I was reminded about convergence when I read what Walt Mossberg was just writing about smartphones and tablets eating into the PC market. And exactly as I predicted in 2007 before the iPhone started to sell, there has been a reinvention of history, as if smartphones didn’t exist before the iPhone and everything started in 2007. This even as the original 2007 iPhone was not a smartphone at all, it couldn’t even have apps installed to it. It was an expensive featurephone with a very good internet browser and large screen. Not a smartphone. But there were smartphones in 2007 yes. In fact a massive 250 million were in use. 2007 would see sales of nearly 120 million smartphones and since the first Nokia Communicator 9000 model of 1996, a total of 350 million smartphones had been produced globally. But not many in the USA - and almost none of the advanced smartphones as made by Nokia, SonyEricsson, Samsung and Siemens of that era. The American image of a smartphone was the Blackberry - an email-optimized large clunky business phone. There was no concept of internet browsing or fancy cameras or gaming - as businesses did not want their employees to go chatting online or playing games and didn’t want to subsidise a digital camera for their employees. While advanced smartphones had been equipped for years with two cameras - one inward facing - again the US industry and the first iPhones didn’t bother to have this feature as the ‘selfie’ was totally unfamiliar as a phenomenon to American designers at the time.
FIRST DIGITAL CONVERGENCE
The early digital convergence talked of the coming together of telecoms, internet and computing. I was there to see elements of that happening, from being employed at at a little computer networking and PC manufacturing company, OCSNY which became New York City’s first ISP when it decided to launch internet service provision services. I have personally been helping the chief engineer with some PC assembly jobs when we had a big client delivery and needed all hands on board - haha, been there done that - to installing, uninstalling, reinstalling software and updates and so forth both at our factory and at client sites. And yes, when the internet expanded beyond California, it next came to New York, and we saw that from the start. Years before the Internet was on the covers of Time and Newsweek.
Then I saw the convergence from the telecoms side, at Finland’s first digital mobile operator (Elisa/Radiolinja - also the world’s first digital mobile operator/carrier) but on its fixed landline side - where at that time still most of the money and profits were. So I’ve seen fixed telecoms from market share battles to the headaches of the billing system. Then I ran the project that created the world’s first fixed-mobile converged service. So I witnessed part of this very converge from literally its birth (and would later chair the telecoms standardizing committee that created the first standards for fixed-mobile convergence). Later at Nokia would see the culmination as I co-authored the world’s first White Paper to discuss how the internet would come to mobile.
And while the Nokia smartphone was launched well before I joined Nokia, yes, I worked for the company that created the world’s first smartphone and saw much of that innovation from inside the company as Nokia started to update and expand its smartphone product lines. In my later job at Nokia headquarters as part of our budding 3G project, we were the first unit of Nokia that combined all three telecoms parts of Nokia - networks, services and handsets - as that ‘3G story’ differed from previous telecoms evolution stages, in that it had to be coordinated across those three units, all which were seen as critical to Nokia’s success in the upcoming 3G market. So while most employees of Nokia in 2000 or 2001 were only ‘specialists’ in one of those three areas, our unit was the pioneering one to experiment bringing all three parts of Nokia together. I was not a ‘handset expert’ but I did regularly show also Nokia’s handset slides to press, investors, operators/carriers and partners.
As long as ‘digital convergence’ has existed in the context of those three industries - computers, telecoms and internet - I’ve been at the pioneering companies doing it. And have myself participated in launching parts of it and seen all of it very close. That gives me quite a deep and insightful perspective into convergence that most ‘experts’ never had. And its been a source of a lot of my thinking and writing, including one of my 12 books being an early case study into massive multiple-industry-wide convergence far beyond those three industries - in the book Digital Korea that I co-authored with Jim O’Reilly. The subtitle of the book tells you how much we saw digital convergence encompassing already then in South Korea beyond telecoms, internet and computing. We discussed broadcast TV, videogaming, music, money, government, cars, robotics, virtual reality, telematics etc. Ok, so I’ve been studying and reporting on this for more than a decade now. What do I think of convergence today, in 2014?
So yeah. If you’ve seen me presenting in the past two or three years on almost any tech topic other than Augmented Reality, you’ve almost certainly seen me talking of ‘Grand Convergence’. I first looked at what all might converge into the mobile phone or what we now think of as the smartphone in what I called the ‘Battle for the Pocket’ from 2002. That was a view of the hardware - seeing, predicting, analyzing how cameras, music players, videogaming etc would arrive to our pocket. It was not a look at the industries converging. That then became a further view, on my ‘Y of Convergence’ that evolved into a 5-industry merger, and then in 2010 I adapted the elliptical illustration of ‘Battle of the Pocket’ into ‘Grand Convergence’ of not devices and gadgets, but of whole industries.
At first this ‘second battle for convergence’ had 13 industries in it. Then I kept discovering ever more industries that I was confident would eventually become almost completely, or completely digital. Today I count 17 industries already in this mad mesh-up. Alphabetically they are: Advertising, Banking, Broadcast, Camera, Credit Cards, Computers, Gaming, Insurance, Internet, Marketing Research, Mapping, Music, Print, Social Media, Telecoms, Virtual Reality, and the Watch and Clock industries. Some are giants - telecoms a 2 Trillion dollar industry (fixed and mobile, including handsets, equipment and of course the telecoms services ie voice, messaging etc). Others are modest like music at a 25 Billion dollar industry. All combined, separately, these 17 industries total about 7 Trillion dollars in annual revenues this year 2014.
