Magazine article European Business Forum

Convergence: Profitable Futures or a Dangerous Mirage?

Magazine article European Business Forum

Convergence: Profitable Futures or a Dangerous Mirage?

Article excerpt

Three to four years ago it seemed the most seductive of visions. Digitalisation of content would make possible ever more combinations of communication and information technologies, industry barriers would quickly tumble, lives would be made much easier and lucrative new opportunities would be created for traditional players and new entrants alike. In practice, it hasn't been that simple--so what went wrong? What happened to all those mergers built on the altar of convergence? Was technology too hastily adopted as the business driver? Were customer needs forgotten in the rush to exploit new ideas? Where now for companies willing and able to harness the still potent forces of convergence?

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In the current edition of EBF we have lined up our usual panel of distinguished experts to address these and other issues. We begin with an essay by Winfried Ruigrok, EBF associate editor and St Gallen Professor, setting the context for the debate and pointing out that it is as fashionable to decry convergence today as it was a few years back to invest in the hype. Next comes US technology pundit Peter Bernstein, whose hard-hitting critique is perhaps the most sceptical contribution on this topic, followed by Wharton Professor Jerry Wind and University of Texas Professor Vijay Mahajan who argue that the really significant convergence has taken place inside the head of the consumer.

John Seely Brown is well known as an author and Chief Scientist of the Xerox Corporation--his contention is that convergence of the physical and virtual worlds is the key issue and that its shape is evolving the whole time through the dynamic actions of new communities. We then switch the focus to particular sectors--the potential in telecoms through the eyes of Paris-based PwC Consulting consultants Francois Couturier, Isabelle Denervaud, Jean-Michel Huet and Philippe Bagnouls, the experiences of a leading European financial services group (Belgium's Fortis) by Kathleen Steel, head of the office of the Chairman of Fortis Bank, and the thoughts of a leading global communications executive (Daryl Simm, President and CEO of Omnicom Media Group). Yves Doz and Peter Williamson, both INSEAD Professors, explain that strategy, knowledge and context issues need to be addressed before convergence opportunities can be harvested. While Matthias Finger, a Professor at the Swiss Graduate School of Public Administration in Lausanne. Switzerland provides an analysis of the revolutionary changes happening in the European utilities sector. The final word is left to Christopher Mole and Robert Dee of PwC Consulting who highlight some practical lessons.

Convergence is in the eye of the beholder

The concept is typically related to modern communications and IT--but earlier episodes are instructive.

The word 'Convergence' has been used to refer to the combination of communication, information technologies, and business services. As usual, narrower and broader definitions exist. According to some, convergence refers primarily to the combination of television technology and online computers. Others define convergence to include the intersection of broadcasting, computers, telephones, video and more.

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A major factor driving this combination of technologies and services is that content and information can be converted, transported and offered digitally. However, few appear to comprehend the full possibilities or implications. Indeed, different definitions coexist because scholars and companies see different technological trajectories or applications, based on their experiences or on products, services and technologies they had previously developed.

Over the late 1990s, an industry in itself emerged to exploit the opportunities of convergence--and the conceptual confusion. IT and management consultants developed flashy presentations suggesting they knew how companies could develop new services and applications. …

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