The (best effort) Internet of Things

November 8th, 2014

Back in the early 1990s, I was manager of new products at WilTel.

WilTel was a scrappy telecom competitor (focused on the business and wholesale markets) whose greatest claim to fame at the time was being the first carrier to launch frame relay services. Frame relay was a packet-based service that dramatically changed the data networking landscape. It delivered performance significantly better than X.25, the previous option for packet services. In fact the performance was so good that businesses could replace expensive private line mesh networks with much more affordable frame relay networks made up of virtual circuits connecting the same end-points. It was a runaway success. In fact, WilTel’s introduction of frame relay is a great case study in successful self-cannibalization. Private lines were WilTel’s bread and butter, so frame relay meant that the company aggressively introduced a product that replaced it’s core product with a less expensive alternative. Sure, for many of WilTel’s existing business customers, there was a reduction in what they paid the company for the equivalent benefit. However, WilTel was able to not only replace a single customer’s WilTel private lines with frame relay, but also that same customer’s AT&T private lines and MCI private lines and Sprint private lines, resulting in a significant increase in “share of wallet” and a meaningful increase in overall revenue from each customer. More importantly, WilTel became a credible provider to many business customers who had never before considered the company. (Sorry for the rabbit trail, but it seemed like a good teachable moment…)

I can’t take credit for the brilliance of this move. I played a very small role in the launch of WilTel’s frame relay service. (That credit goes to Joe Zell and Christine Heckart.) But I tell the story to make the point of how important frame relay and private line services were to the company in the first half of the 1990s when I moved into the role of manager of new products for WilTel and started to see the emerging potential for Internet-based services. I started preaching that, in the future, businesses wouldn’t need private line or even frame relay services. Why would they pay for all of that, when “the Internet” could just as well deliver their data from point a to point b. (Of course, I was right, I was just about 15-20 years too early. For my last 9 years at Sprint, the company was slowly moving towards shutting down frame relay and private line services.)

Anyway, in my role at WilTel, we started increasing our focus on Internet-based services. All of that came to a screeching halt at the end of 1994. WilTel was in the process of being acquired by LDDS (the combined company would be renamed WorldCom) and I put together a summary of our product development efforts for LDDS’ CEO, Bernie Ebbers. His response: “That Internet stuff – shut it down. The Internet’s a toy. Businesses will never pay for it.”

Now, I know that Bernie gets (and deserves) a lot of grief for stupid decisions he made that destroyed WorldCom (and with it the retirement dreams of thousands of employees). But I tell this story to make the point that there was a time when the Internet was broadly considered “not good enough” for “real” use.

The Internet was designed to be a “best effort” network. No performance is guaranteed. As traffic increases, the network does its best to respond and in general everyone’s performance degrades. (Net neutrality is all about maintaining this model.) Today, Internet service providers have invested so much in the core infrastructure and access networks that this “best effort” is actually good enough for the vast majority of uses that consumers and businesses have, and providers have offered dedicated services, apart from the “public Internet”, using IP-related protocols (e.g. MPLS) to ensure the performance that businesses require for their more mission-critical applications.

But it wasn’t always this way. In reality, you couldn’t count on any specific throughput or even successful delivery from your Internet service. The only thing you could count on was unpredictability and unreliability. For many uses, that was just fine, so people bought it and the Internet grew dramatically. For at least a period of time, Internet traffic grew exponentially.

Wow, that’s a long lead in to my main point…

I think it’s important to realize where we are in the “Internet of Things”. As we are rapidly deploying these technologies, it’s important to have right expectations. In time, the vast majority of IoT applications will be rock solid with high levels of performance, and even today, those applications that need it are (hopefully) being built with the right level of investment in the right kind of core infrastructure so that they will work when they need to. (I’m thinking of things like the government-mandated Positive Train Control.)

Today, the vast majority of applications are “best effort.” If it fails – oh well – we’ll try again tomorrow.

Case in point – my smartwatch. I have loved connected watches for a very long time. In 1994, I bought a Timex DataLink watch. Then in the late 1990s I started buying watches with a satellite connection to the atomic clock. By 2009, I’d written off the future of watches, thinking that the smartphone had replaced them, but around the same time I got my first FitBit fitness tracker. I was ecstatic when fitness tracking functionality became integrated into the watch form factor.

My current favorite smartwatch is the Basis band, which I’ve been wearing for a couple of years. Basis has since been acquired by Intel, and is launching an exciting new product. What I love about my Basis is that it encourages me to develop healthy habits. Everyday, I’m working towards eight different goals, from not sitting too long, to walking at least 2000 steps each morning, to walking at least 10,000 steps each day. There’s also a sense of gamification, earning points by hitting goals allows you to add more habits. It’s great – when it works. It’s absolutely frustrating when it doesn’t.

