In the previous sections, we have introduced a number of concepts relating to the implications of digital footprints. Building on that foundation, we now discuss the practical implications of the concepts especially in relation to new services in a converged ecosystem.
Convergence and converged services
An introduction to convergence
What is digital convergence?
Digital convergence is a much-maligned concept. Mention digital convergence, and it conjures up images of the ‘intelligent fridge’; a concept most people think they have no need for. But, digital convergence is an idea whose dawn is near. There is a lot of confusion about what exactly is meant by digital convergence. When people talk of digital convergence, they could actually mean different things, including:
· co-mingled bits: the original definition of digital convergence as outlined in Nicholas Negroponte’s 1995 book Being Digital[i];
· device convergence: one device to rule them all. Think the iPhone (a combination of the iPod and the mobile phone), Nokia N-gage (a combination of a gaming device and a phone), etc;
· fixed to mobile convergence;
· service-level or application-level convergence; and
· devices being able to speak to each other and share intelligence, leading to a new service aka the ‘intelligent fridge’ or home networks.
Consider also: ‘If all you have is a hammer, everything looks like a nail.’ – as Mike Langberg so aptly put it in his article soon after CES[ii]. By that, we mean: your tools (focus) determine your viewpoint of the world. The ‘nail’ in this case, is digital convergence. The ‘hammer’ is the viewpoint (strengths) from which each player is approaching digital convergence. For example, (as per the article referenced above or Microsoft), convergence is a software problem; to be solved using an upgrade of the Windows operating system (Microsoft’s strength). Intel sees convergence as a ‘microprocessor problem’, to be solved with a branding programme called ‘Viiv’[iii], Cisco sees convergence as a home networking problem, to be solved with, guess what, networking. Yahoo! and Google see convergence as an online services problem. To them, the solution lies through the web browser, a common element in all devices. Sony sees convergence as a consumer hardware problem, to be solved with consumer devices, new standards built around its own strengths, like the PlayStation. No wonder there is confusion.
It’s important to note that the only things in common between all these definitions are:
· digitisation; and
In other words, information must be digitised and it must flow freely. This leads to new services, which are greater than its parts (greater than what the devices could provide on their own).
Let’s first discuss the definitions above in a little more detail.
Co-mingled bits: the first definition was proposed by Nicholas Negroponte in his 1995 book Being Digital. Negroponte’s definition of digital convergence is: ‘Bits co-mingle effortlessly. They start to get mixed up and can be used and re-used separately or together. The mixing of audio, video and data is called multimedia. It sounds complicated, but it's nothing more than co-mingled bits.’
Another way to put it is: to a computer, there is no difference between a symphony, a voice call, a book, a song, a TV programme, a shopping list, etc, as long as they are all digitised. The factors driving digital convergence/co-mingled bits include the rapid digitisation of content, greater bandwidth, increased processing power and the Internet. Digital convergence brings four (previously) distinct industry sectors in collaboration/competition with each other. Thus, we have media/entertainment, PC/computing, consumer electronics and telecommunications industries all interacting more closely with each other than ever before. This version of digital convergence is happening all around us.
Terms like ‘triple play’ or ‘quadruple play’ are a part of this scenario. Triple play involves voice, broadband and TV, and quadruple play enhances TV with digital and adds mobile to that mix. These are different from the origins of the cable industry ‘dual play’ (one build, two income streams). It now refers to one infrastructure with many services. Whatever name you call it, here are co-mingled bits in action. If everything has become digital, then the boundaries between the providers fade away.
Device convergence: addresses the age-old question: Will we carry one general purpose device or will we carry many specialised devices? Boundaries between devices are fading fast and devices are now capable of performing more than one function. It is unclear if customers would really want a single device. Most people have a view on this, and so do the device manufacturers.
Fixed to mobile convergence: this is a relatively new area. It has emerged because fixed-line telecoms operators and mobile telecoms operators are each vying for customers in each other’s traditional domains. Telecoms access networks are converging due to the emergence of new technologies. Thus, mobile network providers can provide fixed network services and vice versa. Services could also be converged. Thus, a user could access the same service from either a fixed or a mobile network. Fixed to mobile convergence could be seen as a larger concept called ‘seamless mobility’ – the overall idea being that a customer should be able to ‘roam’ seamlessly between different network types (fixed, mobile, WiFi, etc). Bodies such as UMA (Unlicensed Mobile Access) are driving the standards for seamless mobility.
