|Issue:||Asia-Pacific III 2001|
|Topic:||Marketspace: Content Comes of Age|
In the virtual world of marketspace Dick Wolven, President of EMC Japan, explores the potential for a future perfect vision where carriers can devise revenue models for each player in the value chain to make money and content is king. Billing systems will have to differentiate content as packets traverse networks, content providers may charge users directly or sub-contract this to carriers and the portal business will see competition from virtual network operators. Content is the new business driver.
Marketspace and the Internet Winners Prophetic voices, though rare, occasion-ally refresh us with their clarity of expression. In the mid-nineties, J. F. Rayport and J. J. Sviolka published seminal articles in the Harvard Business Review that still illuminate the continuing Internet revolution. Every business today competes in two worlds: a physical world of resources that managers can see and touch and a virtual world made up of information. We have referred to this new information world as the marketspace to distinguish it from the physical world of marketplace, a virtual world where products and services exist as digital information and can be delivered through information-based channels. Rayport and Sviolka went on to define the terms of the discussion about the Internet and its impact. They recognised, for example, that both marketplace and marketspace participants could be segmented into three distinctive categories: 1) content (what people buy) providers; 2) context (customer or user experience) providers; 3) infrastructure (how products are distributed) providers. Furthermore, they anticipated that the first wave of the Internet revolution would become so complex and rich that those who could simplify the navigation and overall user experience (context) while retaining the rich information would become the real winners. A Future Perfect Vision Now, the second wave of the Internet revolution is upon us. Wireless tele-communications carriers recognise the significance of both context and content while understanding the infrastructure as only a part of their business. In the near future (Japan now) wireless telecommunications companies will have two business segments: 1) the traditional ‘network’ business; 2) the ‘portal’ business in which the carriers will attempt to control the ‘user experience’ and thus the context. Simultaneously, the carriers will attempt to create an ‘ecosystem’ of intelligent mobile appliances, device-based browsers, a standard network, and content providers who offer value to customers. More significantly, carriers will create a set of revenue models through which each player on the value chain can make money. Thus, the handheld appliance providers may continue to receive carrier subsidies through the retail outlets that sell the devices. The carriers will charge for packets that traverse the network (creating the need for billing systems that differentiate content). Content providers may charge the user directly or contract the carrier to perform billing. Virtual Network Operators are emerging to compete based on the Portal side of the business. Marketspace and the Wireless Internet: Location as the New Dimension The key to making this new ecosystem really work is… CONTENT! Even today, 2.5G Carriers like NTT DoCoMo offer a wide variety of (transaction, database, information and entertainment) services through ‘official’ (about 1,000) and ‘unofficial (about 40,000) sites. Short Message Services (SMS) will continue to grow and find new uses For example, Instant Messaging may be linked to Location Services that are, in turn, linked to ‘buddy lists’ that allow people to find each other. As content providers learn to use the Location dimension of wireless services, new and unanticipated applications will emerge. Carriers already anticipate personal navigation, traffic, and weather services based on location. Others on the radar screen include music distribution, cinema previews, wireless point of sale for vending machines, environmental monitoring services, wireless e-commerce for commuter train tickets, convenience stores, bank ATMs, etc. The Value of an Information Infrastructure As George Gilder suggests, bandwidth in the network will soon match or exceed that of the input/output capability of the computers in the network. That means “…the computer disaggregates, and becomes a series of peripherals attached to the network… Meanwhile, the heart of the information infrastructure becomes the storage repository and the increas-ingly object-oriented and multimedia-centric databases it contains.” Gilder may live in the future perfect tense, but content remains, by definition, information that is here, now, and growing. Content is stored, protected, managed, shared, and moved on an infrastructure that includes a federation of networks and systems, including the wireless carrier’s network. This network federation requires an information infrastructure that is capable of delivering content from anywhere, at anytime, to anywhere, in any format, in any quantity, over any network. That same infrastructure must perform these services no matter the absolute size of the content, how fast it is growing, or how fast the service provider must change to accommodate markets and customers. Growth of Information and its Relationship to the Internet Phenomenon More information (content) was created in the last two years than in the previous 5000 years! In the next two years, humanity will generate four times more digital information than the previous two years. We are entering the age of ‘The Terabyte Consumer’. Personal and professional information combined with entertainment will be available via the portal and device of the consumer’s choice anytime, anywhere. Interestingly enough, this growth of information corresponds to both the Internet and bandwidth availability. As Internet (and Intranet) usage has grown, the need for digital information (content) has grown. However, as broadband connectivity becomes more readily available (i.e., next generation telephony networks), the demand for digital information will