network Programming,But Can Sea Creatures, Aliens Boost Ratings?By BROOKS BARNES Staff Reporter of THE WALL STREET JOURNALNovember 10, 2005; Page B1
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 30
New TV RatingsWill ProduceAd-Price FightBy BROOKS BARNES Staff Reporter of THE WSJDecember 22, 2005; Page B1
Question Nine
If audience counting actually worked, what could you really charge for advertising?
Narrowcasting emerges tochallenge Broadcasting
Marketer's Tactic Signals Big ShiftIn a TV Ad RitualFor 'Upfront,' Allstate CreatedGrueling Bidding Process;Balance of Power ChangesABC and CBS Fight for ScrapsBy JULIA ANGWIN and SUZANNE VRANICA Staff Reporters of THE WALL STREET JOURNALJanuary 4, 2006; Page A1
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 31
Question Ten
Are we really “Converging” at all?
…and if so, why?
Digital Culture: VideosWeb clips cross over from email inboxes to TVBy JOHN JURGENSENBaron’s December 31, 2005; Page P2
CBS Shares Rise, Viacom WaversOn First Day of Firm's SplitBy MATTHEW KARNITSCHNIG Staff Reporter of THE WSJJanuary 3, 2006; Page A18
Viacom Inc.'s separation into two publicly traded companies, one called CBS Corp. and the other retaining the Viacom name, went into effect Sunday
HBO Will Offer Some TV ShowsTo Cingular UsersBy LI YUAN and JOE FLINT Staff Reporters of THE WSJDecember 15, 2005; Page D2
TelecommunicationsOutside the BoxAs broadband connections proliferate, so do the opportunities for niche video-content providersBy PETER GRANT Staff Reporter of THE WSJDecember 19, 2005; Page R11
TV On-DemandMay Make AdsMore TargetedBy BRIAN STEINBERG Staff Reporter of THE WSJNovember 9, 2005; Page B1
AOL to Offer 'Vintage' TV Free -- With AdsBy MATTHEW KARNITSCHING Staff Reporter of THE WSJNovember 14, 2005; Page B1
Networks Go Boldly --And Fearfully --Into TV's FutureBy BROOKS BARNES and PETER GRANT Staff Reporters of THE WALL STREET JOURNALNovember 9, 2005; Page B1
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 32
Trivial pursuits questions for converging executives
How much software does it take to run the average automobile?
Where do at least 60% of the long distance telephone calls made in the U.S. end up?
What do a minivan, a fax machine, the “Print Preview” function in software, and a web browser have in common?
What do AIM, the IPOD, 802.11 and Personal Video Recorders have in common?
What was the 20th century’s single greatest contribution to productivity what was the answer’s most significant unintended consequence?
January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 33
Questions & commentsQuestions & comments