winning
the game
ericsson discussion paper
Geoff Hollingworth, Ericsson North America,
Ericsson Evangelist, in collaborati...
This discussion paper is supported by an Augmented Reality app that visualizes graphics in 3D.
Download for iPhone
(Unfort...
Table of Contents
WINNING THE GAME 3
Introduction	...........................................................................
The first paper, “Changing the Game Before the Game ChangesYou,” attempted to place the
massive business changes we are cur...
setting
the stage
http://youtu.be/q-GY6TVttu0
WINNING THE GAME 5
Everything you assumed to be a
strength yesterday may become
a weakness tomorrow, and every-
thing you thought was a weakn...
33 42 51 64 75 86 97 106 113 118 121 122 121 117
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
160...
Noguarantees
Camera film was replaced by “Instagram”.
CDs were replaced by “iTunes”.
DVDs were replaced by “Netflix”.
Will...
There is a need to embrace the
fantastic as part of the imme-
diate future. Those who do will
find competitive advantages.
...
mobile+x = mobile
When anything becomes mobile it tends to disappear.
Music players, cameras, credit cards, videos, boardi...
The world is changing and the
pace of change is accelerating.
There will be an evolution from
industrial-driven transforma...
Speed of
Change
Ray Kurzweil [ref], a well-known inventor who has re-
ceived 17 honorary doctorate degrees, predicts that ...
apps the unit
of disruption
http://youtu.be/6ig01FCowzg
WINNING THE GAME 13
The unit of
disruption
Since the 19th century, there have been net-
work-driven units of disruption. The first was
the fix...
Applications and their data have to live on a platform.
Successful platforms all give something away for free,
they have t...
The mobile
internet
http://youtu.be/94FPVfmSh_4
WINNING THE GAME 16
moving COMPUTE
into the network
By 2017 there will be 5 times more mobile broadband subscriptions
than fixed ones, generat...
The European Commission’s new
strategy for “Unleashing the poten-
tial of cloud computing in Europe”
outlines actions to d...
COMPUTING
DATA
COMPUTING
MOBILE INTERNET
5x
The mobile
internet
By 2017 there will be five times more
mobile broadband sub...
moving
compute
http://youtu.be/JNnuGrvsVRg
WINNING THE GAME 20
moving COMPUTE
into the network
If the objective for mobile carriers is to deliver
a platform that is not just about netwo...
END TO END
GUARANTEED
http://youtu.be/125U-4jSVts
WINNING THE GAME 22
control the
performance
The opportunity is to take control of the digital logistics supply chain –
horizontally. Today, ve...
analogous
to shipping
“McLean’s true innovation was to un-
derstand that the core business of the
shipping industry was no...
shipping
analogy
http://youtu.be/zBmRTul4U7I
WINNING THE GAME 25
The digital supply chain business. Infrastructure as a platform; are
there parallels we can draw from other industries? Th...
“We’re proud to be able to connect Maersk
Line’s fleet with our technology. We believe in a
Networked Society where connec...
Machine
people
http://youtu.be/JzVEUCMUvek
WINNING THE GAME 28
Nature,
machine,
people
When compute moves into the network, data becomes
resident there too. And when the data becomes re...
IN SUMMARY
WINNING THE GAME 30
summary
video
http://youtu.be/Mkth-zqiKwg
WINNING THE GAME 31
THE THREE
THINGS TO
REMEMBER
Apps + Data
Apps are the unit of disruption
and they are merely lenses into
people’s data on ...
winning
the game
It is a paradigm shift,
Your mobile network is not access,
it is distributed compute.
To continue the dis...
The next paper in this series will focus on people and businesses that are embracing
the fantastic and are already prepari...
1.	Yankee Group, www.yankeegroup.com
2.	Pyramid Research, www.pyr.com
3.	Parks Associates, www.parksassociates.com
4.	Stra...
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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 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

  1. 1. winning the game ericsson discussion paper Geoff Hollingworth, Ericsson North America, Ericsson Evangelist, in collaboration with Jason Hoffman, Founder and CTO Joyent There will be more change in the next 10 years than there was in the previous 100.This paper describes the foundational changes and attempts to explain how we can manage them to our advantage1 . 1 The paper references various online thought-leadership articles and visuals, and links to the original material wherever possible. Please contact the author if any of these references need updating or removing. We hope we increase visibility for everyone.
