Grand Convergence Means Grand Competition (Google, Apple, Facebook, Microsoft, Samsung, etc and all the mobile operators/carriers)

I talk about competition very much in my conferences and workshops around the world. It is frequently a requested topic and I have written on it quite a lot in my books from 3G Marketing the fastest-selling telecoms book of all time which focused on competition, customer loyalty, churn, segmentation etc from inside the telecoms operator world and competing against other telecoms operators; to Digital Korea the first case study of the area of Grand Convergence. Grand Convergence is what I call the massive collision of 17 major global industries heading into digital and mobile from music and gaming to advertising and broadcast, from internet and telecoms to insurance and banking. And all sorts of industries inbetween. A grand collision of 17 global industries that I often liken to a death-match, where giants like Facebook, Google, Apple, Microsoft and Samsung try to eat the lunches of Vodafone, Telefonica, AT&T and China Mobile (and vice versa) where some players like print publishers and camera makers are dying, other industries like watch-makers and mapping companies are under siege and some aren't even aware they are being ambushed like banks and insurance companies.

Why does Facebook buy Whatsapp? Why does Microsoft buy Nokia's handset business? Why does Apple launch the Apple Watch? Why does Samsung launch an operating system? Why are Bharti Airtel, MTN and America Movil launching payment systems across their telecoms footprints? These are all early warm-up steps in the big battle of Grand Convergence. Thats why Google launched Android, why Microsoft bought Skype, why Vodafone launched M-Pesa and Apple launched the iPhone. They were testing the waters. Is this Grand Convergence for real. It is. Lets dig in.

GRAND CONVERGENCE

I have been collecting industries into this theory I call 'Grand Convergence'. Note that this is not a mapping of all industries. To qualify, the industry has to be large enough, global in scope and be clearly headed to become mostly if not completely digital in nature. So farming is not in the picture as is not forest management nor fishing, all huge industries. Retail, hotels, restaurants can yes use digital tech, especially on mobile, but they won't be replaced by digital (completely). Airlines around the world will continue to fly over a billion passengers per year. Yes they'll give us a mobile boarding pass, let us buy the airline ticket online and manage our frequent flier program via the internet but they still need those jet planes from Boeing and Airbus to physically fly us from one airport to the next (until some day Apple will introduce iPortation their teleportation service on perhaps the iPhone 9 haha).

So I've been mappiing what industries are either totally digital from the start or will become essentially totally digital in about a decade or so. So far I've found 17 industries which have some overlap but mostly can be identified as their own businesses with clearly defined products and services and identifyable customer segments. They are mapped in this slide I keep showing around the world about the Grand Convergence:




The above slide by Tomi T Ahonen may be freely shared

So  we have the obvious ones, telecoms, internet, media, computers, cameras. Google says the future of the internet is mobile, so too says Yahoo. Microsoft, HP and Intel have said the future of the computer industry is mobile. Apple Computer dropped the 'Computer' from its official corporate name and calls itself now a moblie company. 90% of all cameras in use are on mobile phones not on stand-alone cameras, film-based or digital. And yes, in 5 out of 6 cases, if you call a random telephone number on the planet, it rings on a mobile phone not a fixed landline phone. Part of this picture is familiar territory.

Some parts are newer, Social Media most obviously is a new industry that is only about a decade old as a viable business now (anyone remember MySpace haha). The virtual worlds market is similar new industry. Others are smaller and less broadly reported on, like mapping and marketing research. And some are classic big industries but far past their prime such as the wristwatch and clock industry.

You notice in the above picture that all arrows are the same length but are a different thickness. The thickness illustrates the size of the industry in very rough terms but the wider the arrow, the bigger the industry. Telecoms is a 2 Trillion dollar industry (mobile most of that). Print is about a Trillion dollar industry. Advertising is about a 500 Billion dollar industry while music is a 25 Billion dollar industry. I have tried to arrange the industries so that typically 'similar' industries are near each other, so the internet is between telecoms and computers, and broadcast media sits between print media and music. The relevant point is that these 17 industries are in the death-match, they cannot avod digital and they will all become mostly 'mobile' industries in this decade and the next. A retailer or hotel or restaurnt or car manufacturer can decide whether they want to add digital/mobile parts to their business. These 17 industries do not have a choice. They find themselves in the deathmatch. The giants in these 17 industries will literally disappear if they don't adapt. And even adapting is no guarantee of success.

HOW FAR HAVE THEY GONE MOBILE

So I do an annual review of where the industries of Grand Convergence sit, on their migration to mobile. We just heard that games have hit the point where mobile gaming now accounts for more reevenues than console gaming, so mobile has become the largest part of the gaming industry but is not yet half of the revenues (as there are for example still PC/internet gaming). So I say 45% of the gaming industry has migrated to mobile (roughly speaking, rounding off to the nearest 5 percent). (Strangely, nobody else publishes numbers or any data on this grand race, even as its the biggest contest on the planet. The total race is worth 7 Trillion dollars in 2014, thats much more than global car industry or airline industry or travel or housing or food or war).




The above slide by Tomi T Ahonen may be freely shared

This is what I call the 'map to your career' to anyone who sees any of my presentations. This is the ultimate guide to where the dangers are, who are your most dangerous competirors and where there might be easy wins for you. So telecoms has seen 85% of its journey completed to moblie. The Fixed Landline telecoms business is in severe decline with many countries already past 50% of all households having gone pure mobile (as Finland did first among advanced industrialized countries that achieved 100% household telephone penetration rates in the past decades. The Emerging World then leapfrogged this obsolescent technology and went directly to mobile telecoms).

But take banking for example. They are clueless about this looming disaster on their horizon. Bankers are still trying to get their heads around the types of threats from new digital currencies and don't yet even fully understand why BItcoin is merely an obscure gambling instrument but mobile money will demolish cash. Apple's Apple Pay will not be the world's predominant moblie payment system but they did finally last year help convince the skeptics in the financial world that mobile money is real. Even so, few bankers accept mobile money is inevitable. My readers know all about this as I wrote the worlds' first book on mobile payments (Pearls Vol 3 Mobile Money).

So yeah. Reality check for those of you who are not regular readers of the CDB blog. Sweden is on plans to abolish cash as is Kenya, Somalia and Turkey. Estonians have a national Identity card on their moblles which allowed them to vote in the national elections. South Koreans have an identity SIM card on whch all bank and credit card identities are converged. Turkey was the first country to set the target date to end the manufacturing of cash. Coins were invented in Turkey and cash has powered the global economy 3,000 years. We will be the first humans alive to live in a post-cash economy and its powered by mobile. But is that what you read and hear in conferences about money? The presentation is just as much about how to fit 10 keys onto the plastic credit card or how to do colors and holograms in coins to make them less easy to forge. This is exactly like the Captain of the Titanic seeing the ice berg ahead and orderig the patio chairs to be rearranged on the sun deck.