Service-level or application-level convergence: means bringing together online services and providing a management platform to support all services. This provides the biggest technical challenge in convergence, but also the most significant benefits to customers. Service-level convergence also enables operators to offer all services to all customers, irrespective of device, access, connection, login, services, applications and payment. This is the level where common identity or digital footprint is most useful and also where significant convergence value (cost saving) is derived.Services
A ‘service’ constitutes an ongoing relationship between the customer and the provider. Unlike a product, which is bought and consumed, a service implies a trusted relationship between the provider and the customer. On the web there is a shift or move towards software being sold as a service and not as a product. Similarly, many traditional products (e.g. books) are increasingly being sold as a service through sites like Amazon. Similarly, mobile applications are moving to a service model. These services will be converged, that is, spanning platforms (web, mobile, TV). In doing so, the underlying data and the digital footprint will constitute the bedrock of new services.foot
In addition, operators cannot charge for the value of the packet in IP traffic but many (secretly) wish that they could do. Add to this desire the impossible situation of guaranteed coverage, which the user believed they have paid for. Consider the scenario where the customer pays more for a ‘high value IP session’. He then walks under a bridge, loses connection and sues the operator. If we are worried about 'impact on helpdesk' then that's a MUCH greater worry if you think you can get away with differential IP charging on mobile devices. Thus, the result is: when it comes to upgrades and selection of device/operators today customers no longer want to upgrade for network connectivity or more megapixels, etc. They want a step change. They want differentiation that they can understand and are already familiar with. This means new services.
The significance of mobile services
Until recently, devices were very simple and mostly comprised only voice and SMS. In this scenario, supply chain efficiencies and lowest common denominator/mass market devices prevailed. Differentiation was achieved through price plans, device aesthetics, etc. With the increasing proliferation of Smartphones, devices are becoming more complex and sophisticated. Ironically, at one level, they are being commoditised (the megapixels are no longer a differentiator since most devices are roughly similar). Nor is the network itself a differentiator since we expect good coverage at all places (within reason). Also, with the uptake of OpenSource and other technologies, there are many more device manufacturers who are giving the customer greater choice. So, there are many devices and many more new ones to come.
By ‘services’, we mean a mechanism that the user expects from an ongoing application, perhaps on a subscription basis. The business model for services is well known, for instance, the freemium model[iv], where you provide a basic service for free but charge a premium for extra features. To use a common example, a dating site would charge no money to set up a profile, but you would have to pay to see who viewed your profile.
With mobile services, we have a more complex equation. The traditional way to classifying mobile services is a classic ‘telco only’ view (look at the capabilities of a network, add a service on top of it and pray that the services created from them will be useful to the customers, for example, person-to-person video calling which never took off). The web approach is much more sophisticated and relies on knowing the customer better with each transaction.
Content service example
Marketing (behavioural, targeted, segmentation, demographics) has been based on some quite blunt analysis tools after the action and there has traditionally been a significant lag between product idea, launch, purchase and research or evidence to support actions. Today there are some very capable real-time tools that measure specific actions, which, via analysis, are able to provide reasonable predictions. However, moving forward, the expectation is to be able to gather relevant and specific data that will enable accurate and real-time change, action, resolution, update, modification or improvement to products and services. As shown in Figure 38, the collection of data is moving from just knowing that a product or service has been purchased, to knowing what influenced the purchase, when it was purchased, where it was purchased, how it was purchased and how often it has been consumed (music/video). This data can be stored and analysed to provide preferences for both style and taste, but also to channel, time of day, location and even activity. The business activity will move from the application of blunt wasteful mass media campaigns to focused, insightful, relevant and meaningful media campaigns. The value for the user of giving up data is that services are relevant, timely and endorsed or recommended by social networks. The data on how you then react can hone messaging and focus, providing an ever-improving service and value. It becomes obvious at some point that it will be possible to measure how much you influence and are influenced by your social group. The more you can influence, the higher value you have to a brand.
The WHAT principle and the WHO effect
The WHAT principle
The focus of today's higher value services is personalisation – the making of your user experience, creating value from the reduction in churn and incremental service revenue, assuming that any incremental margin is not eroded by competitive pressures. The focus on personalisation is a focus on WHAT: what you as a user want to do; what service you want; what is needed now? The sole benefactor is the individual, but does this create any new value? The assumption is that personalisation provides focus, and that this focus leads to the ability to deliver engaging and personalised services, including advertising. This advertising being derived from the same advertising budgets, which is now redirected from other display channels. Therefore, does personalisation actually create any new value and will it actually grow the overall spend of the entire market?