  2. 2. This discussion paper is supported by an Augmented Reality app that visualizes graphics in 3D. Download for iPhone (Unfortunately this app is not yet available for Android) This discussion paper is supported by an Augmented Reality app that visualizes graphics in 3D. When you see an icon like the one below, the graphics can be visualized in 3D. Just start the ARWTG app* and point the camera at the target image. *Unfortunately this app is not yet available for Android Download for iPhone Download for iPad Download the ARWTG app for iPhone and iPad
  3. 3. Table of Contents WINNING THE GAME 3 Introduction ................................................................................... 4 Video: “Setting the stage” ............................................................. 5 Everything Changes ...................................................................... 6 No Guarantees .............................................................................. 8 Mobile +x = Mobile ....................................................................... 10 Speed of Change .......................................................................... 11 Video: “Apps The Unit of Disruption” ............................................. 13 The Unit of Disruption ................................................................... 14 Video: “The Mobile Internet” .......................................................... 16 Moving Compute Into The Network .............................................. 17 Europe Alone-More Cloud Computing ......................................... 18 The Mobile Internet ....................................................................... 19 Video: “Moving Compute” ............................................................. 20 Moving Compute Into The Network .............................................. 21 Video: “End to End Guaranteed” ................................................... 22 Control The Performance .............................................................. 23 Analogous to Shipping ................................................................. 24 Video: “Shipping Analogy” ............................................................. 25 Analogous to Shipping .................................................................. 26 Nature, Machine, People ............................................................... 27 Video: “Machine People”............................................................... 28 Nature, Machine, People .............................................................. 29 In Summary ................................................................................... 30 Video: “Summary Video” ............................................................... 31 The Three Things to Remember ..................................................... 32 Winning The Game ........................................................................ 33 What’s Next ................................................................................... 34
  4. 4. The first paper, “Changing the Game Before the Game ChangesYou,” attempted to place the massive business changes we are currently experiencing into a simple and understandable framework. This second paper in the series, “Winning the Game,” explains what conclusions can be drawn and what actions can be taken if these conclusions are to be believed Today, the leaders of major industries are be- ing challenged, seemingly overnight, power- less to control their own destiny despite their legacy, strength and footprint. Change is happening at an exponential rate and hu- mans are not naturally engineered to cope with such a rapid pace of change. Before the Industrial Revolution, technological change over a normal human life span of about 40 years was almost nonexistent. We now live in a world that is very different from what it was as recently as five years ago. This means the impact of the technical revo- lution starts to impact immediate business planning cycles. There is a need to embrace the fantastic as part of the immediate future. Those who do, will find competitive advan- tages. Those who do not will be challenged to maintain their status quo. The target audience of this paper is those who are involved in planning, building and profitably operating digital networks. In North America alone there is a predicted 80-billion dollar shortfall top line by 2020, even if the only goal is to maintain today’s 4.9% CAGR. Bottom line operational costs are also chal- lenged due to growing data demand versus limited associated revenue growth. This causes the need to re-invent the value proposition of the network in the future eco- system of the networked society. In the previ- ous revolutions, the network first powered the disruptive unit of the fixed phone, followed by the disruptive unit of the mobile phone. The next-generation disruptive unit to society is the application. The customer of the disrup- tive application unit is the mobile user, be that one of the 7 billion people on the planet, or one the estimated 50 billion devices that will be used in 2020. This paper introduces the concept of appli- cation and associated data generated from them. It introduces the powerful concept of com- bining next-generation networks with next- generation compute and the beneficial side effects of improved performance, security and transparency. Finally, it introduces the era of guaranteed end-to-end delivery and the associated new business models that this entails... Welcome to winning the game… introduction WINNING THE GAME 4