For example, yesterday, the Basis cloud (which is what rewards me for hitting my goals) told me that I walked 6,640 steps in the morning (yea! – crushed that goal), 5,570 steps in the afternoon (yea!), and only 823 steps in the evening (oh well, can’t win them all). But the really surprising and frustrating data is that Basis thinks I only walked 6,482 steps total for the day. You’re probably thinking what I always think when this happens – that logically is impossible and mathematically is about half of the actual total. But, the big deal for me is that I didn’t get credit for my goal of 10,000 steps, even though I clearly achieved it.

Unfortunately, this is not unusual. In fact, it’s happened twice this week and probably a handful of times this month. I’ve been reporting the problem to Basis for a long time. Their typical response is “do a hard reset of the device” (which really never does any good – it doesn’t recover the data for the current day and doesn’t seem to improve performance over time). The most recent time I reported the problem, after a few back and forths with customer service, I got a more complete response which included this explanation: “The Basis clears the watch memory after a sync to prevent the memory from becoming full and failing to record further data. This clearing of data is the last step in the sync process, and normally, if the sync fails, this action does not trigger. Sometimes, however, data corruption does not register immediately and the action to clear the watch memory is triggered. This results in the loss of data from the watch memory. The totals on the watch face do not reset with each sync in order to keep your daily data accurate, but if a segment of that data is corrupted, the data on the web will only show the information that was successfully uploaded to it. This is why you can see discrepancies in the data on the watch face versus what’s in the app.” Never has Basis indicated that are going to do anything to fix what would be a relatively easy thing to fix (when morning+afternoon+evening > total, update the total…). For these reasons, I won’t be buying any more products from Basis.

But my point isn’t meant to be that the Basis product is a failure. It’s that virtually all IoT products are going to have similar failures. Bluetooth, WiFi, 4G, software, hardware… they all fail at times. The fact that my smartwatch fails to give me credit for what I’ve done is frustrating, but it’s an application that is just fine for “best effort.” And for now, “best effort” isn’t all that good.

Thankfully, if history is any indication, “best effort” is going to keep improving, and IoT will fundamentally change the way that we interact with the world around us, and the way that businesses operate.

Introducing SDG Advisory Services

October 6th, 2014

Friday was officially my last day with Sprint. Over the weekend I updated my LinkedIn profile indicating the “end date” of my Sprint employment and listing a new “job” as Strategic Advisor for SDG Advisory Services. Thanks to everyone who sent me congratulations on the new “job.”

I’m not really looking for a new job. Although I don’t qualify to officially “retire” from Sprint, I’ve viewed my departure as my “retirement from corporate life.” God has blessed my family and I incredibly over the ~28 years since I graduated from Virginia Tech. He has filled my career with wonderful experiences as a corporate executive (Sprint and Williams), a consultant (TeleChoice), an entrepreneur (Digital Frontiers, Seek First Networks, Christian Homeschool Network), and a communicator (The Power of Mobility book, other book contributions, this blog, Christian Computing magazine, Business Reform magazine and BizNetDaily, Homeschool Enrichment magazine, Network World magazine, over a dozen conference keynotes and many other speaking opportunities, etc.).

I’ve made lots of mistakes along the way and unfortunately seen many more mistakes made by others. Those lessons have been incredibly valuable. I’ve also been blessed to do some things right and to watch others have impressive successes. Those too are wonderful lessons. Over the years I’ve had the opportunity to share those lessons with others, sometimes in formal and informal roles as a strategic advisor to companies, events, and organizations, and sometimes in formal and informal mentoring relationships with individuals. These have been some of the most rewarding opportunities I’ve had in my career.

The desire that God has placed on my heart is to focus on “giving back” out of my storehouse that He has filled with rich experiences, knowledge, and capabilities. I believe that tapping into this storehouse could be very valuable for the right businesses and I have created SDG Advisory Services especially for these types of opportunities. I think where I add the most value is in listening (about an opportunity or challenge), framing (helping craft a framework for evaluating options), and then shaping (the work that needs to be done to evaluate the options and make a decision). I think I’m also good at communicating, especially about the impact of technology innovations.