IF YOU DON'T ADAPT, YOU DIE

So yes, 85% of telecoms is now mobile and 90% of camera business is mobile. That industry - cameras - gives us an interesting 'warning' about Grand Convergence. If you don't adapt, you die. Lets look at the global camera industry and the 'Golden Decade of Photographs' for a lesson. The camera industry has grown on a steady clip for over 150 years. Every decade, roughly speaking, the total global camera populatoin doubled. There were great innovations that helped push the camera industry forward bringing cheaper cameras and cheaper film and faster film-processing to expand the total camera population. We had the Kodak Brownie camera, and the Kodak film cassette innovations up to the consumer 110 film cartridge. And eventually such amazing things as flash 'cubes' so basic cameras could have a flash, and then there was Polaroid's family of instant cameras ever better and faster (Like Outcast sang in his big hit: shake it like a Polaroid Picture). And for a while the basic camera tech was so cheap, it was built into cheap disposable cameras that came pre-installed with a roll of Kodak fillm inside the throw-away, use-only-once camera.

So that pattern held very nicely up to year 2000. At that time the world had about 300 million total cameras in use worldwide (almost all were film-based cameras, Apple's Quicktake 100 the world's first consumer-oriented digital camera had only appeared in 1994 and year 2000 saw only about 9 million digital cameras sold worldwide, a tiny slice of the global camera sales that year. The cameraphone had not even been invented yet.

In year 2000 the four giant camera manufacturers were Minolta, Nikon, Canon and Konica of Japan. The world's lsrgest film makers were Kodak and Polaroid. These six were the six giants of the camera industry and they were about to enter the Golden Decade of Photography. If the normal growth pattern in cameras had continued, the planet would go from 300 million people owning a camera (5%) to 600 million by year 2010 (10% of the planet's population of any age and across all continents). It would be a great time because the growth in the decade would match the size of the industry at the start of the decade. Everybody loves an industry that doubles in size every decade.

But the Golden Decade of Photography was far better than that. The total worldwide population of cameras did not double from year 2000 to 2010. It did not trple or quadruple. It grew 10 fold !!! Yes by year 2010 there were a massive 3.5 Billion cameras in use worldwide and literally 50% of the planet's population owned a camera by year 2010. Wow. This was the true explosion of cameras. So what happened to the giants in the Golden Decade of Cameras? Minolta quit the camera business. Konica quit the camera business. Kodak went bankrupt during hte Golden Decade of Photography. Polaroid went bankrupt.. twice. 

In year 2010 the world's bestseling camera brand was Nokia. The world's most used camera brand was Nokia. The second largest was not Nikon or Canon. It was Samsung and Apple sold more cameras on its iPhones than Nikon or Canon total annual production. But here is the frightening part - in year 2000 Nokia had not produced one cameraphone. Neither had Samsung nor Apple. In less than a decade these newcomers wiped out global giants. Nikon and Canon only survived by retreating into the professional and semi-pro camera niche segments. Kodak and Polaroid are very late to the game when they release their cameraphones now for 2015 (only 14 years after the first cameraphone was launched by Sharp in Japan) and Nikon CEO has suggested they may be also doing their first smartphone later this year.

This is the lesson of my theory of the Grand Convergence. It is a death-match. These 17 industries and every major player from those indiustriees is locked into this fight. They find themselves locked into a cage where everyone fights everyone and most will die. That is why Google offers us mapping, Apple launched its payments system and mobile operators in India offer us FM radio content via cellular. This is a deathmatch. Anyone in that picture is a rival who can eat you cake like Nokia and Samsung ate that of Minolta and Konica and Kodak, or anyone can be the victim who dies and will go into the dustbin of history. This is the Grand Competition within the Grand Convegence.

OPERATORS ARE BAD AT INNOVATION

So first, the telecoms operators/carriers. These are the giants who were early to this race and beat out their older rivals from the landline side. Do you remember more than a decade ago when BT sold its wireless business as did AT&T? For a while it was the rage, fixed landline operators divesting their mobile sides 'because of saturation' haha. I was arguing loudly that it is foolish and against all the evidence of this new industry but it happened. Look what happened later, AT&T's brand was sold to rival Cingular (a mobile operator/carrier in the USA) and in Britain BT is now shopping for a mobile operator to be able to return to the industry it abandoned.

But what about all those who were 'wise' to this convergence? Vodafone and TeliaSonera and Orange and Telefonica, T-Mobile. Telenor and China Mobile and Bharti Airtel and MTS and MTN and Axata and Zain and Vivo and America Movil (and the US carriiers too haha, Sprint, Verizon, AT&T). They are strong rich profit-making giants who have a long history of dabbling in the opportunities of Grand Convergence. Who remembers Vodafone Live? What happened to Sonera's Zed? The mobile operator industry is a vast graveyard of great ideas, executed horribly. Now yes, there are some exceptions, Vodafone's M-Pesa is likely the best example that something can be done beyond just providing a telephone connection. But apart from some national anomalies (NTT DoCoMo in Japan and its amazing lineup of highly successful and profitable service units from app stores to advertising to mobile money, yes the prototype of Apple Pay is NTT DoCoMo's Felica on NFC literally ten YEARS before Apple Pay) the operators/carriers hae been quite phenomenally inept at capturing any meaningful slice of this opportunity. They saw these diagrams (or early versions of it) literally more than a decade ago and essentially all major operator groups had projects to capture their place in that future. Today they are threatened by Skype and Whatsapp and find that Google's Play Store and Apple's App Store are taking all the retail revenues that should belong to the gatekeeper's role (well, except for Japan and South Korea and a few other exceptions where the carriers were forward-thinking and not as greedy as in Europe and America and the rest of the world haha).

The mobile operator has all the assets and is the only entity with a direct contact to potentially every consumer in the market (when we get to 200% SIM card penetration rates shortly). That power is from the SIM card. The operators have a license form the national regulators to operate the cellular telecoms spectrum - a limited natural resource - and have an oligopolistic competitive environment in all markets. So its not open competition, its limited competition with 3G licenses granted for periods measured in decades. Thats as close to a monopoly as you can get legally haha. No wonder most operators are comfortably profitable and tend to view their markets as entitlements where digital rivals are not welcome like Skype and Whatsapp for example.

Now where is the movement in this chart? If we look at the big telecoms giants, China Mobile, Vodafone, Orange, Telefonica, T-Mobile, America Movil etc. What do they provide out of this chart? Telecoms services. And some dabble in selling handsets under their own brand. But beyond that, internet maybe. But thats it. An occasional social media epxeriment or music platform. To dismal success. The main reason is tha the mobile telecoms industry kept growing so fast, and had near criminally profitable businesses like SMS that made any other things look tame and not worth doing. So the most phenomenal failure to capture a piece of the future was by the carriers. They didn't need to innovate so they didn't.