Here is my latest slide showing Grand Convergence and the 17 industries that will mostly or completely become both digital and mobile in the coming years.
This slide may be freely shared
Note that the industries are arrayed somewhat in ‘related groups’ so banking is next to credit cards and insurance, social media is next to the internet and gaming, etc.. The arrows are all of the same length but of different thickness. The width of the arrow tells you how big the industry is. The wider the arrow, the bigger the industry.
Every single one of those 17 industries will end up digital, mostly if not completely. Some were digital from the start like the internet or virtual reality for example. Others have migrated most of their business to digital already like telecoms and cameras. Others are on the early stages of that transition such as banking and print. And make no mistake, none of those 17 are immune to digital disruption. They cannot avoid it. And very VERY importantly, there is one part of ‘digital’ which totally trumps any other pretenders - it is ‘mobile’.
RINGING IN THE POCKET TEST
By ‘mobile’ I mean a narrow definition. Not ‘wireless’ which includes WiFi. Not ‘pocketable’ which includes the PSP. Not ‘ultraportable’ which includes tablets. I mean ‘mobile’ in the strictest sense - cellular and in the pocket. Fulfilling my test of is it ‘mobile’ ie the Ringing in the Pocket test. It has to be both small enough to be carried upon our person (tablets are too big unless we all start to wear MC Hammer style clown-pants) and yet have ubiquitous and permanent connectivity - that it can alert us even if we are in a taxicab or sitting on a park bench. Yes many call a tablet ‘a mobile’ and mistakenly think that as it looks like a larger smartphone and uses often the same software and service, it must therefore be also a mobile device. The mistake is the same as thinking skateboard is a car. Yes, both have four wheels but they also have critical differences. So yes, a tablet under the strict defintion is only an ultraportable.
I was among the first to explain that these are different devices with different use-cases and should be treated differently. At first most disagreed with me but recently we’ve started to see clear evidence that yes, they should be considered as part of different industries. A tablet is far more like an ultraportable PC, the steps from laptops and netbooks, not a big brother of smartphones. Smartphones are far more closely related to featurephones than tablets. And increasingly major industry experts also from the computer industry side are starting to agree.
We don’t carry our tablets everywhere - when you go partying some Friday night, you leave your tablet at home but pack your smartphone into your tight jeans. And no matter how much you prefer to use Skype and Whatsapp on your tablet, it can’t alert you everywhere. You have to be within WiFi connectivity - and have you tablet switched on (and you have to be logged into that service). But your phone can be in your pocket and an SMS or phone call will arrive (as long as you have cellular coverage, ahem, London underground! - and you haven’t deliberately switched it to be unreachable such as ‘airplane mode’).
I don’t mean that a ‘mobile phone’ or ‘cellphone’ or ‘smartphone’ physical instrument metaphor is necessarily going to continue for long. We have lots of experimentation to move past the phone form factor - Google Glass, Samsung Galaxy Gear etc. For many years the phones kept shrinking so there was good logic to thinking the phone would almost disappear ie become the size of a matchbox perhaps or even sugar cube. But with the larger screens suddenly now we have the growing phone, with 5 inches starting to seem too small...
But ‘mobile’ as the device and service being able to reach us 24/7, anywhere in normal life (so excepting say airplanes) as distinct from just pocketable or ultra-portable - yes mobile will dominate that digital convergence. It is killing anyone attempting a fight. So lets take the first lesson in how drastic death can be through digital convergence.
GOLDEN AGE OF PHOTOGRAPHY
Cameras have existed for over 170 years. First cameras were very complex instruments and required particular skills. Early photographs were one-off pictures that could not be duplicated - there was no negative and positive as we used to know before digital cameras (take the film to be developed and then have photograph printed). From one negative you could print thousands of exact duplicates of the picture. And gradually the cameras got better and the industry evolved.
The camera population on the planet would roughly double every decade. That was true very much like clock-work as various innovations came along, making cameras cheaper and easier to operate, which increased the popularity of taking pictures past just professionals. Kodak invented a consumer camera. Then came the film cartridge that allowed easier insertion of the film. Then came the pocket camera. Flash equipment also evolved to become evermore user friendly and cheaper per photograph taken. All this helped increase the volume of pictures taken which helped bring down the costs of film, etc.
Well. That steady promising growth rate changed in the decade from year 2000 to 2010. This was suddenly the ‘Golden Age of Photography’. Where every decade before, the camera population on the planet had roughly doubled, now the camera population exploded. Not growing 3 or 4 or 5 times bigger in 10 years. No, it grew a massive 10-fold. At the beginning of the decade most people on the planet had not touched a camera or have their picture taken. At the end of the decade very literally half of the planet had used a camera and most people even in very remote areas of the planet had had their picture taken.
At the start of the decade that would become the Golden Age of Photography, the world’s six camera giants were Minolta, Canon, Nikon, Konica, Polaroid and Kodak. In year 2000 there was no such thing as a ‘cameraphone’. In fact, the world’s largest phone maker, Nokia, did not even suggest in its product development roadmaps that such a cameraphone was even coming. It was year 2001 that Sharp in Japan introduced the world’s first cameraphone on the J-Phone network (now known as Softbank). The camera was a tiny one tenth of one megapixel in its sensor size and the barely color screen was also tiny, the size of a postage stamp. The pictures were so ‘grainy’ you could easily see the dots that the picture was made of. But that was the birth of the cameraphone.