accelerate. Information and the impact of Next Generation Telephony The impact of 3G and beyond upon the growth of information corresponds to the waves of computing: when the Personal Computing and Open Systems wave began, the completely integrated engines began to lose their value. Open Systems began to disaggregate the hardware platforms from the software required to operate them. Entirely new industries were born where independent software providers could thrive independently of hardware providers, local area networks proliferated, and the focus on desktop intensive computing saw over 100 million users. The Network Wave is still with us, but the accelerating pace of technological change moves us quickly toward the fourth wave, which Moschella labels ‘content-centric’. This is the realisation of Gilder’s vision-information, in all its forms, available to anyone, anywhere, in real time, and without interruption. The content-centric wave is being driven by the advent of two phenomena from telephony and computing respectively: 1) free and infinite bandwidth; 2) free and infinite storage. So, we move toward a world characterised by effectively free, infinite and geographically ubiquitous communications. Storage, in this emerging world, becomes abundant and cheap while users are geographically dispersed and mobile. Content becomes the key business driver because businesses will be able to (truly) focus on the ‘I’ in Information Technology, not the ‘T’. Multi-mode networks and portals become near commodities while content providers and navigators (those who can make sense of it all) will offer the only meaningful differentiation to customers. Delivering Value in the Next Generation Who are the key players, then, in the content-centric power wave? Where will all this information content reside? How will it be protected and shared? Who will manage it all? How will ‘the terabyte consumer’ gain access to her information wherever she travels? And, most importantly, how will everyone along the value chain make money? Delivering Value Customers Will Actually Purchase Addressing the last question first, there are no magic formulas for success. However, budding content providers in those parts of the world about to launch 2.5G or 3G services would do well to analyse the successes and failures in Japan. There are strong business reasons to focus on that segment of the potential user population who will most likely take advantage of the highly personal and immediate nature of the services that may be offered in the broadband mobile market. The content-centric mobile Internet creates the conditions necessary to provide location-specific, personal, and immediate content to customers. That means the content-centric infrastructure must have the inherent capability, for example, to deliver content based on a customer’s profile and billing based on the nature and value of the content as well as the volume. Such a revenue model enables everyone who contributes value to the customer to win a slice of the revenue. Planning to Succeed The key players of the content-centric power wave are those who most effectively protect, share, manage and move information among a federation of private and public networks. Who can provide such services? We believe, by 2005, content will live in large-scale ‘information plants’ supplemented by web caching (thus, multi-mode portals) and content distribution capabilities. Thus, large corporations will continue to grow their content-centric infrastructures; however, large service centres are appearing to serve the many smaller content providers. (Consider, for example, the services of companies like Exodus or the business plans of companies like Qwest). Managing Risk Now to the practical issues of protecting, sharing, managing, moving the almost unimaginable volume of user-specific content on behalf of our mobile ‘terabyte consumer’. Content-centric wave service providers must build effective ‘inform-ation plants’ that will fuel the wave. Such plants begin with a robust physical architecture that offers unparalleled availability, capacity, performance and reliability. The technical architecture must include the functionality that isolates technical services from applications (for example, replication, protection, path fail over, and optimis-ation services combined with multi-path file sharing and micro-code sharing). The information plant must offer the connectivity to handle virtually any protocol, server, or operating system. And the application and business architectures must be supplemented with management tools that allow the information plant to be integrated into virtually any information infrastructure. Smart business people understand that strong business models drive business architectures that drive, in turn, application, technical and physical architectures to support the business model. But smarter business people also understand that poorly designed physical architectures limit your ability to implement appropriate, in turn, technical, application and business architectures. In other words, the information plant you choose will determine your success or failure as a content provider in the emerging power wave. Conclusion Carriers and technology providers are working hard to enable this wave despite the recent business slowdown. A few years ago, we envisioned this era as that of ‘intelligent data tone’ where anyone could plug into a wall anywhere and gain access to any information. Broadband wireless technology will provide that access to broadband mobile devices. Information plants protect, manage, and share the information content for a global community whose information follows them anywhere, anytime. The content-centric Wave is the biggest, most exciting, most wealth-creating business era ever. This Wave’s appetite for information is insatiable because Content is the locus of value. That means the information is more important than even the network itself. Thus, the companies providing access become regional (i.e., federated net-works), while the companies offering content become global. Is content a business driver? You can bet your company! Content has come of age!