Peter Cochrane

1
THE FUTURE OF TECHNOLOGYMore machines than people

• Peter Cochrane
• Chief Technologist BT
• Collier Chair for The Public Understanding of
  Science Technology _at_Bristol UK

2
Industrial revolution

• A very low risk life
• Survival by profession
• Money eclipses everything
• Communication is the essential
• Innovation becomes property
• Highly focused specialisation
• Self sufficiency unnecessary

3
You have to do everything...
From village...
To city...
You can afford to specialis/ze...
4
From people centric business...
Town city national global
Global
To machine network Centric business...
5
We seek clarity truth...
Clarity
mostly they are orthogonal...
Truth
6
If it were only this simple...
Sources of return
Variables
Markets
7
Productivity
100
80
70
Productivity
BW
60
40
Chip
20
SW
0
8
Axiomatic.

• Bandwidth is free
• Distance is irrelevant
• Time has no meaning
• Service is key
• Information knowledge is where the action is

9
The Future Outlook
Traffic/ infrastructure
IP
PSTN
1999
2009
Voice Over Data Net
Data Over Voice Net
10
Internet Telephone Connections
10B
Phone Lines
1B
0.1B
Global Connections
Internet Connections
10M
1M
Mobile Phones
0.1M
10k
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
YEAR
11
Smart People - Dumb Company
Constructive Contribution
IQ
Best Case
Collective/Company
Number of People
n
Worst Case
Deconstructive Contribution
-IQ
12
Business Market Time
Iff

• Reaction time ltlt Market time

Success
Reaction time gtgt Market time
Failure
13
No measurement, no visibility ...no control
and... ...heavy losses..
Sales Channel Demand

Consumer Demand
Supply
Planned Launch
Actual Launch
End of Line
14
EU Ecommerce by Technology
TV
Mobile
PC
15
A 5GIP Computer v Book Keeper
US
10,000,000,000
1,000,000,000
100,000,000
Computer
10,000,000
1,000,000
100,000
10,000
Book keeper
1,000
100
10
1
1970
1975
1980
1985
1990
1995
2000
16
Value of bits...
Value
Sequel Launched
Becomes a Classic
Movie Release
Time
17
Concept to Customer
Cost
Research
Development
Delivery
Production
Concepts
Time
Freedom Innovation
Constraints Control Processes Formalism Compet
ition Life Cycle
Focus Objectivity Innovation Timescales
Constraints Focus Objectivity Formalism
Timescales
18
Concept to Customer
Levels of Hierarchy
.com
.com
19
World GDP growth rate is declining
Source IMF, JP Morgan, The Economist
20
Business Spectrum
time

Equity-Value/Employee
Time to Market-React
.com
21
Hardware Software Network Applications
Convergence??
Established Wisdom

• I dont think so.

22
Net Platform Evolution
The Net
23
Company Evolution
People-less Corps
Personal assistant software
Logistics company - Genie
Virtual co-operative - team software
Virtual company - core mgt project team
Traditional company - full time people
24
New Economy

• Knowledge is wealth
• Bigger ain't necessarily better
• More opportunities
• Fewer guarantees
• Everything happens faster
• Everything is exponential
• Demand comes in peaks
• ROI is bigger than ever before
• No rules?

25
The Rules Have Changed

• Inversion
• Exponentiation
• Self organising self optimising
• Mass personalisation
• Cost into an asset
• Shareholder value

26
It is also aboutPerception

• Brand
• Quality
• Timeliness
• Trust
• Delivery
• Taking the pain away

27
Route to customer.

• Media
• Telephone
• Mobile Phone
• PCs WAPs
• Appliances
• Transport
• Gas Stations
• Every screen device is an opportunity

28
Customer relationship. Anticipating.Delighting
Using information knowledge to Keep ahead of
the gamesolve the Problem before the customer
knows They have one..and then tell them?
29
Personalis/zation

• Access control and authentication
• User profiling and dynamic tracking
• Content management classification
• Workflow, repository, delivery engines
• Event tracking and logging learning
• Dynamic relationship management
• Merchandising
• Customer Service

30
Customers dont want choice...

• They want want they want..
• When they want
• Where they want
• How they want
• At the right price and quality...
• And in the right form/format...

31
The future of business is about...

• Sucking up
• Serious sucking up
• Instant gratification...
• Personalisation
• Customisation
• Taking the pain away
• Its about time...