In Japan. Home of four of the world’s six largest camera companies. The camera industry totally laughed at the first cameraphone and said that was such a silly idea it would never take off. And they of course ignored cameraphones and couldn’t see themselves ever bothering to release their own cameraphones.
We know how this story went. Today the world’s most used camera brand is ‘Nokia’ and the world’s bestselling camera is ‘Samsung’ and Apple sells more cameras on its iPhones annually than Canon and Nikon combined. Minolta? Quit the camera business during the Golden Age of Photography. Konica? Quit the camera business during the Golden Age of Photography. Kodak? Went bankrupt. Polaroid? Went bankrupt... twice. Canon and Nikon survived this carnage only by focusing on the premium pro and semi-pro segments, and Nikon CEO already said it was a mistake that they didn’t launch a smartphone - which is a pretty strong sign they are considering still entering this race at this late stage - 13 years late in fact.
That is what Grand Convergence means. It means that even if you are the giants of your industry you are not safe. And even if you are total novices to the industry (Nokia, Samsung, Apple to cameras) you can become the dominant players of it, dethroning the past giants.
Its not just cameras and telecoms. Look at that diagram. Computers and Music? Nothing whatsoever common in those industries. But outrageous computer maker Apple Computer decided to release a music player (iPod) and a music store (iTunes) and today iTunes is the world’s largest music store and the iPhone the world’s most popular music player gadget (if you remember from January 2007, the iPhone was originally introduced by Steve Jobs as ‘first, its a widescreen iPod with touch screen; second its a revolutionary mobile phone...’). It was only later that the iPhone evolved to become a smartphone, pocket gaming console and social media device as well as the music player, phone and internet device that Jobs originally conceived.
Or look at Internet and Mapping. No synergy or overlap whatsoever when those started to collide. Internet was on personal computers on our desktops and maps were needed out there in the wilderness (or in our cars) to get us somewhere we had not been to yet. Now the world’s largest mapping provider is Google who have even kindly photographed the whole planet for us so we can not just see the map, but a Google Earth view of the planet too. Wow. Why didn’t Rand McNally or National Geographic or some other mapping company do that? They didn’t think of the power of mobile to totally alter the way maps can live in our pockets through digital convergence.
ROADMAP TO YOUR CAREER FUTURE
Imagine if you had been given a roadmap to the internet’s future? If someone could have told you that the webcam that showed the acquarium would be forgotten and that Ask Jeeves would shut down but Google would dominate the industry and something weird called ‘social networking’ would become obsessive and addictive with a billion users on Facebook alone. If you knew early on how the internet would evolve, you could have made millions, even billions and definitely steered your team, project, department, division, and personal career into the most lucrative opportunities. Imagine if you had been given a roadmap into the future of the internet.
Except that mobile already today is 5 times bigger than the internet. And mobile is growing far faster. And while the Internet is nearing its peak, its growth rate is very slow now, mobile is still growing very fast and its peak is not even in sight. So rather than the internet, what you’d really want is a roadmap to the biggest economic opportunity of ou lifetimes. That of mobile into the next two decades. Well, check out this version of that diagram. I have now moved those arrows - each of the arrows is the same length, only the width is different based on the size of the industry. I have moved each arrow into the circle to show how much of the industry has migrated to mobile already. Of those indsutries with much migration, I have assigned a rough percentage as per end of 2013.
This picture may be freely shared
Yes, that tells you tons. It tells you which industries have experienced mobile deeply and which are new to mobile. Cameras and Telecoms are mostly mobile already. While banking and print are only starting on their journeys into (digital and) mobile. What this map tells you is not just who are your competitors but the level of competence within that industry about mobile. Social media and gaming and computers are strong about mobile. Insurance, Market Research and Broadcast are still unfamiliar with or confused about mobile (such as thinking a tablet is a ‘mobile’ haha).
You can see economic opportunities and threats. Industries mostly done with their migration don’t have much to offer for you to cannibalize but industries new to this disruption are very ripe to be demolished - by you. Those industries also are desperate to find parters to help them on that perilous journey - nobody wants to go the route of Kodak or Polaroid. So you can help them, maybe partner with them, maybe go teach them or get a job there to manage that transition. Or just take them over and buy them.. Can you see why this is your career roadmap? Your company strategy should start with this picture.
So have you seen what various industry leaders from beyond the mobile telecoms industry have been saying about their industries - and the role of mobile in their future. The world’s largest desktop PC maker Hewlett Packard regrets abandoning the smartphone market and is now returning. The world’s largest laptop maker Lenovo so loves its smartphone side, it bought the Motorola business from Google to expand its smartphone presence. The world’s largest chip maker Intel believes so strongly in mobile it launched a new operating system for smartphones called Tizen (with Samsung). The world’s largest software maker Microsoft is so bullish on mobile, they bought Nokia’s whole handset business and paid royally, 7 Billion dollars for that loss-making mess. So the IT guys seem to agree mobile is essential to their future.
