"EFFECTS OF CONVERGENCE
AND DIGITISATION ON THE
ICT INDUSTRY"
Convergence
and digitisation are part of a new and important phenomenon that
influences ICT strategy and strategic business models. Convergence is
an established reality and an industry norm where the delineation of
industry sectors is not finite and product categories are provided by
several sectors.
Convergence
of
Technology. Digital convergence is the heart of a new technology
revolution. Convergence has been enabled by the speed of delivery, the
decrease in the cost of digitisation of products, the success of the
internet and system customisation. Digital technology permits the
delivery of a wide range of push and pull products, mainly designed as
voice, data and video services, in an innovative, intuitive and
customised fashion over a combined electronic communication platform.
Integrated networks provide ICT companies with an opportunity to invest
and launch flexible and timely products for considerable lower costs.
The new environment of convergence and digitisation puts pressure on
ICT sectors to maximise economies of scale and scope, to enhance
competition at the retail level and to deliver value-to-customers
efficiently.
Digital
technology
has made it possible to transmit larger amounts of data at a faster
speed. The technology has made it possible for the ICT industry to
reorganise physical information and entertainment products into
electronic products, ready for rapid distribution around the globe.
Through
digital technology and the wide diffusion of high-speed internet, the
distinct industries of printed information, telephony, audio and video
have converged over a single platform of delivery.
Digital
Technology
has created new opportunities for the convergence of products and
services. The new opportunities are visible in the distribution
channels necessary to provide customers with telephony, internet
content, movies or music.
Broadcasting
and
Telecommunications providers are leading the market for bundled
communications products by offering packages of fixed and mobile
telephony, internet and TV. Search engines are creating bundles of
innovative services such as document sharing, online schedules, Voice
over internet Protocol (VoIP), chat, web design, web mail, web hosting
and specialised searching.
Commercial
Convergence. The phenomenon of convergence is not limited to
technology. It has created the momentum for the expansion of business
models into different delivery channels, such as the leap from
e-commerce to m-commerce, and the channelling of internet services over
traditional cable and satellite TV networks. Market boundaries are
being dismantled and becoming borderless. Services are bundled and what
used to be a vertical value chain is changing into a collaborative
mixed-model supply structure.
The
ICT industry is going through vertical integration of the different
levels of content creation and distribution of information goods,
including multi-media. Companies, and individuals, are empowered to
create content which can be distributed via traditional print, DVDs and
CDs as well as through internet enables channels, cable and satellite
networks. ICT sectors that are vertically integrated are able to
exploit their products at each level of the supply chain.
Companies
are under
pressure to integrate horizontally across sectors to collaborate and
remain competitive, and to continue supplying products that are
relevant to their customers. A case in point is the horizontal
integration of telecommunications companies and broadcasting companies
respectively with internet, mobile telephony, fixed line and TV content
distributors to compete and offer similar product bundles.
An
interesting
outcome of ICT convergence is that that partnerships rather than
mergers and acquisitions have been the route to achieve digital
convergence. Synergies have been created through partnerships and
alliances, rather than through the cumbersome amalgamation of separate
companies with separate business cultures. Many large ICT companies are
focusing on their core competencies, and are managing growth in demand
by partnering with other companies to increase their service
offering.........
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