Study: Voice Drives Profitability

11/25/2005 7:00 PM Eastern

Converged services could generate $1 trillion per year in sales by 2010, with voice-over-Internet protocol emerging as the most significant product development, according to a recent research study issued by Deloitte Touche Tohmatsu.

The study, The Trillion Dollar Challenge: Principles for Profitable Convergence, also predicts a surge in Internet-protocol based television services. It says IPTV will produce $55 billion a year by decade’s end, a revenue stream that will outperform video delivered via cell phone. Researchers estimate that mobile television will be a $50 billion business within five years.

According to the report, researchers see only niche interest in a “Swiss Army knife-like device that satisfies every possible need.” Upcoming services don’t need to be complex to be successful, it claimed — researchers noted that the use of cell phones was significantly enhanced when the ability to store numbers eased their use.

The report listed a number of principles for profitable convergence, based on past successes:

  • Customer needs, not technology, should drive revenues. Don’t let convergence become an engineer’s folly.

  • Commercial creativity will maximize the impact of convergence. For instance, phone companies added significant additional revenue to their bottom line when they were able to convince consumers to pay $1.99 for ring tones.

  • New products and services should mutually benefit the companies involved. If any one company dominates an area, there is little incentive for other players to join the sector.

  • Converged products can coexist with divergent ones. For example, converged online music services would not have succeeded without the popularity of a diverged product, the iPod.

  • Laggards will lose. Bold parties taking measured risks can excel, as demonstrated by Research In Motion, maker of the original BlackBerry.

  • Timing is everything. The study predicts that video-on-demand and IPTV will struggle over the short term, because there hasn’t been enough enabling technology deployed for their use.

  • The winners and losers will always change. The report reminds investors and developers that just a few years ago, VHS was the recording standard and has now been eclipsed by DVD technology.

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