Anyone else? The world’s largest internet company Google has been singing ‘mobile mobile mobile’ since their then-CEO wrote that famous editorial to the Financial Times (in 2006). Yahoo! and other internet giants all agree that the future of the internet is mobile. Thats no secret now but it was a radical thought 8 years ago. What about Social Media? The world’s largest social media company Facebook calls itself a mobile company now and makes most of its profits on mobile. EA Electronic Arts the largest videogaming company has said for years now that the money is made in gaming through mobile. And the big music labels have been singing from the mobile playbook from before the iPhone. Thats not news. Some of the broadcasters were late coming to mobile but not the biggest global broadcaster (radio and TV combined) ie the BBC. Their Director General said as far back as in 2005 that in the future all television and radio content would be available on mobile phones. Now even Print media is a believer. The Associated Press said that while its difficult to make money on the Internet, newspapers can make money on Mobile (incidentially that also validates my thesis from 12 years ago that mobile is different from the Internet - something very many IT industry experts argued vehemently against me for years) - and the AP said that the future of news is... mobile!
Wow that is an astonishing level of agreement. What about advertising. The world’s largest advertising/media empire, WPP (owner of such advertising houses as Ogilvy and Mather, Young & Rubicam, Grey etc) CEO Sir Martin Sorrell said that the fastest-growing part of the global advertising industry is mobile and explained the reason for that is that there is an imbalance between the media relevance of mobile ie how much time we spend with it, and its share of advertising spend. That needs to get into balance which means huge growth for mobile advertising. Interesting...
The world’s largest home entertainment company, Sony, lost its interest in computers and sold its loss-making Vaio unit, but the CEO sings the praises of mobile as ‘front and center’ of the future of the company. Samsung, the world’s largest tech company makes most of its profits (even as those are now shrinking with heavy competition) in mobile. This while the world’s most profitable company - Apple - remember it was on the brink of bankruptcy when it focused on its past industry, computers - and only became hugely profitable after introducing the iPhone. The world’s richest man for most of the past years has been mobile industry maven Carlos Slim (CEO of America Movil the mobile operator in Latin America based in Mexico) and he was replaced now by Microsoft’s outgoing Chairman Bill Gates as his last decision was to approve the purchase of Nokia’s handset business bringing Microsoft far more into becoming a mobile company too. Of the new millionaires and billionaires on the planet, they come totally disproportonately from the industry of mobile.
Then lets move to money. America’s largest bank JP Morgan Chase says they are now a mobile-first company. Visa the world’s largest credit card company goes one further, they say the future of payments itself is mobile! Yes, cash money will disappear and it will not be killed by plastic or contactless or e-cash. Cash will be killed by mobile. Not my words (anymore) now the world’s largest credit card company is saying that.
Thats not (yet) leadership comments from every one of those 17 industries but that is plenty. Never in human history have so many different industries been in total agreement about what will disrupt their industries totally. This didn’t happen with the steam engine. Not with railroads. Not with steam ships. Not with electricity. Not with the telegraph. Not with the petroleum engine, cars and airplanes. Not with the telephone. Not with radio. Not with television. Not with radar. Not with the jet engine. Not with rockets. Not with nuclear power. Not with computers. Not with satellites. Not with credit cards. Not with the fax. Not with the internet. But yes, with mobile. Never ever has there been one technology that totally disrupted that many other industries totally - and disruption happening simultaneously. This is like taking the dramatic global disruption caused by the internet, and treating that as the modest test-bed. The internet was like the mild tremors of an earthquake far in the ocean, that now is building into a total tsunami-wave of mobile.
SHARK EAT SHARK
This is the ultimate race and the ultimate contest and in quite a real sense, its a dog-eat-dog world, a shark-eat-shark world, a cannibal-eat-cannibal world. Remember what happened to the cameraguys. Anyone in that circle is both threatened and faced with massive opportunities. Why is Samsung selling smart watches? Why is Vodafone launching M-Pesa mobile money all over? Why is WPP buying up marketing research companies like TNS? Why is NTT DoCoMo of Japan half-owner of the world’s largest mobile advertising agency? Why does BBC provide the iPlayer? Why (did) Nokia launch Nokia Money? Why did Amazon launch a smartphone? I could go on and on and on. This is the ultimate game of a ‘territory grab’ like when the pilgrims rushed to the Wild West to get some land for themselves. This is the digital land-grab. Can it work? M-Pesa alone in Kenya (which is the oldest of mobile payment solutions in the country and for Vodafone Kenya is the first country where they launched M-Pesa) processes about a third of Kenya’s total economy today!
If you are in one of those 17 industries, you can be like Polaroid and fail so badly you go bankrupt twice. Or you can be like Nokia and come from literally nowhere and in less than a decade become the biggest player of that industry. Yes. Citybank could become the next Angry Birds. Twitter could introduce the world’s most popular credit card. CNN could become the world’s largest insurance agent. Timex could launch the world’s largest multiplayer virtual world environment. Etc etc etc. Will most of those see the chances? No. They will tend to remain inside their own industry and be like the train industry which failed to see flimsy early unreliable airplanes as a threat to their highly lucrative travel business.
So look at Apple. They just poached Tag Heuer’s top designer to come help create the iWatch or whatever related project Apple has going in that direction. But are the watchmakers rushing into this circle by hiring mobile talent to win, or are they the dodo-birds ready to be destroyed en masse? The watch industry has ceased to be relevant to time-keeping as almost all of us now tell our time with our phones, not our watches. The wristwatch will go the way of the pocket watch. The primary reason anyone wears a watch these days is jewelry, bling. Not to tell time. So why bother with ‘accuracy’ and even ‘time’ on that bling-thing. Why not for example make the ‘wristwatch’ a screen-saver for our fave selfies instead? Time display is irrelevant now for most people who still bother to strap on a watch. Wristwatch annual sales peaked in the past decade and are in perennial decline. Just like personal computers too. Except that PC makers have woken up to mobile, watchmakers have dug their heads in the sand.