On the SDG Advisory Services website I’ve outlined four types of services for which companies may want to hire me:

  • Communications: Help customers and prospects understand the “big picture” of how innovations are changing their world by leveraging a successful communicator’s writing, speaking, or facilitation skills.
  • Two-Day Strategy Lab: Quickly develop a deep and focusing understanding of what is true about your business, your opportunity, and how to uniquely focus your strategy to achieve your long-term goals through a structured 2-day process.
  • Consultation Session: Uncover, clarify, and evaluate strategic options for specific business challenges and opportunities by engaging an experienced strategist who will ask the right questions and provide valuable perspectives.
  • Strategic Advisor: Improve your business decisions through an ongoing relationship with a proven, innovative business leader who can help shape and inform your strategic approach to business.

Most businesses have done a good job of building the right team to execute on their plan. They know more about the opportunity and their own capabilities than any outside expert could ever tell them. Sometimes, however, there’s a real need for help stepping back, framing the situation, and making the right decision with intentionality and focus, before moving forward. My desire isn’t to bill as many hours of consulting time as possible, but rather to have the biggest impact possible with the least amount of time and effort expended (for both you and me).

If you think I could help, drop me a note and we can chat about it.

CTIA 2014: Connected Intelligence

September 15th, 2014

Last week, I was in Las Vegas for “Super Mobility Week.” I spoke at CCA and received an award on behalf of Sprint at CTIA, but one of the highlights for me was actually sharing a cab to the airport with Chetan Sharma. Chetan is one of the smartest and one of the nicest guys in the industry. I met him several years ago when he moderated a couple of panels that I was on at GigaOm’s first Mobilize event and it’s been a pleasure to catch up with him whenever our paths cross.

With my own career at an inflection point, I am especially impressed by how Chetan has been able to manage his consulting business. He has kept it very small so that he can focus attention on his family, and yet he has a huge impact on the industry. The work that he takes on leverages his knowledge, experience, and insights to their fullest. That is what I aspire to as well, so it was great to have the chance to reconnect again last week.

But you, my dear readers, probably could care less about that. What I think would be interesting to you is what we talked about in that short cab ride. The most meaningful discussion was about Chetan’s most recent paper “Connected Intelligence Era: The Golden Age of Mobile,” which I had just read on the flight out to Vegas. (You should read it too.) Chetan’s question for me was “what do you think, is this a new cycle, or the old cycle?” I have to admit that my mind probably hadn’t thought about it enough to be prepared for the discussion, so I had to mentally work through a few concepts first…

In the paper, Chetan references theories on economic cycles put forth by Nikolai Kondratiev, Joseph Schumpeter, and Carlota Perez. It is Carlota’s writings on “Technology Revolutions” that I’ve paid the most attention to since they are both more recent (and therefore informed by the Digital, Internet, and Mobility revolutions) and more specific to technology. The first mental hurdle I had to get past, in my mind, was that Carlota looks at long cycles (PC/Digital, Internet, and Mobility are all in the same “Age of Information and Telecommunications”, which followed the similarly long “Age of Oil, the Automobile, and Mass Production”, “Age of Steel, Electricity, and Heavy Engineering”, and the “Age of Steam and Railways”), while I tend to think in short cycles, the Digital Revolution, followed by the next cycle of the Internet Revolution, followed by the next cycle of the Mobility Revolution, etc. So, when Chetan asked me his question, he effectively was restating what he had included very early in his paper “Where are we in the big economic cycles? Are we in the golden age of the last technology cycle of information and telecommunications that gave birth to the Internet and the modern wireless ecosystem as we know it or are we perhaps on the verge of a new age that will transform human history for the next 50 years?”

I think it’s clear that we are at the beginning of the next “short” cycle. Big data analytics, connected devices (Internet of Things), and cloud all point to this next revolution, which Chetan calls Connected Intelligence and that I’ve been calling the Intelligence Revolution. What’s harder to answer, as Chetan readily acknowledges, is whether this short cycle is part of the current long cycle (the Information Revolution) or part of the next one. As Chetan points out, we probably won’t know for sure for at least a decade, but in the cab, I started to formulate a test that might help us think about it.

During that short conversation what came to mind was “what do the products look like?” I can think of easy things like advertising as a means of creating economic value from “connected intelligence” but it’s harder for me to think of other “products” of this new capability with more direct economic benefits. In the steam era, the products were clear. In the steel era, the products were clear. In the oil era, the products were clear. In the information era, the products have been clear. If this is a new era, the products aren’t yet clear to me.

Another way to think about it is in terms of how the revolution increases productivity. It’s pretty easy to see how industry, steel, steam, oil, and information have increased productivity. I think we need to consider whether “connected intelligence” has the same “big bang” transformative impact.

To his credit, Chetan does a good job in his paper outlining potential products and potential productivity improvements for existing products and services. But it doesn’t really seem to me like a huge leap. So, my vote is that this “Intelligence Revolution” is really just the next step in the “Information Age” and not the beginning of a new age.

What do you think?

