Telecommunications. Just as the telecom industry is heading toward a strict separation between infrastructure and services and applications, customers are shifting their consumption patterns, and their loyalties, away from the traditional telecom operators and toward application and service providers such as Google, Apple, and Facebook, as well as any number of smaller players. In this world, telecom players that remain vertically integrated will come under substantial pressure. Indeed, it is likely that the industry will evolve to include two types of players: The efficient utility, driven by fiber-optic and wireless access technology, and the fast-moving, customer-centric software innovation provider.
At the same time, the information and communications on which the world of 2020 will depend, and the intelligence needed to manage that information, are moving quickly into the online computing cloud. The convergence of these technologies in the cloud will only be the start, however. As more and more services migrate online, telecom, IT, technology, and Internet service companies themselves will begin to encroach on one another’s territory, as they all move toward higher-margin and differentiating applications.
The general outlines of the future created by the arrival of Generation C are clear. The question is whether telecom operators are ready for the changes already on the way and are planning now to create the strategies and business models they will need to keep growing in this more competitive future. Too many telecom operators appear to be focused on preserving sources of revenue, such as voice telephony, that are likely to decline in the future, rather than on developing new sources of revenue and opening up new markets. As a whole, telecom industry players need to rapidly change their operational and business models, the ways they interact with customers, the access and price points they establish to generate revenues, and the way they manage innovation.
We see three primary new revenue opportunities arising from the changes that the emergence of Generation C will bring about. First, the demand for ubiquitous connectivity will ultimately create the need for universal broadband access in developed economies. As a result, operators that hope to grow by offering services dependent on broadband must support national efforts to build out this next-generation infrastructure. Second, vast segments of the world’s population in emerging markets are still unconnected, and operators looking to grow their customer bases thus need to expand in those markets. Third, the ways that Generation C behaves and collaborates, and the technologies it prefers, will create opportunities in other industries; telecommunications operators should be considering how to promote the use of their services to capture some of the new value created. (See “The Thought Leader Interview: Didier Lombard,” by Art Kleiner and Pierre Péladeau, s+b, Spring 2011.)
Healthcare. As information about doctors and hospitals, medical treatments, and costs floods the Internet, consumers will gain real power, performing their own research; writing reviews of physicians, hospitals, and drugs; and forcing the players to compete more actively. Online services, some featuring user-generated content, will become a primary channel for medical advice, substituting in part for traditional support channels.
Widespread connectivity will boost electronic diagnosis, helping to reduce costs; digital health monitoring will become accepted practice; medical R&D will come to rely on social media such as crowdsourcing. The personalization of medicine will lead to new insurance models, and electronic medical records and national e-health infrastructures will connect with online identity and digital passport technologies.
Retail. Ubiquitous connectivity will continue to transform the retail industry, seamlessly integrating the online and offline worlds, and ultimately leading to a form of augmented reality that allows a more elaborate presentation of retail goods. Peer reviews will become a real-time decision-making tool in physical stores as well as online, and social networks will become critical for brand awareness and customer preferences. This will lead to a winner-take-all dynamic among retailers, already typical of commerce on the Internet. Electronics retailers will lose ground as consumers purchase software and services from the cloud rather than in their current shrink-wrapped store format. Social media techniques such as crowdsourcing will be used to further product innovation, and increased connectivity will generate new monetization models driven by new partnerships among retailers and manufacturers.