There is obvious opportunity to cannibalize the business of your rival. Yes, look at that circle and you can imagine such threats and opportunities. But that view is short-sighted. The real massive opportunity arises from the new marketspace, as we wrote with Alan Moore in 2005 in our book, the signature book to this blog, Communities Dominate Brands.
Look at Apple (iTunes was the case study for new marketspace in the book). Yes, they can make TONS of profit selling iPhones. But they also created the App Store. Now they offer a vast market for software developers, and utilizing the long tail, every single sold app on the App Store adds 30% of its resale billing value to Apple’s profits - there is a vast software sales market that didn’t exist to Apple before. It didn’t get a 30% cut out of software developed for the Macintosh or earlier for the Apple 2. But through this digital convergence opportunity, suddenly Apple has found a new, enormously profitable way to make money in a market it was never in before - software sales.
Microsoft and Skype. Yes I’ve written many times how much the telecoms operators/carriers hate Skype and are fighting against Microsoft, but look what Microsoft is doing with Skype. They are launching real-time translation. Yes, the Star Trek universal translator, that translates in real time as we speak, from one language to another. Is this a massive new opportunity that will disrupt some of the translation-industry (I have no idea how big it is, but you know, Berlitz etc). Because software-maker Microsoft bought telecoms service provider Skype, they are now entering an area neither was in, real-time translation services. Something that previously only very highly trained specialist translator - humans - could do.
Google Glass and the various opportunities it creates in Augmented Reality (what I now call the 8th Mass Media after Print, Recordings, Cinema, Radio, Television, Internet, and Mobile the first 7 mass media). Google already owns the Internet and is viciously profitable. It already won the war of the operating systems as Android already exists on more computing platforms (smartphones, tablets) than Windows, with Android growing massively and Windows sales declining gradually (desktops, laptops, tablets and smartphones). Isn’t that enough? No, Google already believes that after mobile the 7th media comes AR the 8th media and they intend to dominate them all (as they do Internet the 6th). Is there money in AR? If history is a guide, mobile media alone (ignoring voice and person-to-person messaging) is bigger in total revenues than the total internet (including VOIP voice and all sorts of OTT messaging). AR is on a growth path to become at least as big as today the music industry but to do that in a decade. AR will not stop growing and may very well in its second decade grow to become bigger than mobile...
The creative Chief Digital Officer (or Chief Mobile Officer) will seek to discover and invent wholly new industries that weren’t possible before. Like how we had ‘pay as you go’ telecoms services invented in mobile two decades ago, now the innovation has come to the insurance industry where they have ‘pay as you drive’ car insurance for example. Why if you drive safely, in safe areas of your country, at safe driving times, would you have to pay same insurance as someone else your age who drives unsafely in dangerous areas at unsafe times... This kind of opportunities weren’t possible before mobile. How television soap operas can sell previews of tomorrow’s episode today, as paid content, to all mobile phones using the simple but effective method of MMS. You couldn’t do that with traditional broadcast. Or how newspapers can sell tomorrow’s headlines today, via SMS or MMS. Again, you couldn’t do that with print newspapers. If you invent a whole new marketspace for yourself, you will also own it until others start to enter it, so early on, you get to make tons of profits out of it. Remember that with digital content, you create it once, then you can make essentially unlimited copies without added costs but sell each license or better even that - rent the service...
New business models are possible and the perfect example is freemium (something we talked about in great detail in Communities Dominate Brands, well before anyone called it that..) Mobile enabled the whole freemium model to flower and now more than 90% for example of Android developer income is from freemium, not from direct payments when apps are purchased, nor from advertising. Yes, 90% is freemium income.
I mentioned that if we take these 17 industries and add their total value up today, in 2014, we get roughly 7 Trillion dollars. It is a mind-boggling number. The planet’s economy in total is worth 85 Trillion dollars. Thats the total economic value of humankind’s effort. There are only a few truly giant industries that are worth more than one Trillion dollars, there isn’t that much money in the world. So yes, telecoms is a 2 Trillion dollar industry (most of that is mobile). Cars are under 2 Trillion. World armaments and military spending is under 2 Trillion. Food is about 4 Trillion. The biggest industry is construction at a little under 5 Trillion dollars annually. But potentially the 17 industries headed for Grand Convergence are now worth 7 Trillion.
That is subject to two opposing influences. There will be ‘consolidation’ and ‘synergies’ when two industries merge, so the total of 1+1 will be less than 2. Thus when these 17 industries merge, when that merger is complete, out of their base businesses, its almost certain, the total will be less than those industries separately. So that influence means ‘less than 7 Trillion’. But there is also the opposite influence: new marketspaces. The kind of opportunities that didn’t exist before like say freemium brought to the software industries. That will be totally untapped opportunity ie the total will be bigger than separately. Thus 1+1 equals more than 2. I think very roughly speaking these two effects will cancel each other out, and when this Grand Convergence is done, we’ll have a colossus industry worth 7 Trillion dollars plus/minus say 10% and by a wide margin the biggest industry the planet has ever seen (with by far the most global competition the planet has ever seen as well).