CCA 2014: Is Wireless a Commodity?

September 11th, 2014

This week I participated in a panel at CCA on “The Evolving Operator: 2014 & Beyond” that was moderated by Sue Marek, Editor in Chief of Fierce Wireless. My co-panelists were Rob Riordan, EVP of Corporate Development for Cellcom, and Mauricio Sastre, Vice President of Product for FreedomPop.

For those that aren’t familiar, CCA is the Competitive Carriers Association and basically includes all of the wireless carriers smaller than Verizon and AT&T. Until Sprint and T-Mobile joined, it had been the Rural Carriers Association. So everyone at the show really cares about the success of small operators.

Early in the discussion, I answered a question by saying that I believed that we need to make three critical strategic shifts:

  1. We must recognize that we’re operating in a commodity market. Today, we don’t operate our businesses in a way that supports a commodity market.
  2. But, we can’t be satisfied with being a commodity, we need to find ways to differentiate.
  3. Finally, we need to act like an Internet company. (Move faster, focus on the customer experience, eliminate bureaucracy, do less and partner more, etc.)

That sparked a follow-on question from Sue for all three panelists. I was sitting in the middle at the table, and I’d say I was also sitting in the middle relative to this question. She asked “is wireless really a commodity?”

Rob is convinced it’s not. He passionately described how many competitors Cellcom faces in Wisconsin, and yet they take the largest share of subscribers. They do it by being part of the community and caring about the people they serve. They don’t operate an IVR – when you call them a live person answers. I don’t disagree with him. For operators like Cellcom, there is an opportunity to be seen as special by those in your community. You aren’t just another provider in a competitive matrix, you’re a neighbor who cares.

My position was that wireless is becoming a commodity. Especially if we look beyond the traditional mobile operators and recognize that we’re really competing against the Facebook and Google’s of the world, who provide over the top services using our own bandwidth against us, we have to realize that our traditional operating model must be challenged.

Mauricio kind of shrugged and said, yeah, of course it’s a commodity. FreedomPop wouldn’t be here and growing as fast as we are if it weren’t already a commodity.

What do you think?

New Book

September 4th, 2014

I recently contributed a chapter to the book “Enterprise City: How Companies Are Changing the Global Urban Landscape)” which is available from Amazon for Kindle.

Not surprisingly, my chapter (chapter 5) is titled “Mobility is Revolutionizing Cities for the Better.” Other chapters include

  • “Cities Will Redefine the World’s Future as Much as They Influenced our History” (by Richard Kadzis),
  • “Smart Work Will Transform our Cities” (by Peter Miscovich),
  • “Big Business and Cities: Opportunities for Leadership” (by Todd Megrath of MGM Grand Resorts),
  • “Creating Sustainable Communities with our Next Natural Resource: Big Data” (by John Clark of IBM),
  • “The A-daptive City” (by Rives Taylor),
  • “Chicago New Heights – The Case for Integrated Sustainable Development” (by Paul McDermott),
  • “The Ubiquitous Web and the ‘All-ternet(tm)’ (by Lubna Dajani),
  • “The Forces Shaping the Future of Urban Economic Development” (by Bill Sproull of the International Economic Development Council),
  • “Using the Power of Collaboration to Invent our Future Cities” (by Carol Warkoczewski of the City of San Antonio),
  • “Can Public Policy Be Nimble Enough to Affect the Competitiveness of a Fast Growing City-Region?” (by Glenn Miller of the Canadian Urban Institute and Iain Dobson of Real Estate Search Corporation),
  • “Form, Function and the Shape of Things to Come” (by Brock Dickinson),
  • “Conscious Collective Evolution as the Primary Focus for Developing our Communities” (by Stijn De Winter), and
  • “Finnish Cities as Forerunners of Sustainable Lifecycles and Smart Technology” (by Galina Kaariainen of PWC Cyprus and the World Futures Studies Federation).

If you’re interested in the urban future, it’s worth checking out!

Sprinting to the Finish Line

September 3rd, 2014

A month from today will be my last day at Sprint. I’m looking forward to my “retirement” from corporate life and the opportunity to pursue some things I’ve been passionate about, but had lacked the time to pursue. I’m excited to see where God will take me next. I’m also looking forward to having more freedom to write for this blog, so stay tuned.