  5. 5. setting the stage http://youtu.be/q-GY6TVttu0 WINNING THE GAME 5
  6. 6. Everything you assumed to be a strength yesterday may become a weakness tomorrow, and every- thing you thought was a weakness today may potentially become a strength tomorrow. Everything changes WINNING THE GAME 6
  7. 7. 33 42 51 64 75 86 97 106 113 118 121 122 121 117 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 160 167 174 186 194 204 230 229 227 220 Forecasted Voice Revenue Forecasted Data Revenue Revenue at Continued 4,9% Growth Rate GAP 2007-2011 CAGR 4,9% 214 225 236 247 259 272 286 300 212 220 225 228 NA Operator Service Revenue Projections 2007-2020 ($B) (Projection based on “as-is” revenue sources – Voice, Messaging, Data) Everything changes For the first time since the Industrial Revolu- tion it is possible to distribute products and value digitally rather than physically. Once digital, they can then be further enhanced or even completely re-invented. It would be natural to believe that the digital network provider would reap the most benefits from such a transition. However, unless they also change, this may not be the case. The existing business model of selling phones to create future revenues generated by voice, SMS and roaming fees is becoming out- dated. Data subscriptions and revenues are growing but once the market is saturated, they will also decline. In North America alone it is predicted that there will be an 80-billion dollar top line gap by 2020 even with modest a 4.9% CAGR, whereas even simple mobile application revenues are expected grow at a 67% CAGR. Service providers must re-think their core business and refocus on the growing seg- ment of application delivery. Download Revenue Advertising Revenue In-App Purchases 3,2 4,7 12,2 5,3 6,7 13,4 8,7 9,5 14,6 0,7 1,4 6,0 2,2 0,4 8,6 2,8 23,2 29,3 36,4 2010 2011 2012 2013 2014 2015 9,9 2,9 1,7 CAGR 120% CAGR 89% CAGR 45% CAGR 67% 16,3 North American Mobile Applications Revenue (USD B) Source:Yankee Group, Pyramid Research, Parks Associates, Strategy Analytics, inCode Analysis 2011 Sources: Distimo 2011, KPCBTop 10 MobileTrends 2011,Yankee 2010, ABI 2010, Pyramid 2010, Gartner 2011, inCode Analysis. “While operators continue to make large infrastructure investments, others in the value chain are capturing most of the value”
  8. 8. Noguarantees Camera 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 and opportunity is opinion and attitude. The difference between winning and losing is the ability to execute on the fantastic. WINNING THE GAME 8
  9. 9. There is a need to embrace the fantastic as part of the imme- diate future. Those who do will find competitive advantages. Those who do not will struggle to maintain the status quo. Noguarantees WINNING THE GAME 9
  10. 10. mobile+x = mobile When anything becomes mobile it tends to disappear. Music players, cameras, credit cards, videos, boarding cards, tickets and much more. What happens when your core product disappears? % of smartphone users who no 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
  11. 11. The world is changing and the pace of change is accelerating. There will be an evolution from industrial-driven transformation to information-driven transformation. This will change individual busi- nesses and society as a whole. Speed of change WINNING THE GAME 11
  12. 12. Speed of Change Ray Kurzweil [ref], a well-known inventor who has re- ceived 17 honorary doctorate degrees, predicts that we will witness approximately 20,000 years’ worth of tech- nological advances in the next 100 (when compared to 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- based product for less money and in less time than it would have taken to simply launch the website for such a company in 1997.” According to Kurzweil, a $1,000 computer will have the computing power of the human brain by 2025. By 2045 it will have the equivalent computing power of the total human population. 1900 2000 20101920 1940 1960 1980 2020 2040 2060 2080 1060 1055 1050 1045 1040 1035 1030 1025 1020 1015 1010 105 1 10-5 10-10 Year CalculationsperSecondper$1,000 One Insect Brain One Mouse Brain One Human Brain All Human Brains Exponential Growth of Computing “Change will never be this slow ever again” HansVestberg, CEO Ericsson – at SIME, September 28, London WINNING THE GAME 12
  13. 13. apps the unit of disruption http://youtu.be/6ig01FCowzg WINNING THE GAME 13