GOOGLE

So lets look at a few of the big rivals and what they are doing. First up Google who won this race already but now its a question of what else can they take with them into their victory lap. So Google obviously is the biggest entrant from the Internet industry. They studied this map very carefully and you remember a decade ago Google's then-CEO Eric Schmidt wrote in his bombshell guest editorial to the Financial Times when he said the future of the internet was going to be mobile. Today we all accept that, but try to find other tech experts in 2004 who said that? (I said it ih my first books from 2002 haha). Yes today its clear but it was a radical thought ten years ago. Then he chanted 'moblile mobile mobile' in all internal meetings for years at Google and then talking to outsider partners he said 'put you best people on mobile'. Google saw this coming. And what did Google do four years after that landmark article in the FT where they signalled their intentions? Google launched Android. Not as an internet platform but as a mobile phone platform for smartphones (and later, also tablets, netbooks, TVs etc). This was Google's masterstroke and they have now become the entity with the biggest footprint out of the Grand Convergence. China Mobile the biggest mobile operator can reach 800 million pockets. But Google's Android is on 1.5 Billion devices, mostly smartphones. 

Because the biggest gadget by unit volume in the world sold today is a smartphone, and Android owns that industry with over 80% market share, Google has won. Because the second largest product category by unit sales of the digital connected devices is dumbphones, and now all handset experts agree with my early view, that all phones will become smartphones before this decade is done, yes Google will have Android reaching something like 80% of all pockets on the planet. And then the third largest digitally connected platform by units sold per year is tablets. And whose the biggest in tablets? Android. Who cares where Microsoft ends with some Windows on some PCs or Apple has a slice of some rich people with their iToys. Google won the war. They won it through stealth, with Android, and because Android is free, there can no longer be a global rival to take half that cake. Not in this decade and very very likely not in the next decade either.

All Google has to do is keep updating Android at a good refresh rate - Kitkats and Lollipops etc - and keep it free, then nobody can catch them anymore. Google gets into 1.5 Billion actual consumer devices today, its more than at its peak what Microsoft had with Windows or what Nokia ever had when both dumbphones and smartphones are added together. Google today has more active customers than any consumer brand has ever had concurrrently. Yes more than Timex was on human wrists at its peak or the number of people drinking Coca Cola or wearing Levi's blue jeans. And Google has only just started. It was 1.5 Billion people last year 2014, it will be 2.0 Billion at the end of this year and about 2.5 Billion consumers by end of next year 2016. No brand has been anywhere in that kind of stratosphere, essentially twice the reach of the next most popular brands the planet has ever seen. And even there Google will not be finished growing. So what is Google up to? Its already the biggest web browser and the biggest internet and mobile advertising platform so its big in the overall ad industry. They are our maps and they are on most of the smarthpones sold. What else? YouTube most obviously but Google is also interested to do money and want to connect the unconnected world and they also are preparing for 'the next big thing' ie Augmented Reality as the 8th mass medium beyond mobile, for the next big planetary digital race. Thats why we're seeing an early Google Glass and now an update to that concept next.

Why is Google in this game? They said in 2010 that if they achieve 500 million users on Android, it would be worth 10 Billion dollars per year to Google through their various services. Now they are three times that and by the end of the year will be four times that. Is the Android platform already delivering 30 Billion dollars of annual revenues to Google, probably not, but in the coming years, it will deliver more than that easily. Where is the money? We heard from the co-owner of this blog Alan Moore when he examined the mobile digital convergence opportuntiy in more detail in his second book Social Media Marketing. Alan is the guy who coined the term 'New Black Gold' for measuring our consumer behavior via our digital platforms, in particular through mobile at the epicenter of that activity. When mobile becomes as Ajit Jaokar explains 'our magic wand' it will have all the essential functions we would want. In Stockholm Sweden you can check into Clarion hotels and they'll have your hotel room key issued directly to your smartphone using NFC. Starbucks achieved 15% of its total revenues in the USA paid via mobile wallets. Finnair gets over 50% of its passengers using mobile check in. Talking of Starbucks, in Britain they partnered with Uber so that if you buy a coffee and pay by mobile, Uber will drive you to the nearest Starbucks for free. How cool is that? Estonia was the first country to hold a general election where people could vote via SMS. In Uganda and Kenya its totally normal to have your full salary paid to your mobile phone and all payments can be processed directly at one click from paying car payments and rents and student fees to yes, taxes. In Spain and Turkey you can sign contracts via SMS. The US state of Iowa has already started to issue driver's licences that are on mobile phones. Sri Lanka was the first country to declare its intent to be a 'mobile first' eGovernment provider. 

So its not that we bought x song from iTunes or subscribe to y station on digital media or watched z movie or liked it in Twitter or made a friend of that on Facebook. Yes all this is ALSO in our digital footprint and valuable. But how much MORE valuable is our digital footprint when it includes our keys and salaries and loyalty schemes and preferences of how we drive to work and where we consider going on a vacation and whether we voted in the last election etc? ALL of that will be potentially harvestable on only one device, the epicenter of Grand Convergence. Our mobile phones. That is what Google wants. Its what they said is the valuable part in mobile. And its for example what the world's largest advertising empire, WPP (owners of Ogilvy & Mather, Young & Rubicam, Grey etc) Chairman Sir Martin Sorrell (aka SMS) said. He said the competitors of WPP are no longer the other advertising and media giants like Omnicom and Publicis. Its now the data guys like Gallup, Nielsen, GFK etc. This is Alan Moore's thought. The digital footprint we create, that is the new black gold. Or how he phrased it (I hope I remember it correctly) Social media intelligence is the new black gold of the 21st century. Google wants to be in every pocket so it can know as much as possible about us.

Why? So it can help us into the future, not unlike how Amazon now helps us find better books similar to what we looked at, or better DVDs and music CDs or whatever else we might want to buy. We don't find Amazon at all creepy, we love the recommendation engine. But its built on an incredible wealth of consumer behavior - across only a few categories of goods. Imagine this across everything we do, not just some of the things we buy. Google is sitting on the biggest data mining goldvein there ever was. And they are very cautiously starting to build their steps into that. They are in no hurry. They will not want to mess this up. But that is why I am totally confident, Android will always be free and nobody can catch Android now. Nobody can catch Google. Its their oyster, what they want to make of it, they can take their time and decide how to 'do no evil' while finding new businesses out of the digital Grand Convergence opportunity. And now that Google 'won' with Android, they don't have to 'destroy' anyone else to get a good-sized piece of the winnings down into the next decade and the decade after that.

APPLE

So what of Apple then? Sure, Apple makes the most desirable PCs and tablets and smartphones. They might succeed to take another industry in decline (watches) and find some profits out of that. But note, that these are all industries of hardware that are driven by Moore's Law into the toilet of thin margins. Like TVs before, an industry that once had Philips (aka Magnavox) and Matsushita (aka Panasonic) among the biggest and most profitable companies on the planet. Yes Apple makes the most desirable consumer tech products today but what happens to those margins not next year but by the next decade? it is a race to the bottom and until Apple can perfect Time Travel, the opportunity to milk exceptional profits as the most profitable company in history - will come to an end. Apple only has its hardware play in that picture. The only software/services play that Apple was able to expand in that diagram was iTunes so they took a tiny target of the opportunity and became a big fish in the smallest pond there was. Apple needs to think about where they go and how.

