Where Do We Go From Here V01

January 4, 2006 © ParkWood Advisors, 2006. All Rights Reserved 1

Where Do We Go From Here?Ten Challenges for a Converging World

John ParkinsonChairman and Managing Director

ParkWood Advisors LLC


About John ParkinsonChairman and Managing Director, ParkWood Advisors LLC

30+ years in technology 20+ years in consulting Published author and columnist (CIO

Insight) World’s top 25 most influential

consultants (2003) Computerworld 100 Leaders in IT (2005) Retired head of Innovation and Strategy

at Ernst & Young LLP (September 2001) Retired CTO of Capgemini

(July 2005) External Director, TeleGuam Holdings Board of Advisors: Brulant Inc. ; TAP.tv;

InSORS Communications;

[email protected]+1 847 235 1791


Copyright notice and disclaimer:

ParkWood Advisors LLC 2006. All rights reserved.

Reproduction or translation of any part of this work, beyond that permitted by Section 107 or 108 of the 1976 United States Copyright Act without the permission of the copyright owner is unlawful. Requests for permission or further information should be addressed to John Parkinson at ParkWood Advisors LLC..

This presentation is designed to provide accurate and authoritative information in regard of the subject matter covered. It is made available with the understanding that the intent is not to render legal, investment, accounting or other professional advisory services. If investment advice or other expert assistance is required, the services of a competent professional person should be sought.


Trivial pursuits questions for converging executives

How much software does it take to run the average automobile?

Where do at least 60% of the long distance telephone calls made in the U.S. end up?

What do a minivan, a fax machine, the “Print Preview” function in software, and a web browser have in common?

What do AIM, the IPOD, 802.11 and Digital Video Recorders have in common?

What was the 20th century’s single greatest contribution to productivity and what was the answer’s most significant unintended consequence?


Agenda

What have we learned from a decade of technological boom and bust?

What’s coming? Ten questions for a

converging world Questions and comments


What have we learned from the last decade of technological boom and bust?


Remember the good times?

“Any sufficiently advanced technology is indistinguishable from magic” Arthur C Clarke


They’re over – for a LONG time to come……..


…..With persistent volatility becoming normal

High

LowYears

Rate ofChange

Traditional Mindset

(Lower, stable Baseline)

New Mindset (Higher,

acceleratingbaseline)

5 YearPlanningProcess

NewCEO

“The MajorReorganization”

DivestNon-Core Businesses

Merger

Semi-AnnualReorganization

New Technology Platform

Industry Deregulation

Another NewCEO

Acquisition “A”

Acquisition “B”

Rebuildingthe Supply Chain

NewCEO

eBusiness

Competition for Alliances


So, what have we learned?

Just because you can do something doesn’t make it a good idea Not all good ideas have viable business models attached Customers sometimes know what they want – and tend to act on

the knowledge whenever they can Monitoring grass roots activity can

be more effective than strategic marketing plans – if you can react fast

Regulation doesn’t stop marketmistakes - even when it’s needed for other reasons


What’s coming?

““It always amazes me how It always amazes me how consistently we consistently we over estimateover estimate what we can do in two years and what we can do in two years and underestimateunderestimate what we can do in what we can do in ten”ten”


Predicting the future is hard…..

A model of an easy to use2004 “home computer” as envisaged by the RAND Corporation in 1954