But wait. Then there is the Yoad. The what? Yes, the Yoad. What the Spanish/British start-up Qustodian is calling the value of our personal data. So yeah, our Twitter followers and our Facebook friends and our recommendations and likes and all of our potential marketing support and commitment. Its value is the Yoad and it is always personal and it changes over time. Its pretty obvious that the relationship between our marketing influence and likes and preferences, to marketing spending will change radically in the next decade or two. We won’t be just ‘targeted’ because of some silly demographics (Why couldn’t a white 54 year old Finnish guy living in Hong Kong like rap music?). Our brand preferences will be courted and supported and rewarded. And we will not find it in the least bit creepy, just as we don’t find Amazon book recommendations creep either (so the guys to do this well won’t be called Facebook haha).
Anyway, Qustodian spoke at Forum Oxford and gave their estimate of the total value of the planetary Yoad, if all individual Yoads are added together. This is the value of the marketing holy grail - ie the perfect data about all real viable customer candidates excluding every nominal customer-target who in reality won’t be intersted in your product or service. The value of the planetary Yoad is... 2.5 Trillion dollars. It today is almost totally theoretical, even as companies as Qustodian seek to explore it, and some companies like say Klout and Kred have started rudimentary steps to attempt to measure factors that matter to one’s Yoad. But almost all major experts in marketing research, customer data etc agree that this is the inevitable future of consumer insights and turns all of marketing communiations upside down when ‘big data’ etc will deliver on those promises.
So that 2.5 Trillion dollars is not captured (at least mostly not) inside the Grand Convergence opportunity. It is an untapped business opportunity that will become available as we learn more about the digital opportunities inside that convergence. This is what Alan Moore was referring to when he said so famously that social media intelligence is the new black gold of the 21st century. So yeah, mobile is the magical measurement machine and mobile data (only) will deliver the detail and accuracy so we can start to monetize that vast opportunity in Alan’s ‘New Black Gold’. And as you may have noticed, tons and tons of futurists and technologists have recently bought into Alan’s thesis arguing ‘mobile data is the new black gold’ or ‘big data is the new black gold’ or any number of variations on that. (By the way, read Alan’s newest book, No Straight Lines, it will blow your mind).
It may be that the full theoretical value of the Yoad will never be captured. But the majority will be. So lets say 2 Trillion, on a 20 year horizon. That brings the total value of our Grand Convergence - with no other totally new industries invented - to 9 Trillion dollars!!!!! More than 10% of the planet’s total economy will be in the pot for this race to end all races.
GOING BEYOND THOSE 17 INDUSTRIES
But did you notice hotels like Stockholm’s Clarion Hotels are introducing door locks that can be operated by your NFC-enabled smartphone so you don’t need to use plastic hotel card keys anymore? Or that Starbucks says nothing is more important to Starbucks than mobile? Seriously? Not coffee beans? Not training of their baristas? Not ... location? Come on, world’s largest coffee shop chain. And we learned in marketing classes that for retail its always location, location, location. But Starbucks CEO now says what? Mobile? You know why he says that? They launched mobile money in the USA and in the first year 10% of their total US business shifted to mobile!!!!!!
Yes. In one year, and remember, the USA is not in any way a global leader in mobile payments like Kenya, Japan, Finland, Philippines or South Korea. Yes, USA. Yes, Starbucks. If one in ten dollars of your business shifts to something new in just one year, the CEO is completely correct to say ‘nothing is more important’ than that. And that is mobile.
Or Finnair. Invented mobile check-in 13 years ago. Half of the world’s airlines already offer it. Now more than half of Finnair’s passengers use it. And what does Finnair do with this new-found connectivity with its passengers? It now sells real-time one-time offer upgrades from economy class to business class. Personalized, Platinum-level frequent fliers go first, and get the best deals. Then Gold-level frequent fliers, etc. They do this in real time after ticket-sales have closed for a given flight, before the passengers have boarded the plane ie when we are there stuck in airport security hell, taking off our belts and shoes. Discounted upgrade offers - paid upgrades - from economy class to business class. After ticket sales has closed and no more passengers will be admitted to this particular flight. All by SMS. All automated, not one human being is involved from Finnair’s side. The frequent fliers who get this offer will feel privileged and honored and love the attention, even if they decide not to buy the upgrade. What it does to Finnair is that with a little bit of testing and optimization and gaming, Finnair soon learns for every single route, what is the ‘pain point’ at which level they can sell out every available business class seat! And business class is where airlines make their profits nowadays.
And do we have numbers? 23% of Finnair frequent fliers who have received that kind of paid upgrade offer from Finnair have already USED IT... Come on! This is Finnair maximizing its profitability - and totally automated. And every frequent flier who gets the offer loves it. This builds loyalty and customer satisfaction - while adding massively to Finnair’s profits!!! This is the power of mobile. As I teach in my workshops, mobile is the magical money-making machine!
So in that Grand Convergence we do not have the hotel industry or the restaurants industry or the air travel industry etc. Education is not there. Retail is not there. Healthcare is not there. Car industry is not there... Note that these industries will not go fully digital (at least not yet, until Apple gives us teleportation, which will probably shock the airline and car industries haha, but that won’t be with us until maybe the iPhone 8). So yes, even though there is much we can do with mobile healthcare, we will still need human doctors and human nurses and physical x-ray machines and edible ‘real’ medicines. So maybe a small fraction of the total healthcare industry might go digital, but at least in the next decade or two it won’t go fully digital.
