Consider Divergence

July 15, 2005

Al’s article on Divergence appeared in the Financial Times on June 27th. The text is not available online so I thought I would post the entire article. The day will come when the convergence bubble will burst. You would think the recent unbelieveable success of the iPod would encourage people to take a look at divergence. But the craziness continues as they try things like iPod Photo (another recent loser.)

Consider divergence. Financial Times, June 27, 2005.

               Convergence is an example of chaos theory in action.

                The flap of a butterfly’s wing in the Bahamas could eventually cause a tornado off the coast of Taiwan. Or so the theory goes.

                Chaos theory does ring true in the media. One story leads to another and pretty soon you have a full-blown tornado. On September 15, 1992, a butterfly named John Sculley flapped his wings in The New York Times: “John Sculley, chairman of Apple, has been preaching about a post-industrial promised land where four giant industries (computers, consumer electronics, communications and information) will converge.”

                “Mr. Sculley describes an emerging industry that he says will be a $3.5 trillion business within a decade. It will, he says, be more than half as large as the combined economies of the United States, Canada and Mexico are today.”

                Well, the decade has come and gone and the four giant industries have not converged and the $3.5 trillion business is nowhere in sight and John Sculley is no longer with Apple, but the concept of convergence is alive and well and running rampant around the world. Every major player in the high-tech field has jumped on the convergence bandwagon.

                “Put a mark on your calendars, 2005 is the year Sony will fulfill its digital promise by creating a formula that melds electronics, video game entertainment, movies, music and other forms of entertainment, and become more networked and converged than ever before.” Sir Howard Stringer, CEO, Sony.

                “At Intel, computing and communications will be indistinguishable. We will be a true convergence company.” Paul Otellini, CEO, Intel.

                “The whole new ballgame is these worlds (computing and consumer electronics) converging, and that’s a world we’re comfortable in.” Michael Dell, chairman, Dell.

                “The phone and the PC are coming together.” Bill Gates, chairman, Microsoft.

                With the world’s largest consumer electronics company, the world’s largest semiconductor company, the world’s largest personal computer company and the world’s largest software company solidly behind the convergence concept, who could doubt that one day it will all happen?

                With the philosophical support of a dead poet, I could, that’s who. “The best of prophets of the future,” wrote Lord Byron, “is the past.”

                Has convergence ever happened in the past? Not really.

                When the airplane was first introduced, many experts predicted that it would converge with the automobile. (The Wright brothers first flew in 1903. The first flying car story appeared in 1906.)

                As recently as September 26, 2004, The New York Times Magazine ran a four-page story on flying cars. “The age of the flying car may arrive sooner than you think,” said the publication. (How long do we have to have to wait?)

                When television was first introduced, many experts predicted that people would get their newspapers delivered through their TV sets. It never happened.

                When the Internet was first introduced, many experts predicted it would converge with television. Interactive TV became the battlecry. In 1997, Microsoft bought WebTV Networks for $425 million and has since poured more than half a billion dollars into the venture. Results have been dismal.

               Microsoft’s next convergence attempt was the “media center PC.” Watch television, play music, play video and show pictures, all controlled from the homeowner’s personal computer equipped with Microsoft software. So far, the media center PC is a non-starter.

                Microsoft, of course, is a major player in smart phones, the latest and greatest convergence fad. Global shipments in the first quarter of this year were some 10 million units. That may sound like a lot, but keep in mind that worldwide cellphone sales during the same quarter were 180 million. As a percentage of the market, smart phone sales are less than 6 percent.

                As a percentage of the media coverage, however, smart phone hype is something like 99 percent. “Everyone seems to agree,” reported the Economist on August 12, 2000, “that the mobile phone will quickly overtake the personal computer as the means by which most people gain access to online services.”     

                It hasn’t happened yet and it never will. Sure, some people will buy smart phones. Some people will buy anything. But most people prefer divergence devices, not convergence devices.

                The convergence crowd likes to point to the camera phone as proof that electronic products will converge. And it’s true that whenever convenience is a major issue, you’ll find some examples of convergence.

                Does a camera phone take better pictures than a digital camera? No, but it’s a convenient way to take a picture and then email it to someone.

               Currently the hottest consumer electronics product is Apple’s iPod, a classic divergence device. Expected sales this year: 22 million units.

                Will a combination smart phone/MP3 player replace the iPod? Don’t be ridiculous. Combination devices invariably end up as niche, not mainstream products

                The MP3 player demonstrates the natural course of technology. First there were flash-memory MP3 players like the Diamond Rio. Then hard-drive MP3 players like the iPod.

                What started as one category (MP3 player) is now two. (Flash-memory and hard-drive MP3 players.) That’s the way a technology evolves.

                Take the videogame player. It didn’t converge with television (although a videogame player without a TV set is useless.) It diverged. And now you have a new category called portable videogame player. (75 million Game Boys have been sold in America alone.) Next up, the dual-screen portable videogame player, the Nintendo DS.

               Divergence is a law of nature. In his book The Origin of Species, Charles Darwin credits divergence for the millions of species that populate the earth, like the branches of a tree that diverge from a single trunk.       

               Darwin’s genius was in recognizing that species like cats and dogs might have a common ancestor, but that they had “branched off” or diverged in response to environmental changes.

                What happens in nature happens in technology. The computer might have had a common ancestor (the mainframe), but today we also have midrange computers, network computers, personal computers, laptop computers, tablet computers and handheld computers. The computer didn’t converge with another technology. It diverged in response to consumer demands.

               Television might have had a common ancestor (broadcast TV), but today we also have cable TV, satellite TV and pay-per-view TV. Television didn’t converge with another medium. It diverged in response to consumer demands.

                The telephone might have had a common ancestor (the wired phone), but today we also have cordless phones, headset phones, cellphones and satellite phones. The telephone didn’t converge with another technology. It diverged in response to consumer demands.

                It’s probably a lost cause, but a divergence butterfly like myself keeps flapping his wings and hoping another tornado will develop.