Commentators, consultants and media sellers will provide convincing evidence to back their own propositions. The purpose of this viewpoint is not to debate the personalisation opportunity, but to introduce the WHO effect. Whilst personalisation will increase value for the provider [more effective marketing and efficient sales]; assuming that there is value for the user, it does not itself create new value for the entire converged industries. However, personalisation could create value, if the focus is on WHO and not WHAT.The WHO effect
Personalisation has been about the WHAT principle. This has focused on a single customer: 'you'. The WHO effect is the multiplier. The focus shifts from WHAT to orientate on WHO you are doing something with. In simple terms, when you go out for dinner, who are you with? When you are in a business meeting or seminar, who are you with? When you are at a concert, in school, or on holiday, who are you with? The opportunity is that these 'WHOs' are gravitating towards and enjoying the same experiences as 'you'. The additional profiles of those who you are 'with' can combine to create a new and incremental market value, assuming, as a company, you are able to reach these customers and deliver services that they want.
Consider the advertising issue created through personalisation, it reaches you – one person in two billion. The world is divided into two billion personalised worlds, only relevant to one person at any given time, and each person with an unequal bite of the advertising spend. The WHO effect would suggest that as you are enjoying something with others, even though it is outside of their personalised preference, it is possible that it would be worth providing information on products and services to the group. The WHO effect is the electronic 'word of mouth'. It assumes and depends on the fact that we adopt at different rates, and some not at all. These issues provide the limitation to personalisation and the WHAT principle, but also the opportunity to the WHO effect.foot
WHAT-based decisions are not using information in a sophisticated enough way. To move to the WHO-based system, customer data needs to be understood in a more nuanced way. We think of data on two main axes: how 'active the data is' (static to dynamic) and the 'type of data' (factual to behavioural) as per Figure 39.
Factual vs. behavioural
· Factual data is just that – date of birth, where you live, etc.
· Behavioural data is what you do, your digital footprint (www.mydigitalfootprint.com) over time.
· Static data is data that doesn't change (e.g. your date of birth). Highly dynamic data is what is changing every minute – movement, current location, etc. Some data is dynamic, but over long time periods (e.g. place of work, home address, etc).
· Some dynamic data is repetitive (there are patterns in it, such as the daily commute) that allows one to predict behaviours and events.
Clearly, if a service provider has a grasp of this information, they would be able to make better decisions about the user context and thus serve up better information or services to the user – critical for the limited real estate on even the smartest of mobile devices.
This WHO effect is not open to the traditional broadcast, TV and entertainment companies, although they are the traditional home of the display advertising budgets. This is because they have no real feedback loop. This service could be offered by web companies; however, as your profile and personalisation has a dependency on your web access time, it could be difficult. The major benefactor of the WHO effect will be mobile-orientated providers, as the mobile device becomes the platform to collect data, interrupt the connection and deliver the value (Mobile Web 2.0).foot
It should be noted that there are a few caveats to this value growth model which include:
First: the opportunity to exploit the WHO effect is not open to companies who want to 'control' the user experience and developer environment, such as Apple, they can only enjoy the WHAT principle. Open mobile platforms, open access services and developers whose services work across all devices will be able to exploit the WHO effect. The multiplier value of mobile is not just knowing WHAT you are doing (location, time and attention), but WHO you are doing it with.
Second: user pre-acceptance and buy-in is critical. ‘Snooping’ behaviour has already blown up in a number of companies' faces, Facebook, Phorn, Google and MySpace are known examples. Users need to be certain that data will not be misused, sold on or otherwise exposed.
Third: trust is critical. Is your brand value one of trust, and what will the user trust you for?
Fourth: regulation and law. This is a black hole of debate currently, and differs by country, we would say the key here is to adapt – and actually practice – the mantra of ‘don't be evil’. If you wouldn't like people to do something to you, don't do it.
Fifth: this concept is deeply embedded in ‘web as a platform concept’ and AAS (As A Service). This is a change from domains, destinations and portals. A way to understand this is to view that owning a top level domain such as www.news.com is not important. Users will rarely visit this site, but rather interact with the data that comes from this source via Twitter, RSS feeds, readers, blogs and social sites. The stats on your site are not important, but rather where your content is consumed and how? Customer ownership, as per caveat one, is not important – owing the customers’ data is.
Sixth: Although both the originator and user of MY DIGITAL FOOTPRINT is the user / consumer, where the WHO effect applies the user actually consumes data that relate not just to themselves but also to others with whom they interact. How we collectively address the privacy issues around this involvement of others in the key feedback loop, which is a rather important point, is somewhat overlooked.The rainbow of trust
Marketing knows that segmentation works. Segmentation is usually based on a factual measureable component; however, the rainbow of trust that is described in this section is a concept to help determine and focus on customers who will aid the virtuous circle to start and grow. The bonds and bridges between trust, privacy, identity, risk and security have already been explored; the rainbow of trust explores one aspect of these bonds and outlines how MY DIGITAL FOOTPRINT can be a mechanism for purchasing commercial services based on a concept of ‘trust’.