In the meantime, I wanted to let y’all know that my departure from Sprint will mean two changes that you might want to pay attention to. Through this blog (and through e-mails to my Sprint address shared here – russ.s.mcguire@sprint.com), I’ve been able to get many people the help they need to resolve issues with their Sprint service. Unfortunately, that will come to an end when I’m no longer an “insider.” Also, through this blog, literally thousands of people (probably tens of thousands) have been able to take advantage of the Everything Plus (and before that SERO) discounts. I’ve literally had people stop me at conferences to thank me for making their service affordable. These days, with Sprint’s aggressive retail offers, the Everything Plus discount is much less compelling than it has been, but if you’re still interested, don’t wait too long to use my credentials at http://sprint.com/everythingplus (russ.s.mcguire@sprint.com 383).

Stay tuned. I’ll be back in October.

Hmmm….

April 24th, 2014

Years ago I drafted a post for this blog. After seeking the counsel of wise co-workers, I decided not to post it and it stayed in my drafts folder. For some unknown reason, WordPress autonomously decided to post it yesterday.

I apologize for any confusion it may have caused. The report and analysis referenced are years old.

For complete transparency, there were a couple of reasons folks recommended I not post it originally. The first was that the vast majority of my readers wouldn’t be able to access the report. In respect to Craig Moffett’s and Bernstein’s intellectual property, I couldn’t share enough of the report to do it justice and yet my readers couldn’t access the rest of it. That didn’t seem fair to my readers. The second reason was that, while I liked Mr. Moffett’s analysis in this report, there are many other reports that he’s written that I don’t agree with. By strongly commending his thought process and analysis on this one report I may lead people to believe that I was endorsing (or worse yet, that Sprint was endorsing – even though everything that’s posted here is my own and doesn’t necessarily reflect Sprint’s positions or opinions) Mr. Moffett’s entire body of work.

I do think Craig Moffett is a very intelligent man, that he deeply understands the industry, and that he often provides incisive perspectives on various players in the industry – whether or not I think he’s right or wrong. I also think this particular analysis was very interesting. I don’t have time now to go back and see how right or wrong he was (using 20/20 hindsight). But anyway, for those reasons, I’m not going to take down this post (unless Craig or Bernstein ask me to).

Is the Mobility Revolution Deadly for Big Bells?

April 23rd, 2014

Please see my follow-up note on this post here.

Craig Moffett of Bernstein Research recently published a very informative report titled

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“The Long View: U.S. Telecom – The End of the Line(s).” In it, he shares his learnings from very detailed analysis of the cost and revenue models of wireline businesses.

Mr. Moffett is a very smart guy. I can’t possibly fairly represent the depth of analysis he has provided in this 40+ page report. I recommend you consider becoming a Bernstein client so that you can read this full report and to follow what he has to say about the industry. He won’t always be right, but his analysis is always worth considering.

And after considering this report, I think it’s clear that the Mobility Revolution, and the resulting displacement of wireline services by wireless services, may prove deadly for the Big Bells.

To give you a sense for the challenges they face, here are some quotes from the report:

