This is sent from the Economist Intelligence Unit London press office.
For immediate release: Monday, January 28th 2008
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Joanne McKenna, Press Liaison: +44 (0)20 7576 8188 joannemckenna@eiu.com
PRESS RELEASE
Device convergence must be made simple
New report from the Economist Intelligence Unit, based on in-depth interviews with senior executives, explores how convergence is changing the consumer electronics industry
Consumer electronics firms are struggling with shrinking margins and fierce competition from developing markets, despite consumers having spent US$600bn on electrical gadgets globally last year . A new report by the Economist Intelligence Unit suggests that digital convergence could provide a lifeline for these firms-if approached in the right manner.
Although the modern home is bulging with digital gadgets, few of them are connected in a way that is useful. So far, convergence has been about cramming ever more functionality onto a single device. Where connectivity exists, it is often complex or lacks utility. The report suggests that consumer electronics firms should focus on delivering products that are simple, functional and interconnected.
However, digital convergence also presents challenges to the industry.
The boundaries between consumer electronics, media, entertainment, software and telecoms firms will continue to erode. Consumer electronics firms may find themselves competing with unexpected rivals. The firms that will survive and prosper through this difficult transition will have several characteristics. They will be good at spotting opportunities and moving quickly to market. Speed is of the essence in the convergence game, as is collaboration. Companies have to be open-minded about potential new revenue streams, even if it means collaborating with erstwhile competitors.
“The potential for digital convergence is still largely untapped,” says Clint Witchalls, a Senior Editor at the Economist Intelligence Unit.
“But companies need to focus on consumer needs, not just bright ideas in the R&D lab.”
These findings are published today in Consumer electronics gets ready for change: How convergence will drive new business models, a report from the Economist Intelligence Unit.
Other key findings of the report include the following:
● Convergence is getting easier and cheaper, but it is not all
plain sailing. Advances in technology mean that many of the drawbacks that have hindered converged devices in the past are now disappearing.
The falling cost of digital technology makes it feasible for the first time to build multi-functional devices for a mass market. Nevertheless, the commercial payback for some convergence offerings remains elusive.
● Intellectual property rights and standards battles will continue
to characterise the industry. As well as spawning new devices, convergence is happening at the service and application level, leading to new entrants. In this new world order, intellectual property rights count for more than manufacturing might, and legal battles over intellectual property rights are common.
● Business models will get more innovative. Technology will
continue to evolve at a dazzling pace, creating new challenges in areas like inter-operability and user interfaces. New business models will need to emerge to cope with the complex technical and commercial challenges that convergence throws up.
Consumer electronics gets ready for change: How convergence will drive new business models is available free of charge at:
www.eiu.com/sponsor/qualcomm/convergence
Press enquiries:
Economist Intelligence Unit
Joanne McKenna, Press Liaison, +44 (0)20 7576 8188, joannemckenna@eiu.com Clint Witchalls, Senior Editor, +44 (0)20 7576 8243, clintwitchalls@eiu.com
About the Economist Intelligence Unit
The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of about 650 analysts, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world’s leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.
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