The App Stores are not it and the App Store will never be it. (All app stores combined across all smartphones, were only worth about 1% of the total telecoms revenues last year. That is yes, not 1% of the Grand Convergence diagram, its 1% only of the Telecoms arrow. That is not nothing. Its less than nothing. If it wasn't for so many tech writers being iSheep and believing all the iBullshit, they'd notice by now that the app store myth is only viable for videogaming - another of the smallest arrows in the diagram. After you remove gaming there is no sustainable economy in app stores for the developers. But we knew that here on this blog for many years now, as I've been calculating the math and economics of that waste of digital space) 

Apple is the most profitable company now, It cannot maintain the profit levels when Macs, iPods, iPhones and iPads become victims of commoditization of their box-mover industries. Wristwatches are not the savior. Apple had a chance to be a big player in the smartphone wars but lost to Google's Android. Now they face a destiny of becoming a marginalized player on the fringe with maybe 10% market share in 5 years. Thats nice but it will be the area where most developers won't bother to go and where Apple is locked into its own alteranate reality where everybody has to follow Apple's rules. It is not conducive to winning in this competition. And Apple does have to make its moves fast, it is now sitting on obscene piles of cash which should be used wisely now, as opportunities are abundant. Not as defensive plays five years from now when the best chances are gone. Oh and incidentially Apple Pay fails exactly because of the mass market situation. Nobody wants a currency that only works 10% of the time. Sorry Apple, you blew it in the grand contest. But currently you are profitable. I wonder if Apple falls back to the days of 1996 when it was months from bankruptcy. There is no guarantee in the HARDWARE business that is so rapidly becoming commoditized as Apple's current products are. Apple needs a software-service play into this future to survive.

Apple's world domination 'cunning plan' is of course the virtual SIM card (that we now see on the new iPads and Apple tried to bring to the iPhone). That would be the ultimate Apple trick and it would wipe out the operators because Apple could then become a virtual operator and sell its customer connectivity to the lowest bidder. This would be exceptionally damaging to international data roaming business where telecoms operators make a disproportionate share of their total profits. That is what Apple is trying and will keep on trying. The carrier community stood united to prevent the virtual SIM card from the iPhone but they were not able to stop it coming to the iPad. It wil be the game to watch. If the operators/carriers lose their lock on the SIM card, they have lost the game and will become nothing but low-cost bit-pipes.

MICROSOFT

So then the Evil Empire. Whats Microsoft up to? Well, they were at one point the biggest player from the computer industry and for much of the past decades have been the most profitable of that industry. They did see mobile coming early on, Bill Gates launched Microsoft into the mobile OS wars and Windows Mobile at its peak was the world's second most used OS on smartphones with 12% market share (slightly less than the level where iPhone currently is in 2014 - if you want a warning from history haha).

Steve Ballmer then threw all that away with his silliness starting with 'no migration path' (why on earth not, after Microsoft - which managed to migrate DOS users to Windows on the PC, how could that same Microsoft make such an elementary blunder). So today Windows Phone OS has under 3% market share of new sales, and all those phones were essentially given away - sold at a loss - and even after that we just heard last year that one in three Windows based smartphones had never been activated (likely most were simply manufactured, shipped to retail and never sold). So the real market share for Windows in smartphones is dismal now, at 2%. It is the most toxic of any 'ecosystems' and developers are abandoning the sinking ship. It is now only a question of time when will Nadella shut down (or sell) the Lumia unit.

What can Microsoft do, if it owned the computer 'arrow' through a Billion Windows PC desktops, then failed in joining the march from the PC to mobile? Microsoft is doomed to try to live 'on the outside'. Thats weird. So yeah, on desktops they are big, they are less big on laptops. They are horridly bad on tablets (Windows has 5%) and dead on smartphones (2% by selling at a loss). A tablet is an ultra-portable PC, it is not a 'mobile' device because we typically cannot operate the device while we move or are in movement. We can't use the tablet (connected) in a taxi or bus for example, and it needs two hands to use it, so as Gary Schwartz explained in his book Fast Shopper Slow Store, 'tablets immobilize people.' We have to stop when we start to use a tablet. But a phone we can use while we walk, we can continue the conversation or send a message or take a picture etc including using the phone comfortably with one hand, with something valuable on the other hand, such as our briefcase or the hand of our child.

So Microsoft was big on the internet, it destroyed Netscape and for a while Internet Exploder was the most used browser. That should have been a lesson to Microsoft. Their Evil Empire antics were so hated that as soon as we had a Chrome or Firefox we jumped away from IE. So even on its 'internet play' Microsoft messed it up. Where else are they strong? Gaming. But note, 45% of gaming has gone mobile. Microsoft XBox represents exactly like Windows on the PC, only the legacy dying part that is not mobile. Microsoft has no play on the mobile side of gaming. Once again they are left standing on the station while the train has pulled away. It is very difficult to see the end to your business if the industry you're in is still growing. Just ask Minolta or Polaroid or Konica.

So what of Skype then? This is the true test of CEO Nadella. He will sell or shut down the Lumia ex-Nokia handset unit soon anyway (I give it about 2 at best 3 years) but Skype prevents Microsoft from ever entering the overall mobile race. Skype was perhaps a smart move by Ballmer when considering Microsoft's rapidly depleted options to play in the internet game. They got Skype but it bit them in the ass. Skype then killed Microsoft in mobile. This is a true modern case of a Pyrrhic victory. Yes Skype is now the most used telephone voice calling service. But it was the reason why Windows Phone was comprehensively shut out of the mobile opportunity by the global carrier community. Don't believe me? Ask Elop, the ex CEO of Nokia, when he was still CEO of Nokia. Elop said that not just Nokia brand but all smartphones sold globally that carried Windows OS, were being boycotted by the carrier community. Not because they HAD Skype - they did NOT and rivals from iOS to Android did have Skype - the reason Windows OS was boycotted globally was because Microsoft had bought Skype, the single existential threat to the operator/carrier business at the time. Elop used the word 'of course' to underline how well this fact was known in the industry, when he asnwered a question from an investor at Nokia's annual shareholder meeting. Of course there was a global sales boycott against all Windows based smartphones, not just Nokia. It is why Sony quit Windows and went Android. Its why LG quit Windows and went Android. Its why Motorola quit Windwos and went Android. Its why Dell quit Windows and went Android. Its why Nokia itself rushed Android based smartphones to the market after they dumped Elop from the post of CEO as Nokia was seling the handset unit to Microsoft.

Skype did give Microsoft a big reach into the digital user base beyond Windows on the desktop. Skype is increasingly used on smartphones (also now on Windows Phone). As we all know, we can use Skype totally free (where it is not blocked) for basic calls between Skype users and then there are lots of premium services if you want something like for example a phone number active in the USA, or to call special numbers outside the Skype network itself. Skype of course also offers videcalling and direct messaging so it the only global 'triple threat' to the carrier business threatening voice calls, SMS text messaging and videocalls. And it is most used for international calls where much of voice call revenues and proftits are made in telecoms. But is Skype profitable? Most years, no. It might make a teeny-weeny profit maybe now, but nothing of the scale Microsoft used to have and could have had if it had even a modest but sustainable business in mobile. A true pyrrhic victory. Microsoft was able to regain a big footprint on the internet but in an area that is mostly on the fixed side/desktop side and one that then eliminated their chances in mobile. If Nadella suddenly sells Skype, that is the day we could say is the rebirth of Microsoft and they may have a chance inside the circle of Grand Convergence. Now they are destined to roam in the ever more bleak wilderness outside the circle. Meanwhile for the industry, Microsoft is not now the Evil Empire, its more like a suicide bomber terrorist, who uses Skype to blow itself up, while taking much of the (mobile operator core) community of this industry to death with its own suicide. Nice job Microbrains! We hate you, go die somewhere else!