  • “The Wireline business – encompassing both the TelCo and Enterprise segments – still accounts for more than half of Verizon’s revenues (after adjusting for Vodafone’s 45% ownership of Verizon Wireless), and a similar amount of AT&T’s. Similarly, Wireline accounts for a majority of assets – at Verizon, about 69%. And Wireline accounts for an even larger portion of costs – the best measure of activity, or what these companies actually do - at about 65%. Indeed, if one were to also include the in-region wired portion of the wireless network as part of the broader wired picture then these companies’ still-overwhelming dependence on their wired franchises becomes even more striking, with what is almost certainly three quarters or more of the revenues and assets depending on the wired infrastructure.”
  • “The TelCo (or regional Wireline segment) represents a larger share of profitability than it does of revenue within the Wireline business. Although not disclosed in Verizon’s and AT&T’s published financial reports, both companies are quick to concede that the TelCo segment is significantly more profitable than Enterprise, even if the TelCos’ trends are deteriorating. At both AT&T and Verizon, we estimate that TelCo accounts for approximately 40% of total EBITDA.”
  • “The combination of competitition, technology, and regulation is a potent brew, and fifteen years after “Being Digital,” the world of the TelCos is a far different place. Consider that, at the time of the ’96 Act, local residential phone service was essentially ubiquitous, with 97% of households connected to the wired ‘grid.’ Nearly 30% of those homes had a second line, either for their AOL dial-up connection, their fax machine, or perhaps for their chatty teenage daughter. That’s an ‘effective’ penetration rate of ~125%. Fifteen years later, more than a quarter of all homes have ‘cut the cord,’ and a quarter of those remaining have left for cable voice. Second lines have dropped to 11%. That’s an effective penetration rate of ~60%; effective residential penetration has been cut in half. And if we look forward just five years from now, we are on a trajectory for more than 40% of homes to have gone wireless-only, for cable to have 40% of what’s left, and for second lines to be a thing of the past. Do the math. Five years from now, in the residential market the TelCos will preside over 60% share of just 60% of homes… an effective penetration rate of just 36%. That’s close to another halving, but this time in five years. That decline rivals that of the film business at Kodak.”
  • “The rate of margin compression appears to be accelerating. Two things have happened in the two years since the end of our ARMIS data set (ARMIS reporting was discontinued afer 2007). First, the rate of access line losses has dramatically accelerated; the country is no longer averaging -4.8% total access line losses as it was from 2000 to 2007. This year, the average has been north (or south?) of a -10% annual decline. Second, broadband growth has slowed dramatically. Indeed, DSL growth tipped slightly negative for the first time ever in Q3. As a result, operators can no longer count on offsetting gains in ARPU to lessen the impact of a declining access line base.”
  • “There is a troubling tendency to dismiss this progression as ‘yesterday’s news,’ to view the big TelCos as wireless operators, or to assume that the wired phone business will decline gracefully. It won’t. The Wireline phone business is a quintessentially fixed cost business. When fixed cost businesses decline – and especially when they decline rapidly – they leave huge and intractable costs in their wake.”
  • “…Intuition suggest, however, that Wireline costs are primarily fixed, and this intuition can be empirically confirmed by the steep slope of correlations between access line losses and cost per access line – drawn from our extensive analysis of state-level FCC ARMIS data through 2007. The correlation suggest an overwhelmingly fixed cost structure for the Wireline business (in a ratio of roughly 50 to 75% fixed and 25 to 50% variable).”
  • “Importantly, it is the nature of fixed cost businesses like telecommunications that ‘threshold effects’ become increasingly pronounced over time. As volumes decline, variable costs are shed. The remaining cost structure is therefore, by definition, more fixed and less variable than it was before. In any high-fixed-cost business, it is always the case that initial unit cost escalation yields even greater sensitivity to further unit cost escalation; as the margin ‘cushion’ gets smaller and smaller, it requires a smaller and smaller subsequent change to volumes to trigger a larger and larger subsequent change in profitability. If this ‘negative operating leverage’ dynamic is at work – as it appear to be – then it is plausible to expect that Wireline margin compression will not lessen; it will accelerate.”
  • “The combination of falling revenues and falling margins is a noxious combination; the dollar amount of EBITDA generated by the U.S. Wireline industry has dropped from an annualized run rate of $52B seven years ago to an annualized run rate of just $38B in the just reported Q3.”
  • “The implications of our analysis of the Wireline segment are troubling for the industry going forward. That access lines will continue to decline from here is a foregone conclusion. That Wireline margins will decline with access lines is more controversial, at least to judge by consensus estimates.”
  • “Our AT&T model projects a decline from 31.8% in 2009 to 26.3% in 2013 in overall Wireline margins. … As a context, each 100 basis
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    point decline amounts to about $650M in reduced Wireline EBITDA or operating income. Our 550 basis point variance from today’s margins amounts to a $3.6B gap by 2013, equal to 17% of ‘consensus’ EBITDA and 54% of ‘consensus’ operating income.”

  • “Our Verizon model projects an even steeper decline, as Verizon’s costs appear somewhat more fixed and less variable than AT&T’s. We project a decline in Wireline margins from 24.2% 2009 to 17.0% in 2013. … Every 100 basis points of margin contraction at Verizon translates to about $460M in EBITDA or operating income. Our 720 basis point variance from implied consensus amounts to a $3.1B gap by 2013, equal to 30% of ‘consensus’ EBITDA and 153% of ‘consensus’ operating income, putting income firmly in negative territory.”

Mr. Moffett is a very smart guy. I can’t possibly fairly represent with this tiny sample from his report the depth of analysis he has provided. I recommend you find a way to read this full report and to follow what he has to say about the industry. He won’t always be right, but his analysis is always worth considering.

Although Verizon and AT&T are clearly being very successful in benefitting from the growth in mobility, they are undoubtedly also carefully weighing how to slow the impact of mobility on their core wireline economic engine.

Some of us, however, would rather mash the accelerator to the floor and say – bring on that Mobility Revolution – full steam ahead!

The Six Cs of Mobility

April 15th, 2014

Nearly a decade ago I introduced McGuire’s Law of Mobility. Over the years, I’ve refined it a bit to simply say “The value of any product or service increases with its mobility.” and, over the years, the truth of the law has been demonstrated time and again.

But back in those early days, despite having anecdotal examples to point to, I couldn’t really explain “how” mobility increases the value of a product or service.

