Boiling Point: Convergence Finally Heats Up

Convergence is essentially the ability of people to use their digital content and services any time, any place and any way. This in-depth piece explores why convergence is a reality today. We discuss the challenges of operating a convergence business. Most importantly, we go into what we believe it takes to reach high performance in convergence.

Why are people talking about convergence today when it was conceived nearly a century ago (remember Dick Tracy’s famous two-way radio wristwatch)? The chief reason is its sheer complexity. There are at least three major industries involved—technology, telecommunications and media. Equally important, there is the prospect of integrating all the moving parts—network, devices, content and services. All of this means that it takes a tremendous effort to coordinate and harness convergence’s full potential.

It took nearly 30 years for a device as simple as the radio to achieve widespread market penetration. Similarly, TV and VHS both took nearly 20 years to reach critical mass. But today—for the first time in history—we see all the components in place to make convergence a reality. While there are still challenges ahead, the blueprint convergence architects laid out is finally taking shape in a practical and scalable fashion. This promises a dazzling vision of mobile TV, wireless music access, on-demand movies on any device, free and portable global communication, networked videogame communities and much more.

Much of what convergence has to offer is already available—music via mobile phones, on-demand television, telephone service via Internet, to name a few. However, the future offers a plethora of services that will take time to reach the mass market. Therefore, convergence is best viewed as a journey that is just starting down the road of possibility.

You can trace the arrival of convergence to five distinct, major developments:

• Content is now predominantly digital, including not only proprietary content, such as movies and music, but personal content, such as digital photos.
• Most users in developed nations can enjoy “always on” connectivity through a broadband Internet connection at home or work or via a wireless device while on the move.
• Consumer electronics devices now offer the proper performance to handle convergence, including processing, storage, power, screen size and form factor.
• Online advertising-supported business models allow companies to deploy highly-valued Web services to users, on any platform, free of charge.
• Information technology allows individuals to create disruptive applications that meets all consumers’ needs and to rapidly distribute the application in the mass market.

Although the challenges are daunting, there is no doubt that there is a valuable prize awaiting companies that pursue a focused and well-planned strategy. As Winston Churchill said, “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” For the optimists, here are some of the key lessons that Accenture has learned through hands-on implementations, primary research and market analyses that will facilitate success in convergence enterprises:

• Create a seamless user experience — The potential complexity of convergent products and services means that those companies that focus on reducing that complexity in fulfilling a consumer need will win.
• Provide a compelling and relevant proposition — Place the consumer front and center of the equation. By providing localized or personalized convergence content and services (such as Google Local and Yahoo! Local), users will have a reason to switch and stick to a service.
• Test new business models — Given the breadth of new products, services and channels, companies need to iterate new pricing structures that move beyond traditional business models.
• Integrate networks and ecosystems — This will allow you to port content across platforms, from cell phone to DVR to cable, truly giving users the freedom to experience their digital assets any time and anywhere.
• Beta fast and small — Bring new products and services to market quickly, launching de-scoped, low-risk beta products.
• Scale success quickly — When products and services prove successful in beta, have the associated technical architectures and business operations to scale the success fast.
• Develop flexible partnerships — As no single player is positioned to control the complexity that convergence requires, companies must create agile, adaptive partnerships that allow them to extend their capabilities at scale and speed.
• Become more open technically — Interoperability makes it easy for external parties to make a company’s platform more valuable by building on it.
• Plan for long-term operational efficiency — Consider architectures and business decisions that bring down the core technical operations costs over time.
• Develop content and service-centric organizations — Many companies that want to offer end-to-end convergence solutions will need to develop competencies in new areas, especially content.

Greg Douglass, Robin Murdoch and Jamyn Edis