Convergence: Dead or Alive?

Feb 1, 2002 12:00 PM, Peter Bernstein

I tried to reach all of you. Unfortunately, I don't have your email addresses. The reason was because on January 30th, Mary Henry--chief telecommunications analyst for Goldman Sachs, perennial Institutional Investor All-Star and certainly one of the most influential individuals on Wall Street--and I were on a webcast hosted and moderated by NET.com. The topic was, "Convergence: Dead or Alive?" I defended the dead proposition, while Mary defended live.

Like any great movie you have not seen, I will not give away the ending and spoil it for you. I also do not wish to put words in Mary's mouth. Fortunately, every gem from this historic confrontation has been preserved and can be accessed at: www.net.com. Since webcasts don't have the reach of this column, and since most people thought defending the dead proposition was an invitation to disaster, I thought you'd enjoy some highlights from my opening remarks. 

Peter Bernstein's opening remarks

Albert Einstein once said that all things that can be counted matter, but all things that matter can't be counted. We spend a lot of time counting instances of convergence. Reality is they don't matter.  It is not worth trying to define "convergence." It needs to be expunged from the IT vocabulary.

Right now, convergence is a vaguely articulated vision of our stalled march toward "E"topia. Everyone knows convergence when they see it, but nobody can define it. Hence, it has no value for describing marketplaces. It also has no value in keeping vendor scores in the equipment or services businesses. Companies whose marketing proclaims leadership in things like "practical," "new world" or "real world" convergence (names withheld to protect the misguided), completely, globally and really don't get it.

Is the world becoming more network-centric? Yes! In fact, increasingly sustainable value will be created, and winners and losers determined at the intersection of the physical and virtual worlds. This is also where ubiquitous computing meets continuous communications at an interface I like to call the Virtual ME (V.ME).

Will the world need secure, seamless multiple media information interchange over heterogeneous broader band networks? Yes! The sooner the better--a wavelength for everyone. Ours remains one of the potentially great growth markets in history. Is this convergence? No! 

The dictionary definition of convergence mentions creation of something new from the melding of two or more discreet things. What is really new about putting voice over packet over a shared medium? We've been doing this for more than a decade. Where are the new applications? This is merely "E"volution--grossly misnamed. Speed is not an application. We children of the1960s know that "speed kills." Moving at the speed of light with no direction is an invitation to get caught in a tractor beam and blown up by the Death Star (if I may converge Star Trek with Star Wars).

There are no VPs of convergence in any enterprise or service provider organization anywhere in the world. Look in the Yellow Pages. Is convergence listed? Can you buy 10 gigaflops of convergence, or 1000 hours of convergence? This is why IT needs to expunge the word.

This is more than semantics. Marketing is crucial for success. Thus, language is important. We are stuck today in large part because in the history of IT there has never been a bigger discontinuity between what vendors say they are selling and what buyers say they want, and are willing, to buy. This from an industry that, on its best days, is severely marketing-challenged.

History is repeating itself. This "E"volution is almost identical to the migration from analog to digital. In two years, it will be impossible to purchase a new anything for either enterprise or service provider use that is circuit-switched. "E"volution will happen based on buyers' calibrations of perceived value. It will happen when buyers deem it prudent for sound business reasons (competitive, economic, regulatory, etc.) to make investments. The days of force-feeding the market with incremental value at excremental cost are over. It will happen much slower than everyone wants or says. However, it will happen because it is inevitable, and the right thing to do. The biggest revolution we have gone through is that for the rest of our professional lives, the buyer really is the boss.

The IT sector is doing itself a massive disservice by doggedly sticking to the belief that the technology is the sustainable value being delivered. This from the people whose mantra has been, "make change your friend." The world going forward is about the creation and enhancement of how individuals and organizations "E"xperience things in the online world.  It is all about having trusted experiences/relationships, as provided by trustworthy vendors, first. "E"verything else comes second. Bill Gates had a divine revelation two weeks ago. Nobody other than an "E"lectrician"/E"plumber cares if voice comes through a widget A-based network, data through a widget B-based network, video through a widget C-based network, or comes all on one network. Nobody cares if it came by wire or through the air.

What we care about is that we have what we want, the way we want it, how we want and need it, everywhere, every time, all the time--securely, privately (when appropriate and/or required), easily and at great price performance. We care that it does our bidding according to our rules and policies interacting with the rest of the world. Synchronization is virtual convergence, but only the manufactures of pipes, faucets, outlets, wires, etc., and maintenance men, care or should care. 

The world is not about "where I want to go today," "what I want the high-performance Internet to be," or whether I am "ready." It is about, can we get there securely, will we have a compelling/valuable and safe experience when we arrive, and have we accommodated the needs of those who have targeted us as their destination. It is about relationships and solving the crisis in responsiveness we've created with too many "E"things.

We are living through a value revolution enabled by an acceleration in technology and not vice versa. Convergence is "old world" thinking. It puts technology and not value first. Convergence is dying. Let's finish it off. May it rest in peace.

Convergence is dead in the enterprise because:

1. There are no compelling reasons to flash cut in new technology, especially when that technology will be used to carry the most mission-critical application, voice, all the time, every time. The business case for flash cuts, because of the customization work, makes positive ROI and TCO problematic.

2. CXOs have bigger fish to fry--security, network extensibility (e.g., wireless integration), business continuity and survival, etc. Enterprises need more broadband, but the events of 9/11 have made them realize that putting all traffic types on a single "converged" infrastructure may be counterproductive.  Using a media and protocol agnostic diverse broadband infrastructure to allow various traffic types to be seamlessly carried on other facilities usually dedicated for other types of traffic, and the ability to do this in real time and manage it, will be important.  The key is dynamic best performance routing.

Convergence is dead for service providers because:

1. In the residential, SOHO and SME markets, the ability to provide voice over XSL destroys the cash cows of the ILECs. Give me an always-on connection and an IP phone, and goodbye Intralata Toll. Goodbye, all metered voice services. Possibly goodbye all voice services.  This is why the DLECs and CLECs had to be defeated. ILECS hate convergence.

2. Again in the residential, SOHO and SME markets, Voice over cable modem has not been a threat. It may actually become one this year. Aha! Convergence!! No, just packetized transport of voice, something that has actually been around for well over a decade. Goodbye T-1 service.

3. In the serving the enterprise space, IP and ATM over optical is inevitable. Depending on your favorite technology zealot, the world is going to be about Gig E and IP over 3G as well. Will this result in new "coverged" services? Only if one believes that slicing and dicing speeds and feeds on an as-needed basis is a paradigm shift. This is merely the connectivity for emerging content area and storage area networks. Again the true "new services" agenda is yet to be articulated. It is doubtful it will come from the incumbents.

4. The world going forward is about the three "As"--authenticate, authorize and administrate.  It is serving as gatekeeper/gateway for our identities and locations. The ILECs are not even part of these discussions. Cisco and Microsoft are poised to become mortal enemies. The Liberty Alliance battle with Passport and the FINREAD initiative in Europe are the most important things to understand in terms of next-generation value creation because they are at the foundation of what will be trusted services. It all begins with trust. You can't trust people who believe it is all about convergence.

I'm with President Bush, dead is preferable.

Peter Bernstein is President of Infonautics Consulting, Inc. He can be reached at pabernstein@worldnet.att.net.