The assumption is that the rainbow of trust Figure 40 (which does not look good in black and white print) is about grades of colour (or grey). It is a continuum and shows that people have a different propensity of trust, from untrusting to very trusting, and what they trust (a brand, the government, people, things, friends, relationships) would also provide different dimensions. To highlight the types of trust that could be possible for service differentiation let’s imagine a customer walking into a mobile phone shop and saying to the sales person: “Hello, I am Mr Blue”. What the sales person understands from this is that this customer wants an unfettered device that has no constraints, and they will sort out all the IT problems themselves, including content that they download. In contrast, a customer called Mr Red only wants to do online and mobile banking and is concerned most about security. Mr Purple wants the walled garden (wants the provider to manage all their content and services. Mr Yellow wants voice and text and Mr Tickle wants a laugh for those following the Mr Men theme. These customers are differentiated based on their trust in both the device, the service provider and the services they demand. Enterprise customers will also vary by their attitude to risk. The analysis demands needs based on value by trust and risk, and not by product or lifestyle. An example of some possible profiles is shown in Figure 41.foot
In this rainbow of trust-based segmentation, there is no market aligned to age, lifestyle, income, demographics, early adopters or followers. It moves the ideas from the young who explore, and the old who stay with what they know, even if it is not the best. It will be (is now) possible to determine trust as we now have access to the very data needed to determine it.
In this model, the untrusting and stupid are a segment who give up data without any thought, they always sign the terms. Largely they are passive in terms that they don’t offer reviews or blogs. They will click on anything, adverts, banners, etc, and are easily swayed by marketing and advertising. They don’t have a firewall, or it’s out of date or switched off as it stops services that they want. They believe that the loss of ID is a hazard of the modern world. Due to their intrepid sprits of ‘trying anything’, they are often a social lead. However, for a brand and a service, this is a dangerous market as they are fickle, disloyal and will move with fashion.
Those in the untrusting and wise segment are the antipathy of untrusting and stupid. This trust-based segment is selective, concerned about privacy, understands about protection and its value, and have many persona to aid this concealment of true identity; they are well advised and considerate of outcomes. Whilst cautious, this is an attractive market as trust earned with this segment will keep them loyal.
Those who accept authority – that still have Yahoo, MSN or AOL as their home page – see the value in the portal or are unable to change it. It has to work with one click, it must work out of the box; it is broken if it’s not simple. Marketing really works to this trust segment. They like structure and will follow.
Those in the one-way segment want to do one thing at a time. When they are happy with the one and that it is good and works (trust built) they will expand and enjoy anther service, one at a time, but, over time, building a wide range of services, slowly and steadily. They will only ever follow what is recommended and already trusted.
Those in the my-way segment – alas, like most people who will read this book – demand untethered devices, we don’t want help, we will discover on our own and tweet, we will push boundaries, we trust no-one until we have done it ourselves. This trust group just want it open and transparent so that they can do it for themselves. As we will discover later, they are some of the few who could manage their own digital footprint and exploit it.foot
It would be fairly safe to assume that, based on the trust capital model, our trust in services and brands changes based on experience and others in our social group’s experience. Therefore, Figure 42 shows the likely migrations routes between the suggested trust-based segmentation categories explored.
It is assumed from the research that the majority of the western population start in the untrusting and stupid, untrusting and wise and one-way segments, and from these there is a migration to other trust camps as users/consumers explore and discover the value. This raises an important question though, which was a point made at the opening of the book – some people will engage and some will not. However, what does this classic segmentation look like?
Figure 43 shows a set-based view on the total population broken down into various categories. From the entire population it is assumed that there are some who like Marmite and some who do not; some will engage and others will not; some will trust and some will not. The focus here is on who are the ones who will be prepared to engage. In this segment there are:
· the economically unviable: those who, even if they gave up all their data, have such a small influence on others, or spend so little, or are so unreceptive to the benefits;
· those who sit back and enjoy the benefits. A segment who will impart their data to whomever and, as long as they perceive that there is a fair trade for data in the form of services, are very happy to continue with the relationship; and
· the controlling. This is the segment who wants to take charge of their own digital footprint and exploit for themselves, as we will see in the possible business models.
This idea of segmentation and trust brings us to the most basic of questions about the possible business model, which we explore in the next section. The fundamental question is: who owns my data?foot
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