Technologies shaping the decade

Source: Institute for the Future

INFORMATION

BIOLOGY

EN

ER

GY

MA

TE

RIA

LS

EmergentComputing New

ArchitecturesWireless Technology

WebServices

Presence

FlowTracking

Real-TimeEnergy PricingLocation

Technology

Collaboration

Tagging

SemanticSearching

New Grammars

HumanAugmentation

DistributedEnergy Production

Wave PowerWind Turbines

Photovoltaic ZEST

EnergyStorage

PremiumPower

Eco-Efficiency

Fuel CellsMicro Fuel Cells

ImagingMicro-Turbines

Sterling Engine

Biofuels

CarbonSequestering

Implants

New I/O

CleanNuclear

MolecularMedicine

MetabolicsProteomicsGenomics

Bioinformatics

SystemsBiology

Vectors &Viruses

Nutraceuticals

GeneticTherapies

DiagnosticDevices

Biosensors

Stem CellTechnology

Microfluidics

SmartTextiles

Biometrics

High-PerformanceMaterials

Nano-Science

MolecularManufacturing

MEMS

Robotics

Photonics

Organic/InorganicInterfaces


The hype cycle


95 00 05 10 15

Perfo

rman

ce

Efficiency Inside the Business

Efficiency Along the Value Chain

We are here

We are here

Uncertainty

Planning Trajectory

Reality

Expectation Gap

Early adopters shorten the expectation gap by switching curves ahead of the market…

We must avoid being trapped between ‘S’ curves as families of enabling technologies evolve

Adjusting is a continuing challenge


With lots of surprises….

10 Billion minutes

300 Billion minutes

Sources: Atlantic ACM Researchand Telegeography Inc. 2005

IP Telephony traffic growth, 2000-2006


…and disruptive behaviors….

Online Advertising Growth

Internet Advertising in Belarus

Source: Lightningcast.com white paper


….which are not equally distributed globally….

WORLD INTERNET USAGE AND POPULATION STATISTICS

World RegionsPopulation

( 2005 Est.)Population

% of WorldInternet Usage,

Latest Data% Population

( Penetration )

Usage% of

World

Usage Growth2000-2005

Africa 896,721,874 14.0 % 23,917,500 2.7 % 2.5 % 429.8 %

Asia 3,622,994,130 56.4 % 332,590,713 9.2 % 34.2 % 191.0 %

Europe 804,574,696 12.5 % 285,408,118 35.5 % 29.3 % 171.6 %

Middle East 187,258,006 2.9 % 16,163,500 8.6 % 1.7 % 392.1 %

North America 328,387,059 5.1 % 224,103,811 68.2 % 23.0 % 107.3 %

Latin America/Caribbean 546,723,509 8.5 % 72,953,597 13.3 % 7.5 % 303.8 %

Oceania / Australia 33,443,448 0.5 % 17,690,762 52.9 % 1.8 % 132.2 %

WORLD TOTAL 6,420,102,722 100.0 % 972,828,001 15.2 % 100.0 % 169.5 %

NOTES: (1) Internet Usage and World Population Statistics were updated on November 21, 2005. (2) CLICK on each world region for detailed regional information. (3) Demographic (Population) numbers are based on data contained in the world-gazetteer website. (4) Internet usage information comes from data published by Nielsen//NetRatings, by the International Telecommunications Union, by local NICs, and by other reliable sources. (5) For definitions, disclaimer, and navigation help, see the Site Surfing Guide. (6)

Information from this site may be cited, giving due credit and establishing an active link back to www.internetworldstats.com. ©Copyright 2005, Miniwatts International, Ltd. All rights reserved.

Source: http://www.internetworldstats.com/stats.htm

With less than 10% penetrationAsia already represents over 1/3 ofGlobal Internet usage.

North Americawith nearly 70%participation is less than 25% of global use


….or entirely desirable: Half of all Internet Traffic is P2P File Sharing.

This graph shows the North America Traffic Index for the past 24 hours


So what’s coming?

Demand for more mobility and a progressively untethered world

More content and a demand for wired bandwidth

Either a customer service backlash or continuing customer indifference to indifferent customer service

A breakout brand The need for an acceptable

approach to effective content management

India, China and Southeast Asia as sophisticated consumer markets


Ten questions

“It may not be possible to predict the future, but it is certainly possible to invent it”……. Alan Kay


Question One

Is it possible to run a consistently profitable, highly regulated, consumer business with undifferentiated commodity products and services?

Understanding the Economics of Ubiquity, Speed & Convenience


Question Two

If Content is King, who wins in a world without monarchies and with Personal Content Recorders everywhere?

