Are your ready for convergence? - convergence of computing, telephony and entertainment - includes profiles of roundtable participants and related article on the CEOs of the future - CE Roundtable - Panel Discussion

Chief Executive, The,  April, 1996  by J.P. Donlon,  Christine Perey

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As computing, telephony, and entertainment converge, technology is outrunning marketplace economics. This soon will change. CE gathered chief executives from within as well as on the sidelines of the convergence revolution to identify market opportunities - and discover how to seize them.

The convergence of computing, telephony, and, indeed, all digital forms of communications and entertainment is finally at hand. This is the result of a confluence of independent, but related, developments - the most noteworthy of which is that the Internet, the collection of some 50,000 computer networks in 90 countries, has reached critical mass.

But the Internet revolution was preceded by earlier Evolutions; such as the overthrow of mainframe dominance by personal computers, which today number about 300 million worldwide.Observers claim we are on the verge of another quantum leap.Now, the hegemony of the desktop PC is about to be overthrown by cheap, so-called "dumb" terminals connected to the Internet that will use simple languages such as Sun Microsystems' Java. Thus, the Internet becomes the computer, and the terminal becomes as user-friendly as a phone. Add to this digital cocktail the integration of faxes and telephones with entertainment.

The Internet, and its best-known subset, the World Wide Web, is a network of networks with 65 million users worldwide, growing by 1.5 million a month. No wonder its emergence raises fascinating possibilities about radical new businesses and the companies that may inhabit them. Even before Congress deregulated telecommunications last February, the worlds of telephones, computers, and media already were colliding. Distributors and content providers were jumping into one another's laps to see who might control the pipe through which most of the interactive digital activity would be transmitted.

In theory, phone, fax, cable TV, and interactive communications can be handled by one fiber-optic pipe and offered by a single supplier - from the cable TV provider to even the electric company.

Participants in the following CE roundtable, held in partnership with Deloitte & Touche LLP, wrestled with the question, "What are the economics of the convergence marketplace?" So far, the only companies making money are a few access providers and those vendors whose Web page is used as a cyberspace Yellow Pages listing. For what will this brave new medium be used, and how much will consumers and business users be willing to pay for the services they will get?

No one questions technology's ability to shape social and economic structures and, in the process, create entirely new industries. But sorting out myth and mania from reality is a challenge. George Gilder, social philosopher and cyberspace author, has argued that the current digital revolution will lead to an "Internet PC" that will usurp telephones, TVs, and PCs. Others are not so sure. As the CEOs participating in the following discussion attest (nearly 40 percent have logged on to the Internet at least once), accessing it can be an ordeal. One doesn't "surf" the Net so much as crawl through it, sometimes with endless delays, disconnects, and server errors. Nor is it certain that distribution channel operators have a clear advantage over content providers. It is interesting to note that during the early days of broadcast, Hollywood studio chiefs saw television as a rival and reviled it.

A number of predictions were made about the future impact of the current digital revolution during the recent meeting of the World Economic Forum in Davos, Switzerland. Nicholas Negroponte, director of MIT's Media Lab, called the digital revolution "a 10.5 on the Richter scale of social change."

John Perry Barlow, vice chairman of Electronic Frontier Foundation, which promotes freedom of expression in digital media, sees cyberspace as "anti-sovereign in the same way the seas are." He said the creation of an information superhighway ultimately will undermine the nation-state.

Michael Bloomberg, CEO of Bloomberg News, is more skeptical. "After 20 years of electronic technology, we still buy newspapers, send letters, use the telephone, and produce paper in the office," he said.

Paul Saffo, president of the Institute of the Future, was asked whether he thought the information superhighway was simply hype. "Hype is an essential part of the innovation process," he said. He predicted that by 1997, cheap Internet links would be available, usable by anyone who could master a VCR. They may cost $1,000 to build, he said, but would sell for $500, because providers would make money on contracts for Internet access. He cautioned that they probably had no better than a 51 percent chance of taking off immediately. It's possible, however, that these terminals could be the 1990s' version of CB radios, which experienced an initial burst of market favor and disappeared almost without a trace five years later. Most observers, however, reckon that the Internet, or some version of it, is here to stay, whatever its short-term problems.