  14. 14. The unit of disruption Since the 19th century, there have been net- work-driven units of disruption. The first was the fixed phone that went into all buildings and changed people and industries. Then the mobile phone went into the pockets of 6 billion people, again transforming their lives and the businesses they work for. Now the unit of disruption is the app. Whereas the first two units of network-driven disruption only focused on communication, the app focuses on everything. And if we look at consumer spending (analysis by VisionMobile [ref]), this provides an overview of not merely commu- nication spending (less than 10% of average household spending) but of everything else as well. According to ABI Research [ref], revenue from mobile apps stores could reach $46 billion by 2016 (revenue including paid downloads, in-app purchases, subscriptions, and advertising), up from $8.5 billion in 2011. Insurance & Pensions Healthcare Transportation Apparel & Services Housing Food Entertainment Other (incl. comms) 11% 6% 10% 6% 13% 34% 4% 16% Other (incl. comms) 10% WINNING THE GAME 14
  15. 15. Applications and their data have to live on a platform. 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. 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 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-line growth for any application provider. The infrastructure platform provides such performance. The end-user of an infrastructure platform of this type gets better quality of experience and longer battery life for their device. The question we have to ask is, How do we build the best network platform to enable the app to generate the most money both for the app and for the network. APP The unit of disruption APPS DATA PLATFORM FREE PAY INFRA- STRUCTURE PAID WINNING THE GAME 15
  16. 16. The mobile internet http://youtu.be/94FPVfmSh_4 WINNING THE GAME 16
  17. 17. moving COMPUTE into the network By 2017 there will be 5 times more mobile broadband subscriptions than fixed ones, generating a substantial increase in mobile access to applications as opposed to fixed line access. Why then do all applications reside in fixed broadband? Data centers? Change the game! WINNING THE GAME 17
  18. 18. The European Commission’s new strategy for “Unleashing the poten- tial of cloud computing in Europe” outlines actions to deliver a net 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 users get interoperability, data portability and reversibility; necessary stand- ards should be identified by 2013; support for EU-wide certification schemes for trustworthy cloud providers. Development of model ‘safe and fair’ contract terms for cloud computing contracts includ- ing Service Level Agreements [ref]. Europe Alone-More Cloud Computing This will mean: 2.5 million new European jobs an annual boost of EUR 160 billion to EU GDP (around 1%), by 2020 This will require: SLAs, certification, interoperability, data portability and reversibility WINNING THE GAME 18
  19. 19. COMPUTING DATA COMPUTING MOBILE INTERNET 5x The mobile internet 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. 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 other set of networks and these other networks are massive ones that are all between the core internet and the people and machines using it. The massive growth 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
  20. 20. moving compute http://youtu.be/JNnuGrvsVRg WINNING THE GAME 20
  21. 21. moving COMPUTE into the network If the objective for mobile carriers is to deliver a platform that is not just about network ser- vices but also about compute and data services combined with the network, what are the oppor- tunities? The objective is to provide application developers with the best prerequisites, enabling them to deliver the best end-user experience to their customers – both application developers and the mobile carriers’ customers. There is an opportunity is to move compute into the network. The challenge is how to do this considering the fact that up until now, mobile carriers have been very network service-centric, not compute-centric. This is why Ericsson has an ongoing dialogue with cloud computing experts like Joyent. It is advisable that all mobile carriers do the same, or contact Ericsson and Joyent to find out what we have already learned... WINNING THE GAME 21
  22. 22. END TO END GUARANTEED http://youtu.be/125U-4jSVts WINNING THE GAME 22
  23. 23. control the performance The opportunity is to take control of the digital logistics supply chain – horizontally. Today, very large companies are doing this through vertical integration. It is expensive, does not scale, time to market is slow, and it cannot leverage the unique assets that are intrinsic to the private mobile networks that are enabling the delivery. The infrastructure platform enables the mobile carrier to control a digital supply 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 new potential business models for carriers, such as indemnification. All businesses today are being compelled to embed both network and compute inside their core business operations but how do they know if this is working; who “has their back” if something goes wrong. If we can begin to answer those questions, we will have the opportunity to become a preferred business partner to that company. WINNING THE GAME 23
