The Congress of the Converged Service - 10 positions to take

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.