So look at retail. They are utterly freaking out that half of US smartphone users have already been inside a store, ready to buy, when they discovered something on their phones and instead of making the purchase, left the store without buying (says MMA survey last year. The actual percentage was 49% so techncially only almost half). Now retailers are introducing all sorts of innovations to help customers enjoy the shopping experience more with their phones turned on and used inside the stores. As the world’s largest department store Macy’s said last year, that before, their sales staff would rush to stop any customers from using cameraphones inside Macy’s. Now the sales staff smile and encourage customers to take pictures, and to post them on Facebook etc. What a total change in culture and attitude about mobile and shopping. A whole book could be written just about retail and mobile. Wait, Gary Schwartz already did that, his latest book is Fast Shopper Slow Store (also an excellent read).
So apart from the 17 industries involved in Grand Convergence, the rest of the planet’s other industries total 78 Trillion dollars. This is everything else so its anything from Farming to Fishing to Forestry to Funerals. And yes, every other industry can benefit from mobile (I am not kidding. Farmers doing better irrigation via mobile phone based remote controls; Fishermen doing real-time bidding of todays’ catch even before they reach the shore; Forestry management tagging trees to be felled with reusable NFC/2G telematics cellular tags to ensure optimal processing in up to 6 separate saw mills per tree; Funeral homes offering now QR codes on gravestones to let grieving visitors see and share digital memories of the recently deceased.)
Lets say of all other industries - you hear a lot about car makers talking about the connected car and the intelligent car and the driverless car etc... how will they do that? With mobile of course, cellular connectivity to the cars and then a lot of various intelligent interconnected systems. So yeah. Lets say for all other industries, only 5% on average will be delivered with mobile. How big would that be... nearly 4 Trillion dollars more.
So we have 7 Trillion inside the Grand Convergence. The Yoad (and big data etc) adds another 2 Trillion. And the digital/mobile opportunities out of all other industries on the planet will add at least another 4 Trillion. We are looking at 13 Trillion dollars, readers. Yes. 15% of the planet is in play. You, reading this blog, are in that race! If you thought the gold rush of the Wild West was a big ‘bonanza’ to get rich fast. Or you thought you missed out on the PC revolution or the internet economy. Those were peanuts. Those were nothing compared to where we stand today. If you discovered an oil well in your backyard today, its value is less than what you can do in mobile! The best economic opportunity ever in human history is right in our grasp. It only takes the guts and will to go get it. To win in it. To be bold but determined. Not to lose focus. Don’t bother with the silly stuff like tablets or bitcoins or anything on the irrelevant periphery of this Grand Convergence. Go for the big wins, the giant opportunities, in the middle.
THE OPPPORTUNITY IS NOW
Look at whats happening now in this space. Coca Cola is the planet’s biggest advertiser. And they are massively bullish on mobile doing all sorts of wild intrusions into that digital convergence circle from launching their own currency in South Korea (you can earn Coke Play points even by dancing) to launching their own payphone booths in Dubai (you can get international calling minutes to call home in Pakistan by using Coca Cola bottle tops as ‘coins’). Unilever uses mobile airtime as rewards for loyalty in South Africa and voice recorded jokes by celebrities to help advertise to audiences that include illiterates in India. McDonalds lets kids play car racing on McDonalds restaurant tables using mom’s smartphone in Singapore, and offers vouchers via television ads direct to mobile phones in Denmark. Cosmetics brand Nivea has launched a smartphone alarm clock, the tool store chain Home Depot has introduced a screw/bolt measurement tool using the phone screen, the furniture store Ikea offers an Augmented Reality catalog so you can test furniture virtually in your home, and tissue brand Kleenex gives personal real-time hyperlocal weather allergy warnings. Massive global non-digital brands are now rushing into mobile and launching clocks, weather forecast info, measurements, telecoms services and even money.
There has never been a creative opportunity as enormous as mobile is today. What you can imagine, you can also do - and make even commercially viable business out of it - with mobile.
When the Fortune International 500 is released in year 2020 the biggest companies on the planet, the 10 largest companies will no longer be mostly oil companies, they will be mostly mobile industry leaders (but not necessarily handset makers or telecoms carriers/operators as we think of mobile today, they could as well be a Google internet company-turned mobile company or Sony home entertaiment giant-turned mobile entertainment company etc).
When Forbes releases its 2020 list of 400 wealthest people on the planet, the single largest industry to propel that wealth will be mobile. Also any young entrepreneur or millionaire list will be disproportionately powered by mobile in the coming years. There are no guarantees in life and no easy ways to the top. But mobile is the fastest way, or the way of least resistance if you are ambitious in a monetary incentive way.
And if your motivation is not money. If you have other measures of success, like healing the sick, or helping students learn, or bringing about better government or achieving more votes in an election - whatever your measure of success, again mobile (currently) is the best way to help you reach that. Take education. Studies from all around the world - from Nigeria to England to the USA - find very consistent results. If mobile is introduced to learning, students get 30% better scores in national tests compared to similar students who didn’t get m-learning assistance (Wow!!!) and... yes there is more.. students who are given m-learning tools like school so much more that they drop out of school 7% less. I rest my case. No matter what you do in whatever industry, you need to learn about mobile now and take advantage of its power to help make life better (or if you are so inclined, for you to also make money for yourself - and those are not necessarily mutually exclusive).
