Winning the Game
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There will be more change in the next 10 years than there has been in the previous 100. This paper describes these expected foundational shifts and explains how we can manage them to our ...

There will be more change in the next 10 years than there has been in the previous 100. This paper describes these expected foundational shifts and explains how we can manage them to our advantage.

In their latest discussion presentation "Winning the Game", Geoff Hollingworth, Ericsson North America Evangelist, in collaboration with Jason Hoffman, founder and CTO of Joyent, discuss what these changes will mean for devices, the cloud and the network.

This interactive presentation is supported by 8 videos. It describes the foundational changes that will occur across industries and networks, and attempts to explain how we can manage them to our advantage. The target audience of this paper is those who are involved in planning, building and profitably operating digital networks.

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    Winning the Game Winning the Game Presentation Transcript

    • ericsson discussion paperGeoff Hollingworth, Ericsson North America,Ericsson Evangelist, in collaboration withJason Hoffman, Founder and CTO Joyent winning the game There will be more change in the next 10 years than there was inthe previous 100. This paper describes the foundational changes andattempts to explain how we can manage them to our advantage1.The paper references various online thought-leadership articles and visuals, and links to the original material1wherever possible. Please contact the author if any of these references need updating or removing. We hopewe increase visibility for everyone.
    • This discussion paper is supported by an Augmented Reality app that visualizes graphics This discussion paper is supported by an Augmented Reality app that visualizesvisualizedin 3D. Just in 3D. When you see an icon like the one below, the graphics can be graphics in 3D. start the ARWTG app* and point the camera at the target image. Download for iPhone (Unfortunately this app is not yet available for Android) Download the ARWTG app for iPhone and iPad Download for iPhone Download for iPad*Unfortunately this app is not yet available for Android
    • Table of ContentsIntroduction ................................................................................... 4 Video: “End to End Guaranteed” ................................................... 2 2Video: “Setting the stage” ............................................................. 5 Control The Performance .............................................................. 3 2Everything Changes ...................................................................... 6 Analogous to Shipping ................................................................. 4 2No Guarantees .............................................................................. 8 Video: “Shipping Analogy” ............................................................ 5 . 2Mobile +x = Mobile ....................................................................... 0 1 Analogous to Shipping .................................................................. 6 2Speed of Change .......................................................................... 1 1 Nature, Machine, People ............................................................... 7 2Video: “Apps The Unit of Disruption” ............................................ 3 . 1 Video: “Machine People”............................................................... 8 2The Unit of Disruption ................................................................... 4 1 Nature, Machine, People .............................................................. 9 2Video: “The Mobile Internet” ......................................................... 6 . 1 In Summary ................................................................................... 0 3Moving Compute Into The Network .............................................. 7 1 Video: “Summary Video” ............................................................... 1 3Europe Alone-More Cloud Computing ......................................... 8 1 The Three Things to Remember ..................................................... 2 3The Mobile Internet ....................................................................... 9 1 Winning The Game ........................................................................ 3 3Video: “Moving Compute” ............................................................. 0 2 What’s Next ................................................................................... 4 3Moving Compute Into The Network .............................................. 1 2 WINNING THE GAME 3