Talking about hate, how's that Windows Phone OS doing for you Microsoft? Remember Sony? Darling Sony who once made Windows based smartphones and sold them happily? Well, after Skype, Sony quit selling Windows based smartphones but it still sold Vaio branded laptops running Windows for the desktop. And so some Microbrain went and bribed Sony to agree to return to Windows on smartphones. Sony took the Microsoft 'bribe' ie partnership enticement marketing bullshit money, and promised they'd not launch consumer smarthpones that they sold now successfully on Android under the Xperia brand, but some enterprise-oriented smartphones on the Vaio brand, yeah, sure, that made sense. There was arguably some synergy to that. So yeah. Sony announced that in 2013. Then they went and sold the Vaio unit. 

So how dead is Windows Phone OS for smartphones? Sony had prior experience with Windows OS for smartphones. Its Vaio brand laptop business unit is now an independent company. It is a 100% Windows house. If ever - EVER - there was honest real synergy and business sense for ANY company to launch Windows based smartphones, it would be the Vaio unit, that knows Windows on smartphones, and currently sells Windows based PCs and who had been developing a Windows based smartphone for a year. What did Vaio just announce? That their Vaio branded smartphones to run alongside Windows based Vaio laptops will run... Android. Windows is so dead its not even funny. In ten years Windows is as relevant to high tech as Cobol and Fortran are today. And in smartphones Windows OS today is as viable as IBM's System 360 mainframe computers (which BTW celebrates 50 years this year, congrats IBM for the worlds' first modular standardized computer system that ran standard computer languages.. When I studied computer programming the industry was known as IBM and the Bunch where IBM literally made half of the money. Fleeting is such fame, Apple iFans beware)

FACEBOOK

So then we have FB (what, is Facebook not dead yet?). Yeah a kind of tech darling and obviously the biggest of the social networking industry. Social networking is a child of the internet industry but its now a separate industry because we can have pure social networking companies outside of the internet such as social networks built on mobile (like say SMSall of Pakistan that runs on SMS) or the bluetooth social media networks like Firechat we heard about during Hong Kong's umbrella protests. So Social Media is its own legitimate category. And as we know, Facebook like just about every social media player didn't find its profits until it came to the 'dark side' of mobile haha. Exactly as I wrote in my book about mobile social networks haha (Pearls Vol 2: Mobile Social Networks). So where is Facebook? Its dabbling in advertising and looking for places to invest in or to play in. Its big play was Whatsapp which makes it the biggest independent messaging platform as an OTT (Over The Top) provider. Whatsapp just passed 700 million active users. That is bigger than any carrier/operator in the world except China Mobile, and if we count the OTT players, then ranks them fourth behind Skype, Facebook and China Mobile. Yes Whatsapp alone is the fourth biggest network provider. And it generates now messages at 30 Billon per day so Whatsapp alone is now bigger than total SMS text messaging traffic on the planet (even as SMS has 8 times bigger user base). Obviously Whatsapp and Facebook overall have tiny reveues compared to SMS globally.

(oh did you ask? 110 Billion dollars roughly for 2014, a little bit down from its peak in 2013 but yeah, SMS is by far the biggest messaging system on the planet 3 times bigger than email, 4 times bigger than Facebook and 8 times bigger than Whatsapp by number of active users in 2014. SMS isn't about to die any day soon. Only its peak profits and peak revenues are now past. Its still a very healthy global juggernaut four times bigger than the global cinema industry for example. Yes SMS text messaging.)

What does Facebook want out of this Grand Convergence? They seem to be adrift with no real focus or plan. They are not unlike what Yahoo has been on the internet side. Think about it. Google didn't do anything in secret. Yahoo watched right next door what they were doing and today we have Google and Yahoo two utterly differtent directions. One owns the future and the other is on a one-way ticket to oblivion. Facebook yes has Whatsapp but then what? Where is their vision. Remember that failed phone? Yeah as smart as Amazon launching its own phone. Wait, Amazon did launch its own phone haha. (so you think I love the Kodak phone or Polaroid phone now? After the Microsoft Kin and Google Nexus and Amazon Fire and (HTC) Facebook phone. No, Kodak and Polaroid won't succeed in this either. Not the way they are going about it. But thats for another blog).

SAMSUNG

So then there is the biggest tech company on the planet right now, Samsung. A dubious position as we can recall how many others once were there, like HP, IBM, Sony, Microsoft haha. But yeah, Samsung is more than twice as big as Apple in total sales across all of their businesses. In Smartphones Samsung sells about 50% more annually than Apple (dont' be fooled by the end-of-year numbers when Apple always has its best annual quarter, thats because Apple launches its new phones for Christmas sales, we have to consider Apple total smartphone market always on an annual cycle not a quarterly cycle). In all phones sold (including dumbphones) Sammy is about twice hte size of Apple's iPhone. Samsung also sells TVs and semiconductors and all sorts of other gadgets and tech. But its a curious company considering the Grand Convergence, Samsung has in the past seemed to be singularly inept at leaping across the industries with any 'synergy'. Take screens. Samsung is the world's largest TV maker and largest smartphone maker and semiconductor provider. It has also sold personal computers for more than a decade. Why is Samsung not the world's largest (or a Top 3) sized PC maker? Weird, isn't it?

This is quite different from say how Apple operates. Apple has been able to 'invade' other areas where it finds partial synergies - the iPod was a very simplified computer/media player partly taking functions from the Newton and just minimizing it. But while pundits of the music industry compared the iPod to Walkman cassette players and thought Apple had no synergies, actually the chips and codecs and memory of the iPod were computer industry gear, just repurposed by Apple. Yes an iPod is a basic and task-optimized pocket computer or call it a variation of the PDA. So its not as wild a jump technically for Apple as it seemed or would have been if Apple launched a cassette-tape player against the Sony Walkman haha.

Then Apple is able to gain dominance in the areas where it expands for a while. Best example iPad obviously. But no. Samsung seems to ignore its corporate strengths, never use any synergies to support its divisions and only manage to grow within a given industry. Like becoming the biggest player in televisions or phones or semiconductors. This is not unlike Sony, which is another company utterly inept at taking advantage of almost any of its vast array of brands and technologies to expand a given unit's business (the original Walkman branded musicphones are the main exception).

