Now that we have the iPad (notwithstanding its flaws), will eBook readers die? What is the future of Blu-Ray players as TVs converge with the Internet? Will the Flip die now that we have video cameras built into iPod Nanos? Will handheld GPS devices seem quaint when every smartphone has built-in GPS functionality? Is there a future for a dedicated TiVo devices? A common theme in all these questions is – do dedicated devices eventually die because devices converge? Do devices converge as technology advances? Looking back at history, we see examples of convergence as well as examples of dedicated devices persisting. The PC is the ultimate convergent device, and many a dedicated device (word processors, fax machines, NCs – Network Computers, etc.) have been sucked inexorably into the pull of the “do it all” PC device. Even at the software level, Microsoft Office is a convergent suite that sucked up dedicated functionality from WordPerfect, Dbase and Lotus into one package. Yet, dedicated gaming consoles have been able to resist the forces of convergence. And the TV-VCR combo didn’t catch on either. What gives?
My take is that, like all questions in marketing and strategy, the right answer is – it depends! I believe that convergence (and the consequent death of dedicated devices) is a function of several contingent factors. So, rather than taking one side or another of this debate, I would like to reflect on som principles that will help predict whether we will see convergence win out in a specific context. So here are some assertions:
The more mature the underlying technologies, the more convergence is favored.
The wider the disparity among the converging functionalities, the less likelihood that convergence wins.
The greater the value of “converged scenarios”, the more the likelihood that convergence wins.
The more the cost of a dedicated device, the more the likelihood that convergence wins
The stronger the externalities of dedicated devices, the lesser the likelihood that convergence wins
Let’s look at these principles in turn, with some examples.
When technologies are immature, it is difficult enough to do one thing well. It is virtually impossible to do multiple things well. Consider the Apple Newton. Handwriting recognition, display, battery and processor technologies were all relatively immature in the ealry 90s, when the Newton was created. In fact, a whole slew of PDAs (Motorola Envoy, AT&T EO, Bell-South Simon and so on) failed because the devices simply could not do everything acceptably well. But now, the data-voice convergence is virtually seamless (smartphones). And data-voice-media is also quite easy to do (iPhone/Nexus One). As a corollary, if you are trying to combine apples, oranges and broccoli, it is difficult to create a convergent device that does very different things well. If the form factor for the different dedicated devices are very different (does a camera look like a phone or does a phone look like a PC keyboard?), it is more difficult to create an acceptable convergent device. If ”jack of all trades” functionality is acceptable, then convergence wins. But if you need very specific functionality for a dedicated device, as gaming consoles offer, then dedicated devices persist. Hence, I believe that Digital SLR cameras will sustain as a dedicated device, but the Flip is more vulnerable.
Sometimes, convergence creates new scenarios – you can do things with convergent devices that you simply could not do (elegantly) with multiple dedicated devices. I still am amazed how I can Google a business and click to call the number on my smartphone. And how I can take a picture and upload it instantly onto my Facebook account using my smartphone. These are “convergent scenarios” - new possibilities that convergence opens up. But bundling a VCR with a TV does nothing new – one plus one is two, not eleven in this case. So the more the possibility of valuable convergent scenarios, the more likely that convergence wins. So, watch out, Tivo!
If dedicated devices are expensive, then the value of a convergent device (or product) that offers a better deal overall will be greater. That’s how Microsoft Office destroyed the competition in office applications. It was not only expensive to buy all these dedicated applications, you had to learn each application separately and you could not integrate them easily.
Finally, one of the reasons gaming consoles will persist despite advances in PC and TV technology is that people have a lot invested in the software, and this software is not portable across platforms. The same thing is true for the Amazon Kindle – you can’t move the books over (or at least Amazon won’t make it easy to!).
So these are some principles that might help you figure which way the cookie will crumble.