    • introductionThe first paper, “Changing the Game Before the Game Changes You,” attempted to place themassive business changes we are currently experiencing into a simple and understandableframework. This second paper in the series, “Winning the Game,” explains what conclusionscan be drawn and what actions can be taken if these conclusions are to be believedToday, the leaders of major industries are be- The target audience of this paper is those one the estimated 50 billion devices that willing challenged, seemingly overnight, power- who are involved in planning, building and be used in 2020.less to control their own destiny despite their profitably operating digital networks. In Northlegacy, strength and footprint. Change is America alone there is a predicted 80-billion This paper introduces the concept of appli-happening at an exponential rate and hu- dollar shortfall top line by 2020, even if the cation and associated data generated frommans are not naturally engineered to cope only goal is to maintain today’s 4.9% CAGR. them.with such a rapid pace of change. Before the Bottom line operational costs are also chal-Industrial Revolution, technological change lenged due to growing data demand versus It introduces the powerful concept of com-over a normal human life span of about 40 limited associated revenue growth. bining next-generation networks with next-years was almost nonexistent. We now live in generation compute and the beneficial sidea world that is very different from what it was This causes the need to re-invent the value effects of improved performance, securityas recently as five years ago. proposition of the network in the future eco- and transparency. system of the networked society. In the previ-This means the impact of the technical revo- ous revolutions, the network first powered the Finally, it introduces the era of guaranteedlution starts to impact immediate business disruptive unit of the fixed phone, followed by end-to-end delivery and the associated newplanning cycles. There is a need to embrace the disruptive unit of the mobile phone. The business models that this entails...the fantastic as part of the immediate future. next-generation disruptive unit to society isThose who do, will find competitive advan- the application. The customer of the disrup- Welcome to winning the game…tages. Those who do not will be challenged to tive application unit is the mobile user, be thatmaintain their status quo. one of the 7 billion people on the planet, or WINNING THE GAME 4
    • settingthe stagehttp://youtu.be/q-GY6TVttu0 WINNING THE GAME 5
    • EverythingchangesEverything you assumed to be astrength yesterday may becomea weakness tomorrow, and every-thing you thought was a weaknesstoday may potentially become astrength tomorrow. WINNING THE GAME 6
    • EverythingchangesFor the first time since the Industrial Revolu- dated. Data subscriptions and revenues aretion it is possible to distribute products and growing but once the market is saturated,value digitally rather than physically. Once they will also decline. In North America alone “While operators continue to makedigital, they can then be further enhanced it is predicted that there will be an 80-billion large infrastructure investments,or even completely re-invented. It would be dollar top line gap by 2020 even with modest others in the value chain arenatural to believe that the digital network a 4.9% CAGR, whereas even simple mobileprovider would reap the most benefits from application revenues are expected grow at a capturing most of the value”such a transition. However, unless they 67% CAGR.also change, this may not be the case. Theexisting business model of selling phones to Service providers must re-think their corecreate future revenues generated by voice, business and refocus on the growing seg-SMS and roaming fees is becoming out- ment of application delivery. NA Operator Service Revenue Projections 2007-2020 ($B) North American Mobile (Projection based on “as-is” revenue sources – Voice, Messaging, Data) Applications Revenue 300 272 286 (USD B) 259 36,4 247 225 236 GAP 2007-2011 214 220 225 228 230 229 227 220 CAGR CAGR CAGR 4,9% 204 212 67% 29,3 8,7 120% 186 194 167 174 5,3 160 97 106 113 118 121 122 121 117 23,2 64 75 86 CAGR 33 42 51 3,2 9,5 89% 6,7 16,3 4,7 1,7 2,9 8,6 0,7 CAGR 1,4 12,2 13,4 14,6 45% 2,8 9,9 0,4 6,0 2,2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 Forecasted Voice Revenue Forecasted Data Revenue Revenue at Continued 4,9% Growth Rate Download Revenue Advertising Revenue In-App PurchasesSource: Yankee Group, Pyramid Research, Parks Associates, Sources: Distimo 2011, KPCB Top 10 Mobile Trends 2011, YankeeStrategy Analytics, inCode Analysis 2011 2010, ABI 2010, Pyramid 2010, Gartner 2011, inCode Analysis.