Why dont' we have a Playstation smartphone running Android? Or why are Sony's smartphones very ho-hum in cameras while Sony owns the Cybershot camera brand? Why is Samsung able to boast the best cameraphones far outclassing Sony. It makes no sense. And bear in mind, Gangnam sits in the meccha of digital convergence in Seoul, the most connected city in the most connected country where the kind of digital convergence exists today that most only dream about. As I said, I wrote the book on it, Digital Korea as the first case study of Grand Convergence on a national level. So Samsung R&D can see the digital converged future in their daily lives when they step outside their offices. How can they so miss this opportunity? It baffles the mind

But at least Samsung has been trying. The software play was once strong and serious with bada released and Tizen on the pipeline. Now Tizen has had what, six delays to its launch for two years and the OS seems to become stillborn. We have only seen two smart watches on Tizen (that then inexplicably were annoucned to be Osborned and Samsung would return to Android for future Galaxy Gear smartwatches? WTF?) Now we see Tizen on some TVs and there should be or might be a Tizen smartphone launched (fingers crossed) in India maybe later this Spring, who knows. But yeah, Sammy did try to go where the logical expansion is for a major handset maker. When the PC era went to box-moving at slim margins, it was Microsoft the OS provider who made all the profits and the box-mover PC makers lived in a razor-thin margin if it was a good year. Most years they reported losses. And it led to huge consolidation. That is what the future of digital convergence looks to Samsung. The saving grace for Sammy compared to Apple is one word: scale. As long as Samsung remains the world's largest tech provider then they have the cushion of scale and should outperform other box movers in the mass marekt space like LG and Sony and the various Chinese players. That is a different business than a niche market (Apple) where bigger profits are possible. If Samsung remains only a handset/tablet/TV equipmetn maker, they are facing a slow long decline into becoming what Dell became in the PC world. Would investors love to hear of profit margins in a good quarter of 2%? Samsung is now huge and has deep pockets, it should now move beyond the boxes and use its insights and broad range of assets to find something next.

They don't seem to know what they are doing though. The Tizen mess is a perfect synopsis of how clueless Samsung is at the top. They simply don't know where to go or what to do. When Nokia was on the top, say what you will about their delays but Nokia had a clear vision and pursued bravely the first gaming phones and the 'multimedia computers' and the consumer smartphone space and app stores and mobile payments and industry-best cameraphones and mobile advertising and music and ultra-low-cost smartphones and NFC and mobile wallets etc (all literally years before Apple got around to doing it, or in most cases also years before Google got to it. This all was that old Nokia before Elop killed it ail).

Consider Apple and Samsung. Five years from now there will be devices that are still clearly 'smartphones' and 'tablets' and that hardware will still be a 300 Billion dollar industry plus/minus 33%. But 15 years from now the smartphone and tablet will be as quaint as a stand-alone telephone answering machine with its two cassette tapes haha. Or a VCR (Betamax or VHS? haha, real men had both!). Yes some connectivity gadgets will exist but the form factor of the 'phone' will be gone in 15 years. We may have some gadget embedded into our bodies but then if its digestible, how can anyone even see that cool iPhone 23 that is just a chip under my skin or embedded inside my tooth? Some tech is needed, say cars, trains, airplanes, ships. Some tech becomes totally obsolete like telegraphs, fax machines, zeppelins, telephone answering machines. The smartphone metaphor device and the tablet metaphor device - these are not sustainable. They will shrink and vanish. Not completely but so much that there isn't enough of a hardware business to bother with. In year 2030 the 'hardware' business of the portable pocketable digital connection device will not be as big as a third of today, at best at $100 Billion dollars in today's money (inflation-corrected). It might not even be as little as 10 Bililon haha. That is a comprehensive collapse of this slice of the industry. 

Yes there will be hardware but mostly it will be embedded or wearable and it will be miniscule. And it will be dirt-cheap. Did you read the blog I did of the analysis of the 10 dollar smartphone by 2020? Think through what that means? It does mean that we will buy other 'smartphones' and 'tablets' in 2025 like we would want to buy a CRT-based black-and-white TV set today. Yes it can be made but nobody would buy it. Apple will probably migrate to ever more luxury and fashion lifestyle products (led by Apple Watch) so they might be a jewelry brand by 2030 wth some semi-high tech thrown in. But Samsung will be the biggest box-mover who sits at the slimmest profit marging sustainable pushing its Chinese and Indian rivals to zero-profit quarters while occasionally buying one of the other giant rivals - much how HP kept being the biggest PC maker for so long, Buying up its rivals.

ULTIMATE RACE

So we are witnessing the biggest race of human history. This converged industry today when the 17 industries are measured separately, are worth 7 Trillion dollars. The migraiton to mobile has hit 1.7 Trillion dollars according to Chetan Sharma's 2014 number so we are about one quarter of the way to the end-state. We've seen some giants fall but this is a death-match. There will be huge deaths to come in the next 15 years and most of the winners in this race will be majors within this circle today. The operators are at the driver's seat as long as they can hold onto the SIM card as key to our digital connection. The carrier community would be wse to adopt as much tech into the SIM card and make it as indispensble as they possibly can, from what Estonia did with IDs to what South Korea did with the banking industry. And if Apple ever breaks that SIM lock to the consumers and gets their virtual SIM into the market, then the carriers/operators will become toast.

Google is the only definite winner so far with a nepharious plan to bypass the operators and get into every pocket. But differing from the operators, innovation is in Google's DNA. They kill off more live Google products than what carriers/operators can even imagine in their innovation workshops haha.

Microsoft was one of the strongest players but is now exiled to the outside. Apple has been brilliant when the early stages were hardware, they now have to do the same on the software/services side. They have the DNA to also succeed reinventing services and software, look at iTunes and the Apple Store but its not the App Store. Apple has to now do something radical and new, beyond Apple Watch in hardware or the futile bid of Apple Pay when only 10% of consumers would ever have that payment instrument. Its as stupid as a TV station releasing a TV show that is only visible on Sony branded TVs haha.

Facebook is lost but at least they are perhaps on the path having discovered the money in mobile. Who knows. Samsung is huge but their synergies are hopeless and their software and services record is spelled bada - something Samsung itself killed off. Tizen is the test of is there more to Samsung than hardware at thin profit margins.

There are tons of other players, Intel, IBM, Sony, BBC, Yahoo, Amazon, Turner, Time-Warner, WPP, Omnicom, Publicis, LG, the Chinese tech brands and internet brands from Baidu to Xiaomi; EA, Warner, Universal, Visa, Amex, Citibank (even Nokia on a comeback?) etc. Some of them will be driven by a visionary CEO who will be called the next Steve Jobs, who will make a bold brave move to another industry within Grand Convergence, like how Apple the PC maker launched iPod music players and the iTunes music store. Might we see an American Express smartphone? MIght we see Yahoo Insurance? A BBC internet service? There is gold inside the circle of Grand Convergence. We have only made one quarter of the journey. The biggest prizes are mostly still hidden and will come in the next 10-15 years. Who will be brave and bold to get there? Who will stumble along the way. Will we still identify brands that are now known as mobile operators/carriers by 2030 or have they vanished from our daily lives not unlike the water provider or electricity provider to our homes and offices today?