  24. 24. analogous to shipping “McLean’s true innovation was to un- derstand that the core business of the shipping industry was not operating ships but delivering cargo and doing so with the best performance possible.” WINNING THE GAME 24
  25. 25. shipping analogy http://youtu.be/zBmRTul4U7I WINNING THE GAME 25
  26. 26. The digital supply chain business. Infrastructure as a platform; are there parallels we can draw from other industries? The physical shipping industry is a good analogy and the digital networks overlay the exact same trade routes as those used in the Silk Road trading days. If ports are data centers, networks are shipping routes, and applications are the packages being transported, then we as a digi- tal industry are using the same methods as before the introduction of the shipping container in 1954: best effort, expensive, inefficient or unreliable. The shipping container enabled the global economy in the physical world. Building the same operational model to ship applications in the digital world will create the same economic transformation. We ship applications today but without any intelligence. Include intelligence!! analogous to shipping WINNING THE GAME 26
  27. 27. “We’re proud to be able to connect Maersk Line’s fleet with our technology. We believe in a Networked Society where connectivity will only be the starting point for new ways of innovating, collaborating and socializing. The result will be automated and simplified processes, higher pro- ductivity, real-time information allowing quicker, more informed decision making and problem solving,” said Hans Vestberg. [ref] Nature, machine, people WINNING THE GAME 27
  28. 28. Machine people http://youtu.be/JzVEUCMUvek WINNING THE GAME 28
  29. 29. Nature, machine, people When compute moves into the network, data becomes resident there too. And when the data becomes resident in the network, then the network can control access to the data for the benefit of its users, for the benefit of the net- work and for the benefit of the data’s’ owners. Facebook has disrupted Google’s ability crawl information since the data is hidden behind Facebook’s proprietary interface. Data in the mobile network can maintain open interfaces but the owners of such data can sleep at night knowing: Where the data is stored Its legal compliance Its visibility Its regulatory trust Data is valuable Use of data is priceless… WINNING THE GAME 29
  30. 30. IN SUMMARY WINNING THE GAME 30
  31. 31. summary video http://youtu.be/Mkth-zqiKwg WINNING THE GAME 31
  32. 32. THE THREE THINGS TO REMEMBER Apps + Data Apps are the unit of disruption and they are merely lenses into people’s data on the network.1 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.3 Compute + Network We need a truly holistic service delivery platform that is sitting there saying let’s run apps well.2 WINNING THE GAME 32
  33. 33. winning the game It is a paradigm shift, Your mobile network is not access, it is distributed compute. To continue the discussion... Contact Ericsson Contact Joyent Follow us on Twitter: @geoffworth @jasonh WINNING THE GAME 33
  34. 34. The next paper in this series will focus on people and businesses that are embracing the fantastic and are already preparing, planning and adapting to the paradigm shift ahead. 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 of the Networked Society. Please send your feedback, thoughts and ideas to geoff.hollingworth@ericsson.com for a chance to be featured in the next paper in this series. What’s Next WINNING THE GAME 34
  35. 35. 1. Yankee Group, www.yankeegroup.com 2. Pyramid Research, www.pyr.com 3. Parks Associates, www.parksassociates.com 4. Strategy Analytics, www.strategyanalytics.com 5. inCode Analysis (2011), www.incodeconsulting.com 6. Distimo (2011) “Distimo Releases FullYear 2011 Publication” www.distimo.com/blog/2011_12_distimo-releases-full-year- 2011-publication/ 7. KPCB (2011) “KPCB Top 10 Mobile Trends” www.kpcb.com/insights/top-10-mobile-internet-trends 8. O2 Survey, (2012) “Making calls has become fifth most frequent use for a Smart - phone for newly-networked generation of users” news.o2.co.uk/?press-release=making-calls-has-become-fifth- most-frequent-use-for-a-smartphone-for-newly-networked-gen eration-of-users 9. Tomi Ahonen, (2012) www.communities-dominate.blogs.com/brands/ 10. Kurzweil, R., www.kurzweilai.net 11. VisionMobile (2012) www.visionmobile.com 12. ABIresearch (2012) “In-App Purchases to Outpace Pay-Per-Download Revenues in 2012” www.abiresearch.com/press/in-app-purchases-to-outpace- pay-per-download-reven 13. European Commission (2012) Unleashing the Potential of Cloud Computing in Europe ec.europa.eu/information_society/activities/cloudcomputing/ docs/com/com_cloud.pdf 14. Ericsson, (2012) “Traffic and Market report, On the pulse of the Networked Society” www.ericsson.com/res/docs/2012/traffic_and_market_report_ june_2012.pdf 15. Ericsson, (2012) “Maersk Line and Ericsson bring mobile connectivity to the oceans” www.ericsson.com/news/1576938 references 284 24-0002 Uen, Rev A © Telefonaktiebolaget LM Ericsson 2012

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