A few weeks ago I was asked to speak at an event hosted by Mobiquity. That event gave me the opportunity to try to capture and communicate thinking I’ve been doing recently about the specific ways that mobility creates value in products and services – either for the end customer (and thus indirectly for the supplier) or directly for the supplier. In some respects, this is the result of looking back with 20/20 hindsight and merely capturing what we’ve already seen, but I do think it’s helpful for those looking forwards to consider how to practically design the value of mobility into their products and services.

So, here are the six C’s of mobility – six ways in which mobility adds value to a product or service:

  1. Connectivity
  2. Community
  3. Content
  4. Context
  5. Commerce
  6. Cost

Connectivity

At it’s core, integrating wireless connectivity into a product or service is about, well, connectivity. What I mean here is specifically full-time two-way connectivity into back end systems that enable the product or service to operate as part of the larger value proposition of the firm, and therefore provide greater value to the end customer.

Community

Some people refer to the “social revolution,” and we’ve certainly seen a dramatic rise in social networks and the huge impact these sites have had on how we interact with the world around us, but I’m not sure whether it’s a separate “revolution” or a subset of the “mobile” revolution or if they are both the same revolution – the “social/mobile” revolution. Whatever the case, the fact that products and services have wireless connectivity built in makes it possible for users to share with their friends and provide support for one another. This is easiest to see in mobile apps, but I’ve also seen it in retail kiosks for sunglasses and makeup, and built into digital cameras, and I believe we’ll increasingly see the opportunity to “like”, “share”, and give or receive encouragement being built into more and more connected products and services.

Content

Wireless connectivity also makes it simple to leverage the reach and richness of the Web with a real-time element and with relevance that goes well beyond what’s possible in a desktop Internet experience. A navigation device that provides recent reviews of nearby restaurants, along with the daily specials would be a great example. (I’d love to have this built into my next car…) Another example is the simple Bible app. When I started carrying a PDA a couple of decades ago, the Bible app was one of the first things that demonstrated to me the power of mobility. Wherever I was, I could read God’s Word. However, a single translation would consume almost all of the memory on my device, so forget about additional resources like commentaries and Bible dictionaries. Today, most Bible apps don’t store any translations locally, and yet, over the wireless connection, you can access almost every translation, commentary, or reference work ever published.

Context

In the mobile community, we’ve often spoken of the unique value of “context” that mobility enables above and beyond what has ever been possible in a desktop application. Because it’s been so broadly discussed, I won’t belabor the point here, but I do believe that the ability of wirelessly connected products and services to adapt given place, proximity, and priority does provide tremendous incremental value never before possible.

All of the C’s listed above are value enhancements that the end user directly realizes. Hopefully that value realization translates into value for the provider (differentiation, premium pricing, customer loyalty, etc.). However, the next two C’s are ways in which the provider benefits directly from the integration of wireless connectivity into the product or service.

Commerce

Wireless connectivity creates a tremendous opportunity for the provider to extend their business into adjacent spaces and realize new untapped revenues. A service provider may be able to offer new kinds of services, not previously possible. A product or service company may be able to present to customers extremely relevant advertising, or may be able to (while respecting and protecting user privacy) collect data that has analytical value for the company or a partner. Many other adjacent revenue opportunities will likely become available to those that are integrating wireless connectivity into their business.

Cost

The final C deals with the opportunity to replace components with cloud content. For example, the first “connected” watch I bought was satellite connected to the atomic clock in Colorado. I thought it was cool geeky technology. I showed it to a jeweler and he thought it was cool because it meant that you could build an incredibly accurate watch with very inexpensive components. Similarly, I’ve often told the story of TeleNav, a company that replaced expensive GPS navigation electronics with software on a mobile phone connected back to maps and data in the cloud. As wireless connectivity gets integrated into every product and service, there will be many opportunities to take costs out of the product or service by replacing expensive physical elements (e.g. highly trained specialists in the field) with content and capabilities hosted in the cloud.

I hope these 6 C’s are helpful to you as you consider how to revolutionize your industry!

New Book!

December 16th, 2013

There are only 4 days left on this Kickstarter Deal and it’s still a long ways from getting funded. I want to read the book, so hopefully you’ll consider joining in!
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I am very pleased to announce my contribution to a new book project called shift 2020 – How Technology Will Impact Our Future. It’s a self-published book curated by Rudy De Waele including foresights on how technology will impact our future by some of the world’s leading experts.