    • NoguaranteesCamera film was replaced by “Instagram”.CDs were replaced by “iTunes”.DVDs were replaced by “Netflix”.Will our children even know what a phone is?Do they know what a typewriter is?How do they pay? What is the value?Was it possible 5 years ago?The difference between threat andopportunity is opinion and attitude.The difference between winning and losingis the ability to execute on the fantastic. WINNING THE GAME 8
    • NoguaranteesThere is a need to embrace thefantastic as part of the imme-diate future. Those who do willfind competitive advantages.Those who do not will struggleto maintain the status quo. WINNING THE GAME 9
    • mobile+x = mobileWhen anything becomes mobile it tends to disappear.Music players, cameras, credit cards, videos, boardingcards, tickets and much more. What happens whenyour core product disappears?% of smartphone users whono longer have…Alarm Clocks: 54%Wristwatches: 46%Stand-alone cameras: 39%Laptop PCs: 28%Gaming consoles: 11%TVs: 6%Books: 6%Ref: O2 Survey “Mobile is the ultimate cannibal” Ref: Tomi Ahonen WINNING THE GAME 10
    • Speed ofchangeThe world is changing and thepace of change is accelerating.There will be an evolution fromindustrial-driven transformation toinformation-driven transformation.This will change individual busi-nesses and society as a whole. WINNING THE GAME 11
    • Ray Kurzweil [ref], a well-known inventor who has re- ceived 17 honorary doctorate degrees, predicts that weSpeed of will witness approximately 20,000 years’ worth of tech- nological advances in the next 100 (when compared toChange the rate of change in the year 2000). Or to put another way, we will see more change in the next 10 years than we have seen in the previous 100. By 2011 “the industry had reached a point where it was realistic to form a start-up and launch an internet tech- Exponential Growth of Computing based product for less money and in less time than it would have taken to simply launch the website for such 1060 a company in 1997.” 1055 According to Kurzweil, a $1,000 computer will have theCalculations per Second per $1,000 1050 computing power of the human brain by 2025. By 2045 1045 it will have the equivalent computing power of the total 1040 1035 human population. 1030 1025 All Human Brains 1020 1015 One Human Brain 1010 One Mouse Brain 105 1 One Insect Brain “Change will never be 10-5 10-10 this slow ever again” 1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2010 Year Hans Vestberg, CEO Ericsson – at SIME, September 28, London WINNING THE GAME 12
    • apps the unitof disruptionhttp://youtu.be/6ig01FCowzg WINNING THE GAME 13
    • The unit ofdisruptionSince the 19th century, there have been net- unit of disruption is the app. Whereas the first household spending) but of everything elsework-driven units of disruption. The first was two units of network-driven disruption only as well. According to ABI Research [ref],the fixed phone that went into all buildings focused on communication, the app focuses revenue from mobile apps stores could reachand changed people and industries. Then on everything. And if we look at consumer $46 billion by 2016 (revenue including paidthe mobile phone went into the pockets of 6 spending (analysis by VisionMobile [ref]), this downloads, in-app purchases, subscriptions,billion people, again transforming their lives provides an overview of not merely commu- and advertising), up from $8.5 billion in 2011.and the businesses they work for. Now the nication spending (less than 10% of average 10% 10% 11% Other (incl. comms) Insurance & Pensions 6% 6% Healthcare Transportation 13% 16% Apparel & Services Housing Food 4% Entertainment 34% Other (incl. comms) WINNING THE GAME 14
    • Applications and their data have to live on a platform.The unit of Successful platforms all give something away for free, they have to figure out who pays them and most impor- tantly how to get people paid.disruption APPS DATA FREE INFRA- PLATFORM PAY STRUCTURE PAID The challenge is to build an infrastructure platform that enables people to maximize their share of the $46 billion in the future and that adequately compensates the infrastruc- ture provider for the competitive advantages it offers them from a performance and business point of view. Performance = real money. As presented by Walmart, February 2012. A large eCommerce site extensively A/B tested page performance and published a study showing that a 100-millisecond delay = a 1% drop in revenue. Search engines A/B tested performance and found APP that a 500-millisecond delay caused a 20% drop in traffic. In an experiment across multiple retailers, a 1-second delay caused a 7% decline in conversion. Having optimal performance translates into real top-lineThe question we have to ask is, How do we build the growth for any application provider. The infrastructure platform provides such performance. The end-user of anbest network platform to enable the app to generate infrastructure platform of this type gets better quality ofthe most money both for the app and for the network. experience and longer battery life for their device. WINNING THE GAME 15