This is the richest time for innovaiton in human history and the Grand Convergence theory is your map to the future. There are enormous riches here to be had but also vast dangerous pitfalls that will imperil foolish companies. Print out the Grand Convergence map and frame it on your wall and save it on your phone and use it wisely. Imagine being an explorer who is suddenly given a map to where you want to go. This is that opportunity. Come back to the blog where I will review the Grand Convergence from time to time. We may have 18 industries in it next time we meet... 

PS Grand Convergence is of course one of the main themes I will cover in my big workshop in Dubai in May if you want to send someone from your team to catch a full workshop with me.

 

Comments

[Jouko Ahvenainen]

I also wrote some thoughts about Samsung and Android http://www.telecomasia.net/blog/content/mobile-bloodshed-next-casualty: "It anyway looks like the Android phone business starts to look very much like PC with Windows was many years: a dominating operating system, good hardware matters, but not the hardware brand, and hardware manufacturer’s additional OS or software components just annoy people."

I also feel it is too early to talk about a collapse of Apple, but Apple should improve with services. And Microsoft's mobile future depend on many other things than WP only, they must get solutions to all main systems.

[Peter]

You could take into account two things:
1.Facebook acquired Oculus Rift, which might be used to get foot into gaming/new ways of communication/augmented reality/virtual reality

2.Samsung with its different industry branches sees the convergence between them by approaching the Internet of Things, maybe creating ecosystem mashup of hardware appliances and software

[Tomi T Ahonen]

Hi KPOM and Jouko

KPOM - look at the time-frame. 15 years to 2030. Are you SERIOUSLY suggesting Apple can maintain its obscene profits in hardware 15 years out, while the world all make clones at ever lower prices? Or will Apple adjust to market realities? I have no doubt year 2015 will be another good year for Apple but year 2020? By then this gravy train is well past unless Apple finds an off-ramp from the hardware racket.

KPOM as to 'doubling in the US' haha. Thats from essentially zero base. It means nothing. Look at the world. Outside of the US nobody is rushing to deploy Apple Pay because they see the economic futility of the system because of its limited reach.

Jouko, very good article you wrote (as usual). And yeah the market has a very strong analogy now to the Windows-PC era where the OS provider will make the biggest profits and most hardware makers need to learn to live on thin margins. And your point that the branding loyalty in the PC wars diminished to nearly zero, if it ran the latest version of Windows, and it was a 'trusted' brand like a Top 10 brand, then it was essentially the same if you bought a Dell or HP or Compaq or IBM etc. That is the direction where Android handsets seem to be headed.

Apple collapse no, not saying collapse but they cannot sustain this business. That is math, Jouko, isn't it. The hardware side of Mac PCs or tablets or smartphones will not sustain a 120 Billion dollars-per-year sized Apple in 5 years or 10 years. Those businesses are going to shrink, the PC and Tablet industry in revenue terms already are (and the PC industry in unit sales as well haha) and the smartphone business will soon start to shrink in revenue terms. So Apple has to shift or shrink. It won't shrink.

But Microsoft? Seriously Xbox won't sustain the company's size. The Cloud is too immature still. They need Windows for the desktop and Office Suite or they collapse. And those businesses are now shrinking at an alarming speed.

Tomi Ahonen :-)

[tz]

Cobol and Fortran? Well, yes. That is a secondary danger to Apple and Microsoft. C# and dot-net aren't really that big on Linux, and I doubt Android will add APIs supporting them (see Visual J++ and the Sun lawsuit against M$). Apple is less evil in that it at least is a UNIX clone, but Objective C might be Rejected C, along with their App Store rules banning porting.

Linux is a very live and healthy ecosystem. Sure, Android is Java, but underneath and on the server end, there are lots of languages still competing, expanding, contracting, appearing, becoming extinct.

One of Microsoft's errors was to port its desktop development to mobile. Even if you can shoehorn it into mobile, the existing ecosystem can't be integrated. It is as if it is not a carbon based lifeform.

One thing you didn't mention was the evolution of the web. HTML5. Yes you can have "apps" but part of the convergence might be to something more Chromebook like where everything is not so much a native app but a web-app. One ecosystem pushes toward an app, but depending on how things break, web-apps might be significant - they are on-demand downloaded apps.

[Jouko Ahvenainen]

Apple, it is of course math too, but then it is brand, loyalty and capability to innovate. And it is hard to forecast all of them. Nowadays I sometime also think my very personal behavior and don't even try to understand all meta-trends. And for me Apple is now 'the reliable' device for laptop, tablet and phones. I know they work, they have needed apps and they are easy to use. Android is like PC-era Windows, have always something to fix, updates can cause problems etc. But I agree that Apple's service and own apps (map, iWorks, cloud) are not so great.

MS. I think their key question is enterprise solutions and Office and keep them in all devices (I wrote about this already a year ago, but it is still relevant http://www.telecomasia.net/blog/content/wheres-microsoft-mobile-heading). Apple offers its tools for free, but it is not really a threat for MS at the moment. But Google starts to be, and how people's behavior and use of tools have changed. And I mean they should get office and their business tools to all operating systems, Windows is not enough.

I use all the time Windows, Android and Apple phones. I must say as a user, WP 8.1 was an improvement and I like it now much more (I used to hate it), but I still hate tiles and lack of apps. But Samsung Android has gone to another direction, I like it less and less, when I have issues with updates, apps that suck battery, stupid Samsung solutions, etc. I feel MS is improving in mobile, but this its own OS game is not enough for it.

[modal]

I'm asking this because I'm curious. Why are you disallowing comments regarding the app stores and the profitability of apps even while you comment about that on this blog post. Or have I misunderstood and commenting on apps is allowed on the comments of this blog post.

[AndThisWillBeToo]

@modal
Tomi disallows comments that disagree with his app stores blog post as that app store post is a source reference of this blog post. You are supposed to do comments like that to the app stores blog post.

That's how I understood it.

[Tomi T Ahonen]

modal

I don't think I've expressly forbidden discussion about app stores related to this blog posting (I did at another blog posting where it was not related to the topic of the blog). I have written a blog expressly about the economics of app stores and have a link to that article in this blog posting, I would prefer if you have issues to contribute about apps store economics you bring the discussion to that blog posting - as its not in any way relevant to the Grand Convergence - but I just double-checked and I do believe I have not forbidden anyone from commenting on any topic in this particular blog posting and its comments thread. In fact, this blog has wider topic range than usual because I also discussed profits in the posting (profit LEVEL debates and related stock market speculation debates are usually banned on this blog).

