NeoMedia Technologies, Inc (NEOM)

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DD Convergence and the Customer
27.01.2006
World Economic Forum Annual Meeting 2006

http://www.weforum.org/site/knowledgenavigator.nsf/Content/_S15600?open&event_id=1462&year_i...

Today's customer demands connectivity on the move – any place, any time, with everyone. This poses enormous challenges to the mobile telecommunications industry. The integration of data, voice and video across networks and devices is opening the door to a wave of new products and services, but most businesses will have to take huge risks and reboot their business models if they are going to survive and thrive.

The"next big thing" is already here, according to Michael J. Wolf, President and Chief Operating Officer, MTV Networks, USA. It is the online shift from text to video and multimedia."Today's consumers have huge expectations for full-motion video on their cell phones and every other device they carry around," he said. Another trend is that while older audiences are cocooning around large plasma TV screens, young audiences are going to much smaller screens so they can experience video any time, on demand, making prime time all the time.

One major challenge is discovering what customers want. Michael T. Fries, President and Chief Executive Officer, Liberty Global, USA, said the iPod is a success for two reasons: it's really simple and it's affordable."We are in the middle of this perfect storm. Our job is to focus on complexity, but the trick is to mask it behind a simple, cheap device." Hector de J. Ruiz, Chairman of the Board, President and Chief Executive Officer, AMD (Advanced Micro Devices), USA, agreed that it would be"great" to figure out what consumers want, but in doing so companies should not carve out a monopolistic position."The end user must be put in a position of power," he said.

The industry will weather this paradigm shift, predicted Edward J. Zander, Chairman and Chief Executive Officer, Motorola, USA."We always get it eventually," he said."We definitely need to sort out standards. For example, we are launching TV globally amidst competing multiple standards." Zander commented that industry would prefer"a light hand" when it comes to regulation. He was reassured by US Federal Communications Commission Chairman Kevin J. Martin, speaking from the floor, that the regulatory environment will be"correct" and that the"rules will keep up with the technology”.

Glenn H. Hutchins, Managing Member and Founder, Silver Lake Technology, USA, pointed out that competition exists at the product level, but that industry must reorganize business models by fundamentally changing the process to deliver the converged product."Why did Dell win in the PC world? Because they had a superior business model, not a superior product. Take Google – a new product and a new business model.”

Moderator Steve Adler, Editor-in-Chief, BusinessWeek, USA, asked if there will be cooperation or competition as the industry moves to satisfy demanding consumers. Panellists agreed that collaboration is critical if interoperability – a top consumer demand – is to be achieved. To this end, open standards are the way forward, noted Ruiz.

They also agreed that technology is not the real challenge. The real challenge, according to Zander, is to give users a"cool” experience. In the search for"cool”, it is critical to ensure things work, added Ruiz. In the rush to connect the millions of unconnected, technology issues can be sorted out."We need to deal with issues such as leadership, industry standards and collaboration if users are to have a cool experience each time,” he said.

The thorny issue of paying for content will also be sorted out. Hutchins observed that two economic models are clashing at the consumer level – prices are plummeting rapidly while what is being delivered to the customer is increasing exponentially. Panellists generally agreed that consumers may be reluctant to pay at first, but Wolf predicted a"flight to quality” as they define and shape their own media experiences. Another industry challenge is to find acceptable pricing models and a system of micropayments, making it easy and safe to buy and sell digital content and services at any price point.

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