If you need more info, this blog has tons of articles over the years (we’ve had over 5 million visits already - and did you notice, no advertising! and no registration! and I will not spam you haha, I do not harvest your web address... even if you leave a comment, it is Typepad who insist on your comment registration, that is not me). You may want to download my 10th book (I’ve written 12, I’m the most published author in mobile and I am that well respected by my peers that I am already quoted in 140 books by my fellow authors in this industry) - 350 page ebook totally free called ‘The Insider’s Guide To Mobile’
You may want to follow me, I am @tomiahonen on Twitter. I am available for consulting and can create a strategy/management seminar around these themes or anything else I’ve written or spoken about. Write to me at tomi at tomiahonen dot com. If you need stats and facts on this industry, I publish a handy smartphone-screen-sized ebook statistics volume annually called the TomiAhonen Almanac. It also has a handset-specific companion volume every alternate year called TomiAhonen Phone Book (new edition comes out this summer). And if you are into mobile strategy, you might appreciate me as the most accurate forecaster of this very volatile industry. I publish a Forecast for this industry too, the new edition comes out later this year (if you buy it now, you also get the older forecast as a bonus immediately now, before the new one is released later)
So who am I? Forbes measured me as the most influential expert in mobile. I’ve been quoted in over 500 press articles in two dozen languages and I’m often seen on TV. I’ve authored or co-authord 12 books as well as several chapters to other books. I am quoted in more than 140 books by my peers. I’ve done 350 public conference presentations/keynotes in 100 cities in over 60 countries on all 6 inhabited continents. I’ve been invited to speak in each of the 10 countries with largest mobile industries. I am one of the most prolific speakers in mobile but very likely the most widely seen speaker in terms of total cities haha... Most global hit rock stars don’t get to perform in 100 different cities in their total careers... I’ve been seen by a live audience of over 125,000 people and I’m regularly quoted in the press (just now yesterday in Forbes for example, about Samsung’s future prospects). I’m the father of several of the industry’s major theories and concepts, serve on Boards of several companies and hold patents in mobile. I lecture at Oxford University on mobile and I have done guest-lectures at major universiites on five continents including The New School in New York, Medinah Institute in Saudi Arabia, Universidad de la Empresa in Argentina and Aalto University in Finland.
I started my consultancy in 2001, before that I worked at Nokia, and before that at Finland’s telcos Elisa and Finnet. Elisa is parent to Radiolinja the world’s first GSM operator, also thus world’s first digital cellular carrier and first competitive mobile operator. I started my telecoms/digital/tech career working at New York City at OCSNY the first ISP of New York. Before that I worked briefly on Wall Street, and earlier in marketing research back home in Finland. I’ve provided consultancy for 16 of the 20 largest mobile operators/carriers and 8 out of the 12 largest handset manufacturers as well as 4 out of the 6 largest network infrastructure providers. My reference customer list is pretty well the whose who of mobile/digital: Axiata, Bank of America, BBC, Blackberry, BT, China Mobile, CNN, Economist, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, Motorola, MTV, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, BNP Paribas, Saatchi, Sanoma, SK Telecom, Telefonica, Telegraaf, Telenor, TeliaSonera, Tigo and Vodafone. Note those are not ‘my customer list’ they are much more than that. They are ‘reference customers’ - meaning, THEY (not me) say they have used Tomi Ahonen. And no, not that they might have used my company or its services. They have said explicitly into the public domain, that they have used me, personally, to assist them in their strategic consulting needs into this complex industry (or used me to teach their clients/partners to learn about mobile).
At this blog I have been giving advice for free for 9 years, often with the co-author to my fourth book Alan Moore who still occasionally returns to blog here. As I mentioned, no ads, never had, never will. No registration either. I (we) do this purely out of a passion to share (Alan now mostly blogs at his company blogsite but his philosophy is the same). We have a highly engaged, loyal and enthusiastic readership here who provide very high-level discussion in the comments thread. This blog has received over 42,000 comments lifetime ie nearly 5,000 comments per year. For the mobile industry, this blog is the largest open resource for statistics about the mobile industry including several statistics provided by my consultancy that are not available from any other free source. Five million lifetime views of this blog tells a story of respect and confidence and loyalty, again as I only blog as a hobby and may take weeks of not writing when my consultancy business keeps me airborne and jetlagged. But every major story relating to mobile was discussed here, such as how will the iPhone impact the industry or what happens when Nokia announced the Microsoft partnership to all major mobile services from Angry Birds to Skype.
Go read back what I wrote at the start of those changes (or hundreds more) and find out how well I foresaw the future at the time, even to the point that when Nokia’s then-new CEO Stephen Elop’s infamous Burning Platforms memo was leaked to the press, I wrote a long blog explaining why no sane Nokia CEO could possibly author that disasterous and error-laden memo. While it emerged that I was wrong, Nokia’s CEO did write the memo and proudly took full ownership of it when the story leaked - I was also correct in that Nokia’s Chairman and Board were livid about it and reprimanded Elop for the idiotic and massively damaging memo. I revised my original blog only to state that I had clearly been wrong, but as is the policy of this blog, every posting remains as written - and you can go still now and re-read how strongly I disagreed with that memo - the first person in the world to do so - and even after it emerged Elop did write the memo, I left even that ‘mistake’ onto this blog as a record of what has been written here. I had no idea at the time that Elop would indeed be reprimanded for the memo in front of the whole Board as it later emerged in Finnish press stories.