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Technology Convergence Makes a Comeback in 2006

February 27, 2006

HONG KONG — Convergence — a catch phrase during the dot-com boom that became the butt of jokes in the ensuing crash — is making a comeback in the new era of cutting-edge gadgets and communications.

Advances in miniaturization have yielded a bumper crop of newfangled multipurpose gadgets in the last two years, ranging from game consoles that can be used as photo viewers to cellphones that double as cameras and music players.

At the same time, developments in high-speed communications are allowing providers of traditional services like cable TV, Internet and phone services to move beyond their realms to products like video on demand and music and video downloads.

As the lines between product offerings become blurred, a looming high-tech identity crisis is creating rivals out of companies that once considered themselves to be in separate industries.

Telecoms operators believe they have a shot at being TV companies, while cable companies are selling Internet and mobile services, and handset makers are getting into music players and cameras.

While traditional tech and telecom firms fight it out, Internet companies like Google, Microsoft MSN and Yahoo are building up powerful brand names to leverage in the future, both on and off the Web.

Mobile phones have one of the hottest areas for convergence in the gadget space, with manufacturers adopting a “Swiss Army Knife” approach by packing in as many functions as possible, said Aloysius Choong, an analyst at International Data Corp.

“Convergence has been happening in mobile phones for the longest time,” he said. “First it was voice, then SMS, then it became your alarm clock, your camera. These days it’s become a bit of your TV as well and MP3 player.”

CONVERGENCE ON DISPLAY

Signs of convergence are on display the world over, spanning the semiconductor industry in Asia, where the hearts and memories of many devices are made, to cutting-edge telecoms development from Europe to the thriving U.S. Internet community experimenting with new products and services.

Many of the major players, from Asian contract chipmakers to European consumer electronics giant Thomson to U.S. media powerhouses, will detail their strategies at the Reuters Global Technology, Media and Telecoms Summit taking place this week in Hong Kong, Paris and New York

During the U.S. leg of the summit, top executives from Viacom Inc. and Time Warner will address opportunities for media companies, while Internet players Yahoo Inc. and Google Inc. will lay out plans to move beyond the PC.

Senior executives from Qualcomm Inc., Lucent Technologies, Cisco Systems, EMC Corp., Electronic Data Systems Corp. and Sprint Nextel will also lay out their strategies in an era when product and service lines start to blur.

The any time, anywhere demand for technology services, content and communications is expected to force every player in these industries to adapt or risk being left behind.

Other topics that may have affect the success or failure of convergence are piracy, politics and regulation, privacy concerns and anti-trust measures, all of which will be discussed at the summit.

In Paris, the CEO of Liberty Global, Europe’s top cable operator, the European president of Microsoft and the retail business head of British telecoms operator BT Group (BT.L) will cross swords.

And in Asia, chipmakers like Chartered Semiconductor, Elpida and Samsung Electronics will talk about the challenges they face from wannabes trying to cash in on the latest chip trends, and the wild gyrations their markets often face.

A new generation of Chinese powerhouses, including Huawei Technologies and TCL Corp. will also get in its two cents, detailing the latest products that combine multifunctional products with low-cost advantages.

IDC’s Choong said the convergence between industries is creating a new generation of bedfellows, not only among companies but among the people who follow and work with them.

“Convergence means you can’t just have isolated silos and work on your own,” he said.

(Additional reporting by Lucas van Grinsven in Amsterdam and Daisuke Wakabayshi in New York)




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