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Digital convergence crucial, report says
Last Updated(Beijing Time):2006-02-15 10:42

Digital convergence has now become a reality, and companies who do not adapt to this trend face failure, according to a new report from Deloitte's Technology, Media and Telecommunications (TMT) industry practice.

The report, "Digital Convergence: The Trillion Dollar Challenge," asserts that digital convergence a trend in which devices like TVs and mobile phones merge into multi-purpose devices communicating via the Internet will create new product categories and new markets.

In some cases it will change the structure of existing industries, perhaps shifting the balance of power and altering the basis of competition.

"Convergence became a buzz word during the dotcom boom, but it didn't deliver," said Charles Yen, leader of Deloitte China's TMT Group.

"The concept (convergence) was based on future technologies, but with the expectation of immediate revenue, and companies didn't stop to consider and understand what customers actually wanted and needed."

Now, the report says, a wealth of convergence products and services are emerging, from online music to Internet Protocol (IP) appliances. Each of these offerings satisfies a real customer need and most are already generating real revenue and earnings.

Some of the most significant converged services are expected to be from Voice-over-IP (VoIP), which provides telephone services over the Internet, with industry analysts forecasting US$1 trillion in revenue by 2010 globally.

In addition, IP appliances, which will include next-generation digital music players, home entertainment services, home video phones and enterprise collaboration services, will also generate sizeable revenue.

Other emerging products and services expected to generate substantial revenues by 2010 include enterprise collaboration software, IP television, mobile phone content, networked games and online music, the report says.

"Businesses that leverage digital convergence as a competitive advantage have the potential to benefit greatly," Yen said.

"However, convergence will also have the power to obliterate business models in a relatively short time frame ... The extent to which convergence adds or destroys value is a direct function of the extent to which a company anticipates, plans for and takes the lead in convergence."

The report says that convergence is being driven by three underlying trends.

The first is proliferation of digital data, which provides a common base for handling diverse types of information numbers, words, music, pictures, video, and more using the same devices, processing techniques, and media.

The second is widespread connectivity, which helps bring diverse information together and extends the value and capabilities of a device beyond its out-of-the-box functionality.

The third is continuous advances in technology, from battery life to processor speed.

Source:China Daily 
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