I sometimes step in to a given discussion thread if the comments become unproductive like recently someone started a debate with me about the book industry economics where that blog made no specific issues about books except as a group of hits businesses overall. At that point I ended that discussion, you may have seen that. But no, on this blog there is no prohibition at this article to discuss app stores - but I prefer you don't open that can of worms here because there is a specific blog about it. Mind you, if you do talk about apps stores, then your comment must reflect the fact that you've read THIS article before you argue against my views, ie you must illustrate you read what I said and what evidence or arguments you might want to post against my points - ie Apps are only 1% of the telecoms industry - lost in the rounding-off error - and thus a tiny fraction of a percent of this Grand Convergence and nobody suggests they will be a Trillion-dollar industry, app stores, in the next 10-15 years haha. So yeah be aware of what you write if you decide to attempt a contribution about the barren desert of app stores and their contribution to this grand battle

More generally, the overall philosophy is that whatever i raise in the blog article is always open to debate in that comments thread and i try to welcome open and wide discussion so I allow quite a lot of latitude, as long as you stick to the point, are not rude, illustrate that you've read the full article. in other words as long as your comment is sensible and adds value to the readers of my blog. You don't have to agree with me, i learn not from those who agree with me but from those who disagree with me.

Tomi Ahonen :-)

[RottenApple]

"In ten years Windows is as relevant to high tech as Cobol and Fortran are today."

In other words: Windows will become a niche where competent developers are a highly sought-after resource because there's so few that can still handle it? Good prospects for me... :D

Well, anyway...

You need platforms that can create content for your mobile paradise. And so far the mobile platforms themselves show no sign whatsoever to become that themselves, locked down and restricted as they are.

So that leaves the 3 major desktop OSs.
MacOSX, due to Apple's nature will forever remain a niche, Linux, as being handled today will never be able to leave the geek corner, so what else, if not Windows? Unless Microsoft produces another major goof of a size larger than Vista and Windows 8 combined I doubt that it will become extinct. As won't desktop computers. There's far too many tasks where the internet is simply insufficient for and will remain so for a long time. Not everybody has high speed broadband access and seeing how much needs to be invested here this won't get solved in 10 years.

[Otto Mäkelä]

I notice you haven't talked much about how (mobile) computing will effect other market sectors. An example is how Tesla sells their vehicles directly via internet, pretty much cutting out the middle men, and how their after-market support and maintenance is heavily tied to mobile networking. What will happen once we have smart cars which are also network-connected mobile computing platforms?

[Maggan]

Quoted from blog post: "Sweden is on plans to abolish cash"

That's the first I've heard about this, and I live in Sweden. Do you have a source so I can read up on this?

Cheers

/Maggan

[Lullz]

"The App Stores are not it and the App Store will never be it. (All app stores combined across all smartphones, were only worth about 1% of the total telecoms revenues last year. That is yes, not 1% of the Grand Convergence diagram, its 1% only of the Telecoms arrow. That is not nothing. Its less than nothing."

With this rate App Stores are going to be 1,5 % of the telecoms industry or closer to 1,5% than 1%. People may not expect the apps to grow into a Trillion dollar industry in the next 15 years but I expect that to happen in 25-30 years. It's only logical really. Once the emerging markets start reaching the income level the old industrialized countries have today, they will have the money to purchase apps and with apps anything is possible. The apps industry is expected to grow close to 50% rate this year and the projections we have seen rarely extend that far.

The growth rate is really independent of the number of the developers as long as there are enough quality apps available. The number of the developers may be declining but as long as the rich companies can produce content people want to purchase and pay for, the app economy is going to generate more revenue. We may have seen the peak app but that is independent of the peak app revenues.

[RottenApple]

@Lullz:

"With this rate App Stores are going to be 1,5 % of the telecoms industry or closer to 1,5% than 1%. People may not expect the apps to grow into a Trillion dollar industry in the next 15 years but I expect that to happen in 25-30 years. It's only logical really."

That's pure nonsense. It not even remotely logical.
For apps other than games to become a profitable business there first must be some profound motivation to buy this stuff. And that - plain and simply - DOES NOT EXIST! And it never will.
You may be able to sell some specialty software at high prices - but you'll need the high prices to refinance the operation with low sales.
But for the average run-of-the-mill app will always find a free alternative.

[AndThisWillBeToo]

@Maggan
AFAIK it's this:
http://twitter.com/tomiahonen/status/283272563344429056

Which I presume originates from this:
http://www.mobil.se/mobila-betalningar/swish-s-funkar-bankernas-betaltj-nst

Connect the dots yourself. You're a Swede.

[Wayne Borean]

Interesting post.

About five years ago I was reading Microsoft's SEC filings, and when I added everything up, it showed a serious weakness in the company, specifically that the largest profit center was Office. I played with projections, and came to the conclusion that Microsoft's position was untenable because there were a lot of options to using Office, which were less expensive, and nearly as capable (disruptive technologies).

I had no knowledge of mobile at the time, and didn't know how it impact things.

I also suggested around the same time, that ereaders would soon be inexpensive enough to be included as a gift in cereal boxes. Turned out is was wrong on that, as ereaders became tablets instead, and you can now buy a fifty dollar tablet which can be used for far more than just reading, but 7" tablets may soon be selling for $10.00 along with smartphones.

It's going to be one hell of a ride as this plays out. I think we are going to see at least one major new innovation which shakes up things even more (besides wearables and/or tech built into the body).

What? I have no idea. But there are a huge number of talented people playing with millions of ideas. Someone is going to build the next Google or Facebook in a garage, and scare the wits out of all the big firms.

And yes, I was wrong about how quickly the disruptives would tear up Office. It is happening, just slower than I expected.

Wayne

[RottenApple]

Great prospects...

get your smartphone stolen, lose all access to money.

Am I the only one who sees the insanity of such ideas?
There will always be need for an emergency backup system, and so far none has been found that is not actual cash.

So here's my prediction: The country which abolishes cash first will be in for some major trouble.

[AndThisWillBeToo]

@RottenApple
From the blog:
"Sweden is on plans to abolish cash as is Kenya, Somalia and Turkey."

I'm sure Tomi can hand out links to public press from all four countries where they explain their strategy to get there. He wouldn't write something like that unless it was true, right?

[RottenApple]

@Lulltz:

Don't confuse apps with games. It's all lumped together in one big number.

Games can and will make profit. How much remains to be seen. Just don't expect some super-growth here. I'd expect growth of the same magnitude as the market grows. But don't forget: That money will just be shuffled around from other means of gaming like PC and consoles. So no magic well of riches for the games developers.

Non-games - sorry - but that won't happen. Just like on PCs for most things some free alternative will be available and the vast majority of paid apps will be scams. But I wouldn't consider fraud a sound business. Unlike PCs it's much harder in mobile app stores to miss user ratings.

[Maggan]

@AndThisWillBeToo

Thanks for the links. No support for claiming Sweden is on a plan to go cashless though.

The banks are introducing mobile payments, and we have adopted an australian NFC card system on public transport in three major cities, but that's about it. Nothing mandated by the government.

So painting Sweden as some kind of a poster boy for planning a cashless economy seems to be way off from the truth, at least from where I stand.

I really appreciate the links, so thanks again.

/Maggan

[charly]

@KPOM

Apple's 0.15% is do-able in a market like the US were even Wallmart pays 1.5%. It is not so do-able in the UK where the EU has set a limit of 0.35% for debit cards (i assume Tesco would pay even less) or the Netherlands where the average cost for a pin transaction is €0.21.