Reinventing Digital Rights in the post-Tivo Age


Question Three

Is it better to have dull technology that works reliably everywhere or the next big thing that occasionally works somewhere?

The Continuing Quest for “Invisible” Infrastructure

“I don’t know what it is but you need a new one”


Question Four

When will we eliminate the foolishness of Region Codes and Roaming arrangements in a supposedly connected Global Economy?

Promoting Collaboration and Co-existence


Question Five

How many standards do we really need? And how can we get them faster?

“If you don’t understand how it works, can you trust it?”

“if nobody understands how it works, do you want to depend on it?”

“If you haven’t finished paying for it, should you be allowed to change it?”


Questions Six and Six (a)

If spectrum is so valuable, why do we waste so much of it?

If bandwidth is so important, why don’t we offer more of it?

PROBLEM

Winning the War with the FCCLoosing the War with Asia


Question Seven

What happens if your cash flow gets hijacked by a Hedge Fund?

Fighting the War with Wall Street


Question Eight

If consumers can easily create their own content, why would they pay to (see) (hear) experience yours?

Winning the Creativity Wars

TV's New Visual EffectsTechnology Changes Network Programming,But Can Sea Creatures, Aliens Boost Ratings?By BROOKS BARNES Staff Reporter of THE WALL STREET JOURNALNovember 10, 2005; Page B1


New TV RatingsWill ProduceAd-Price FightBy BROOKS BARNES Staff Reporter of THE WSJDecember 22, 2005; Page B1

Question Nine

If audience counting actually worked, what could you really charge for advertising?

Narrowcasting emerges tochallenge Broadcasting

Marketer's Tactic Signals Big ShiftIn a TV Ad RitualFor 'Upfront,' Allstate CreatedGrueling Bidding Process;Balance of Power ChangesABC and CBS Fight for ScrapsBy JULIA ANGWIN and SUZANNE VRANICA Staff Reporters of THE WALL STREET JOURNALJanuary 4, 2006; Page A1


Question Ten

Are we really “Converging” at all?

…and if so, why?

Digital Culture: VideosWeb clips cross over from email inboxes to TVBy JOHN JURGENSENBaron’s December 31, 2005; Page P2

CBS Shares Rise, Viacom WaversOn First Day of Firm's SplitBy MATTHEW KARNITSCHNIG Staff Reporter of THE WSJJanuary 3, 2006; Page A18

Viacom Inc.'s separation into two publicly traded companies, one called CBS Corp. and the other retaining the Viacom name, went into effect Sunday

HBO Will Offer Some TV ShowsTo Cingular UsersBy LI YUAN and JOE FLINT Staff Reporters of THE WSJDecember 15, 2005; Page D2

TelecommunicationsOutside the BoxAs broadband connections proliferate, so do the opportunities for niche video-content providersBy PETER GRANT Staff Reporter of THE WSJDecember 19, 2005; Page R11

TV On-DemandMay Make AdsMore TargetedBy BRIAN STEINBERG Staff Reporter of THE WSJNovember 9, 2005; Page B1

AOL to Offer 'Vintage' TV Free -- With AdsBy MATTHEW KARNITSCHING Staff Reporter of THE WSJNovember 14, 2005; Page B1

Networks Go Boldly --And Fearfully --Into TV's FutureBy BROOKS BARNES and PETER GRANT Staff Reporters of THE WALL STREET JOURNALNovember 9, 2005; Page B1


Trivial pursuits questions for converging executives

How much software does it take to run the average automobile?

Where do at least 60% of the long distance telephone calls made in the U.S. end up?

What do a minivan, a fax machine, the “Print Preview” function in software, and a web browser have in common?

What do AIM, the IPOD, 802.11 and Personal Video Recorders have in common?

What was the 20th century’s single greatest contribution to productivity what was the answer’s most significant unintended consequence?


Questions & commentsQuestions & comments