    • The mobileinternethttp://youtu.be/94FPVfmSh_4 WINNING THE GAME 16
    • moving COMPUTEinto the networkBy 2017 there will be 5 times more mobile broadband subscriptionsthan fixed ones, generating a substantial increase in mobile access toapplications as opposed to fixed line access.Why then do all applications reside in fixed broadband? Data centers?Change the game! WINNING THE GAME 17
    • Europe The European Commission’s new strategy for “Unleashing the poten-Alone-More tial of cloud computing in Europe” outlines actions to deliver a netCloud Computing gain of 2.5 million new European jobs, and an annual boost of EUR 160 billion to EU GDPs (around 1%), by 2020. Key actions include: Cutting through the jungle of tech- nical standards so that cloud usersThis will mean: get interoperability, data portability and reversibility; necessary stand-2.5 million new European jobs an ards should be identified by 2013;annual boost of EUR 160 billion to support for EU-wide certificationEU GDP (around 1%), by 2020 schemes for trustworthy cloud providers. Development of modelThis will require: ‘safe and fair’ contract terms forSLAs, certification, interoperability, cloud computing contracts includ-data portability and reversibility ing Service Level Agreements [ref]. WINNING THE GAME 18
    • The mobileinternet By 2017 there will be five times more mobile broadband subscriptions than fixed ones [ref]. Everyone developing applications today is developing mobile applications first, not fixed ones. 5x We are in a world where we speak about an internet that has clouds that has computers. It makes complete sense from an internet point of view and has worked fine for years. In reality the mobile internet is a whole COMPUTING other set of networks and these other networks are COMPUTING massive ones that are all between the core internet and MOBILE INTERNET the people and machines using it. The massive growth DATA of the mobile internet is the place where application developers want to work. What happens when you start to orchestrate compute, applications and data start to become resident in the mobile internet? If applications start to execute inside the mobile inter- net and traffic only goes to the public internet in excep- tional cases, the result is an enhanced experience for both the end-user and application developer, and also improves the network management experience. WINNING THE GAME 19
    • movingcomputehttp://youtu.be/JNnuGrvsVRg WINNING THE GAME 20
    • moving COMPUTEinto the networkIf the objective for mobile carriers is to deliver opportunity is to move compute into the network.a platform that is not just about network ser- The challenge is how to do this considering thevices but also about compute and data services fact that up until now, mobile carriers have beencombined with the network, what are the oppor- very network service-centric, not compute-centric.tunities? The objective is to provide application This is why Ericsson has an ongoing dialoguedevelopers with the best prerequisites, enabling with cloud computing experts like Joyent. It isthem to deliver the best end-user experience to advisable that all mobile carriers do the same, ortheir customers – both application developers contact Ericsson and Joyent to find out what weand the mobile carriers’ customers. There is an have already learned... WINNING THE GAME 21
    • END TO ENDGUARANTEEDhttp://youtu.be/125U-4jSVts WINNING THE GAME 22
    • control theperformanceThe opportunity is to take control of the digital logistics supply chain –horizontally. Today, very large companies are doing this through verticalintegration. It is expensive, does not scale, time to market is slow, and itcannot leverage the unique assets that are intrinsic to the private mobilenetworks that are enabling the delivery.The infrastructure platform enables the mobile carrier to control a digitalsupply chain. The three important perspectives of this platform are: Performance and Scale – to keep optimal growth and service performance costs in line with demand. Security and Integrity – preventing corruption (security) and detecting corruption (integrity). Transparency – real-time answers to questions such as Why is my application slow, Why is my application down, or When is it coming back?When delivery is reliable or even guaranteed, this enables newpotential business models for carriers, such as indemnification.All businesses today are being compelled to embed both network andcompute inside their core business operations but how do they knowif this is working; who “has their back” if something goes wrong.If we can begin to answer those questions, we will have the opportunityto become a preferred business partner to that company. WINNING THE GAME 23
    • analogousto shipping“McLean’s true innovation was to un-derstand that the core business of theshipping industry was not operatingships but delivering cargo and doingso with the best performance possible.” WINNING THE GAME 24
