Pixar and Disney join forces

This was the most important announcement of the week and it has the potential to dramatically impact the way digital content is created, distributed and consumed. Media companies have always been wary about Internet/Network-based delivery of content because of piracy. According to MPAA between 400,000 and 600,000 movies are illegally downloaded each day compared to the 1.2B pirate CDs sold and 76M counterfeit DVDs seized last year. The January deal has the potential to take the market into a new direction.

Steve Jobs will undoubtedly bring a great understanding of technology and consumer design to Disney's board. How is he going to influence Disney's overall media content delivery is anyone's guess. Based on Jobs' track record, the following could happen:
Full end-to-end proprietary delivery of Disney and Pixar content through iTunes portal using QuickTime/AAC format and FairPlay's digital rights management on a limited list of compatible portable players (iPod and other
Apple devices only). Last year, Disney announced plans for a mobile virtual network operator (MVNO). No doubt, the media giant will brand a few cell phone services with preferred access to Disney's (ABC,ESPN, Pixar) content, turning the wireless (and broadband) carriers into more bit pipe providers, cornering even more revenues in the process. Apple could embed a GSM or CDMA chip (with EDGE support) into the iPod to address what the ROKR totally missed: instant music gratification (who wants to store only 100 songs on a phone and be wired to download new ones?). Sounds good from a shareholder point of view? Short term: yes, but take a look at the results of this approach with the Macintosh and Apple II's marketshares. Consumer device manufacturers and other media companies will certainly respond to the threat by creating new open standards.

As a different approach, Apple could license (new revenue source) its DRM technology for use on copy-protected CDs and DVDs, and broaden the content to be shared on their devices and others'.

NBC just signed a deal with Apple to sell downloads of some of its TV shows on iTunes. It's $0.99 with cable on demand versus $1.99 on iTunes but you get to keep the program on your player (8 million videos have been sold on iTunes since the launch late last year).
Apple could go further and open source iTunes and DRM to create a community of content providers, device manufacturers, and service providers that would significantly increase the total market for media download by providing interoperability across the whole value chain. The only drawback: Apple/Disney need to continuously stay on the innovation edge and provide the best consumer device and content :-).

Last August, Sun announced the Open Media Common initiative to develop open, royalty-free digital rights management solutions and promote the creation, duplication and distribution of digital content while making sure that creators and owners get compensated. Drive participation in the network to increase revenue. The convergence of media and telecoms over a single IP network represents the most fascinating transformation and largest opportunity for this industry. Proprietary will not work.

Rwanda and the participation age

Fundamental disruptions are occurring because we are all connected to one another; last month John Gage introduced me to Greg Wyler and I got first hand examples of what these disruptions meant in Rwanda. Greg just acquired the state-owned Rwandatel in a privatization transaction. His vision is universal, cheap IP access to achieve the highest teledensity in the next 5 years to support economic development. Today's wireless rates in the region (Tanzania, Kenya, Uganda, Rwanda) are over $.20/min, too expensive for Rwanda where 50% of the 25,000 subs can only use their cell phone to literally "ring" each other. Terracom (the new company name) is laying optical fiber (btw people dig out copper, but not fiber unless they can invest in a $15K termination point) throughout the country to reach 2,500 schools.
The entrepreneur, turned telco CEO, wants to connect students to the network but power consumption is a critical factor (both access and cost) for the client. Greg also said that viruses have a much bigger impact in a country like Rwanda than anyone here can imagine. We discussed ultra thin client Sun Ray technologies that have been successfully deployed in schools, reviewed power consumption, different form factors, VoIP integration, and developer communities.
It is fascinating to see how technology brought to an internet-starved place by a passionate individual can positively impact people's life. A sustainable economic growth in a knowledge-based society is what will draw Rwanda into the participation age.

The participation age and telecom

I get a lot of questions about the participation age and what it really means for the telco industry. At the last 3GSM conference in Cannes, I had the opportunity to keynote for Sun (Sun at 3GSM 2006 in Barcelona). My subject was: The innovation will come from outside of your network, and there are several technologies that are key to profit from it. What I shared with the attendees is the following: the time for telcos to develop their own services in their network is over, and because voice services (and data services for that matter)are quickly becoming commodities, they need to look outside of their traditional business models to bring new revenues. ATT just announced declines of over 20% in consumer and 12% in business revenues for long distance.
Carriers need to find the new SMS-on-steroid-like IP-based applications that will generate the next growth wave, or else see their revenues continue to decline. These new applications (or innovation) will come from outside of their networks. That's the idea behind the participation age: harness the millions of developers to work on creating value for your network, bring the new media content to your subscribers' handsets, or integrate the enterprise applications into the rest of the communication systems. Communications service providers need to extract greater value from customers who increasingly will access multiple communications, IT and entertainment services from multiple providers across multiple IP-based networks. You may call it web 2.0, or internet.next(), the idea is the same, and telcos (convergent service providers) will make it a reality.
One key enabling technology that is paramount in this participation age is Java. Java created an environment that facilitated growth in application development, by enabling the communities of developers who took open development platform to heart. Business applications, information gateways, and massively scalable network games, which simply didn't exist before the widespread adoption of Java, are now in common use.

First steps in the Blogosphere

I've been debating for a few months on the value of blogging about my industry and whether or not I should jump into the big pond. So here I am now, writing my first blog...
I'm the director of industry marketing for the telecommunication group at Sun (bio). This industry is at a critical crossroad and will be instrumental in accelerating the next wave of innovation. Don't take my word for it, but read my blog and you'll see why.
We have entered the participation age, telecommunication is one of the industries that will benefit the most from it. What better media than a blog to share this vision with my "community" ?
In this blog I'll discuss trends and challenges in telecom (OSS/BSS, VoIP, IMS, Wireless, FMC), how telcos can benefit from it, and how Sun is driving some of the initiatives behind it.