The story
The idea of shift 2020 is based upon Mobile Trends 2020, a collaborative project Rudy launched early 2010. It’s one of the highest viewed decks on Slideshare (in the Top 50 of All Time in Technology / +320k views). Reviewing the document a couple of weeks ago, he realised the future is catching up on us much faster than many of the predictions that were made. so, he asked the original contributors for an update on their original predictions and new foresights for the year 2020.
Additionally, Rudy broadened the scope of this new book project and asked new contributors to give their vision and foresights on the following topics: 3D Printing, AI, Apps, Biotech, Cloud, Connected Living, Consumers, Context, Crowdfunding, Data, Education, Entrepreneurship, Enterprise, Fashion, GreenTech, Health, Hyperconnectivity, IoT / IoE, M2M, Maker Movement, Media, P2P Money, Retail, Robotics, Sensors, Smart Cities, Social Media, Society, Surveillance, Transport, Wearables with global input as well as focused on emerging markets such as BRIC and Sub-Saharan

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Africa.
shift 2020 is designed by Louise Campbell, an award winning UX and design technology professional with years of experience working with luxury fashion E-commerce brands, designing first-class, multi-platform, digital shopping experiences.
A Kickstarter campaign has been launched to raise the necessary funds to make this project a reality (mainly to cover the costs for design, editing, website and promotion). Head over and order your unique copy of the nicely designed eBook, paperback or a quality Hardcover Photo Book printed by blurb.com. The content includes 80 pages of original content, featuring most of the original Mobile Trends 2020 contributors. In addition to some 40 new contributions from around the globe who are prominent futurists, trend-predictors and industry leaders. There’s no such existing compilation of foresights in existence that I know of. It’s quite unique!
Special opportunity for companies to customise the book!
Rudy created as well an opportunity for companies to personalise the cover of the book with your company logo and name. The book presents a very special opportunity to create a unique New Year’s gift for your business relationships and clients. What a better way to start 2014?
shift 2020 includes quotes, paragraphs and essays from confirmed contributors, such as:
Neelie Kroes (VP of the European Commission), Douglas Rushkoff, Salim Ismael (Singularity University), Loic Le Meur (LeWeb), Shannon Spanhake (Innovation Officer San Francisco), Adeo Ressi (The Founder Institute), Boris Veldhuijzen (The Next Web), Saul Klein (Index Ventures), Aubrey de Grey, Sunny Bates (Kickstarter / Jawbone), Carlos Domingo (Telefonica Digital), David Rowan (Wired Magazine), Laurent Haug (Lift), Martin Recke (next), Will Page (Spotify), Scott Jenson (Google), Gerd Leonhard (The Futures Agency), Yuri Van Geest, Russell Buckley, Russ McGuire (Sprint), Kwame Ferreira (Kwamecorp), Delia Dumitrescu (Trendwatching.com), Georgie Benardete (Shopbeam), Hans-Holger Albrecht (Millicom), Tariq Krim (JoliCloud), Dr. James Canton, Andrew Hessel (Autodesk), Christian Lindholm (Korulab), Eze Vidra (Google Campus), Harald Neidhardt (MLOVE), Raina Kumra (Juggernaut). Robin Wauters (Tech.eu), Nicolas Nova, Gianfranco Chicco, Shaherose Charania (Women 2.0), Ken Banks, Marc Davis (Microsoft), Felix Petersen, Kelly Goto, Erik Hersman (Savannah Fund), David Risher (Worldreader), Glen Hiemstra (Futurist.com), Jessica Colaço (iHub), Mark Kanji (Apptivation), Rohit Talwar (Fast Future), Priya Prakash (Changify), Andrew Berglund (Geometry Global), Alan Moore, Martin Duval (Bluenove), Maarten Lens-FitzGerald (Layar), Andrew Bud (mBlox/MEF), Andy Abramson, Fabien Girardin, C. Enrique Ortiz, Raj Singh (Tempo AI), Inma Martinez, Robert Rice, Ajit Jaokar, Jonathan MacDonald, Tony Fish, Dan Applequist, Redg Snodgrass (Wearable World), David Wood, Mark A.M. Kramer (razorfish Healthware) , John Kieti (m:lab), Aape Pohjavirta, Kosta Peric (Innotribe), Blaise Aguera y Arcas (Microsoft) , Michael Breidenbruecker (Reality Jockey), Tricia Wang, Louisa Heinrich (Superhuman), Mike North (UC Berkeley), Mac-Jordan D. Degadjor, Kate Darling, Simon White, Chris Luomanen (Thing Tank), Ariane Van De Ven (Telefonica), Ed Maklouf (Siine), and many others.
The eBook version will be delivered to you before Christmas 2013. Pre-order now on Kickstarter. The printed books will be delivered as Standard Delivery (according blurb.com guidelines) counting 12-15 business days from December 20th 2013 onwards.
For any customised offers not mentioned in the pledges, please contact Rudy.
Check the shift2020 website for latest updates and additional information.