    • shippinganalogyhttp://youtu.be/zBmRTul4U7I WINNING THE GAME 25
    • analogousto shippingThe digital supply chain business. Infrastructure as a platform; arethere parallels we can draw from other industries? The physicalshipping industry is a good analogy and the digital networks overlaythe exact same trade routes as those used in the Silk Road tradingdays. If ports are data centers, networks are shipping routes, andapplications are the packages being transported, then we as a digi-tal industry are using the same methods as before the introductionof the shipping container in 1954: best effort, expensive, inefficientor unreliable.The shipping container enabled the global economy in the physicalworld. Building the same operational model to ship applications inthe digital world will create the same economic transformation.We ship applications today but without any intelligence. Includeintelligence!! WINNING THE GAME 26
    • Nature,machine,people“We’re proud to be able to connect MaerskLine’s fleet with our technology. We believe in aNetworked Society where connectivity will onlybe the starting point for new ways of innovating,collaborating and socializing. The result will beautomated and simplified processes, higher pro-ductivity, real-time information allowing quicker,more informed decision making and problemsolving,” said Hans Vestberg. [ref] WINNING THE GAME 27
    • Machinepeoplehttp://youtu.be/JzVEUCMUvek WINNING THE GAME 28
    • Nature,machine,peopleWhen compute moves into the network, data becomes Where the data is storedresident there too. And when the data becomes residentin the network, then the network can control access to the Its legal compliancedata for the benefit of its users, for the benefit of the net- Its visibilitywork and for the benefit of the data’s’ owners. Facebookhas disrupted Google’s ability crawl information since the Its regulatory trustdata is hidden behind Facebook’s proprietary interface. Data is valuableData in the mobile network can maintain open interfacesbut the owners of such data can sleep at night knowing: Use of data is priceless… WINNING THE GAME 29
    • IN SUMMARY WINNING THE GAME 30
    • summaryvideohttp://youtu.be/Mkth-zqiKwg WINNING THE GAME 31
    • THE THREETHINGS TOREMEMBER1 2 Apps + Data Compute + Network Apps are the unit of disruption We need a truly holistic service and they are merely lenses into delivery platform that is sitting people’s data on the network. there saying let’s run apps well.3 Guaranteed End-to-End Delivery Across networks, compute and data combined. This changes why we build networks, our desired operational model and our potential for new products, new business models and new revenue streams. WINNING THE GAME 32
    • winningthe gameIt is a paradigm shift,Your mobile network is not access,it is distributed compute.To continue the discussion...Contact EricssonContact JoyentFollow us on Twitter:@geoffworth@jasonh WINNING THE GAME 33
    • What’sNextThe next paper in this series will focus on people and businesses that are embracingthe fantastic and are already preparing, planning and adapting to the paradigm shiftahead. We would therefore love to hear your thoughts on these subjects and descrip-tions of real case stories about companies that are leading the charge into the era ofthe Networked Society.Please send your feedback, thoughts and ideas to geoff.hollingworth@ericsson.comfor a chance to be featured in the next paper in this series. WINNING THE GAME 34
    • references1. Yankee Group, www.yankeegroup.com 10. Kurzweil, R., www.kurzweilai.net2. Pyramid Research, www.pyr.com 11. VisionMobile (2012)3. Parks Associates, www.parksassociates.com www.visionmobile.com4. Strategy Analytics, www.strategyanalytics.com 12. ABIresearch (2012) “In-App Purchases to Outpace Pay-Per-Download Revenues in 2012”5. inCode Analysis (2011), www.incodeconsulting.com www.abiresearch.com/press/in-app-purchases-to-outpace- pay-per-download-reven6. Distimo (2011) “Distimo Releases Full Year 2011 Publication” 13. European Commission (2012) www.distimo.com/blog/2011_12_distimo-releases-full-year- Unleashing the Potential of Cloud Computing in Europe 2011-publication/ ec.europa.eu/information_society/activities/cloudcomputing/ docs/com/com_cloud.pdf7. KPCB (2011) “KPCB Top 10 Mobile Trends” 14. Ericsson, (2012) www.kpcb.com/insights/top-10-mobile-internet-trends “Traffic and Market report, On the pulse of the Networked Society” www.ericsson.com/res/docs/2012/traffic_and_market_report_ 8. O2 Survey, (2012) june_2012.pdf “Making calls has become fifth most frequent use for a Smart - phone for newly-networked generation of users” 15. Ericsson, (2012) news.o2.co.uk/?press-release=making-calls-has-become-fifth- “Maersk Line and Ericsson bring mobile connectivity to the oceans” most-frequent-use-for-a-smartphone-for-newly-networked-gen www.ericsson.com/news/1576938 eration-of-users9. Tomi Ahonen, (2012) www.communities-dominate.blogs.com/brands/ 284 24-0002 Uen, Rev A © Telefonaktiebolaget LM Ericsson 2012