32
Time is the enemy...
Weeks
Days
Hours
Minutes Seconds
60s
80s
90s
70s
00s
10s
50s
33
The S Curve
Technology
time
34
The S Curve
Technology
Product 1
time
35
The S Curve
Technology
Product 2
Product 1
time
36
The S Curve
Technology
Product 3
Product 2
Product 1
time
37
The S Curve
Technology
Optical Fibre
Coax
Pairs
time
Open Lines
38
The S Curve Continuum
Technology
DVD
CD
Cassette Tape
time
Tape
39
Moores Wall
ICn
Log Scale
IC5
3D ICs Molecular Quantum Genetic Biological Optica
l Computing
IC4
IC3
IC2
IC1
Transistor
Thermionic Tube
1915 46 59
2010 2025
40
d
s
Transistors/Chip
1
1
1
0
1
0
1
0
x
9
1
0
Memory
Logic
x
8
1
0
7
x
1
0
6
x
1
0
5
1
0
4
1
0
3
1
0
1
9
8
0
1
9
9
0
2
0
0
0
41
BIT STORAGE DENSITY
42
ENERGY PER LOGIC FUNCTION
43
UK 14 Year Olds 2000

• Mobile Phone Owners
• Girls 38
• Boys 28
• In Bedroom
• TV 72
• PC 61

44
Virtual E Business

• Death of geography
• Death of distance
• Fluctuating assets
• Information intensive
• Infinite Chaotic
• Bits rule the atoms

45
Faster Faster Wealth Generation
USBn
100
PC
Internet
90
80
70
New Company Value
60
50
40
30
20
10
0
1
2
3
4
5
6
7
8
9
10
Year
46
UK SMS Messages 99
Millions
47
How many friends do you have ...how many
people do you know?
Separation People You Know
0 gt 30 gt 300 1 gt 900 gt 90,000 2 gt 27,000
gt 27,000,000 3 gt 810,000 gt 8,100,000,000 4 gt
24,300,000 5 gt 729,000,000 6 gt 21,870,000,000
48
Distribution
Manufacture
Raw Materials
RETAIL
Ecosystem
Consumer
Trash
Trash
49
B-B
B-B
B-B
Distribution
Manufacture
Raw Materials
RETAIL
Ecosystem
B-C
C-C
C-B
Consumer
Trash
Trash
50
Business Spectrum
Market Change Time Company Change Time
Acquisition Growth
10
1
Take Over
Bankrupt
0
3
1
2
0
Time Years
51
Value...
Value
Bits
Atoms
Abundance
52
The value of atomsper kg
90k
Pentium III Chips
25k
Viagra
10k
Gold
4.3k
Hermes Scarf
3.9k
Palm V
2.1k
DVD
230
20 Cigarettes
90
Hardback Book
40
Mercedes E Class
15
Chevy 4 Door
Hot Rolled Steel
0.5
0.1 1.0 10 100 1000
10,000
Price US /kg
53
The old marketplace ...the customer
view...
Broadcast Newspapers Stores, Oil, Gas,
Power, Food, Banks, Insurance, Government
Few Many
1 N
54
The internet marketplace ...customer
view...
Broadcast Newspapers Stores, Oil, Gas,
Power, Food, Banks, Insurance, Government
Many 1
N 1
55
The internet marketplace
actuality...
Many to Many
One to Many
Many to One
56
Fitness Function
flexibility x speed x vision

• Fitness

experience
Experience is only useful when the Environment
stays roughly the same, but everything has just
changed dramatically
57
Market Space - Modes
Exp Growth
Market High Margin
Amazon Ebay Yahoo eTrade eBank eBookers
Nokia FedEx IBM Dell TI
.com
.com
Kmart Ford Oil AA
Banks ISPs Telcos Cable
Atoms Dominated
Bit Dominated
Limited Market Low Margin
Linear Growth
58
Grades of FREE...

• Free as we used to understand it
• Free after 100 gallons of petrol
• Free after 7.00 pm
• Free for 35/month
• Free if you buy two
• Free if you listen/view these adverts
• Free if you buy my food
• 100 Free!

59
Cities - influence density
City
Geographic World
Suburbs
Villages
Community network peak
Cyberspace
Global presence
60
From the few to the many...
Concentrated Expertise Skill
Distributed Ignorance
Telephone Operators Dial Buttons Computing
Mainframe PC Copiers Corp
Centre Office Xerox Printing Hot
Metal Offset/Laser Jet
61
Distributed ignorance wins!
Concentrated Expertise Skill
Distributed Ignorance
Technology

N2
Ability to Compete
N
62
Where is the energy...
Internalised
Externalised
Dispersed - Chaotic Adaptable Fleet of Foot
Centralised Control - Hierarchy Inflexible
Ponderous
63
The Rules Have Changed

• Inversion
• Exponentiation
• Self organising self optimising
• Mass personalisation
• Cost into an asset
• Shareholder value

64
Work is ...not a place
...it is an activity
65
What have we done?

• Downsized
• Reorganised
• Challenged everything
• Changed everything
• Change the culture...weed out old minds
• Experimented with everything..
• Outsourced a lot.
• Survived...so far...

66
Some Half Lives

• -20 years Today 20 years

Employer Job Degree
50 10 1 15 5 0.5 20 7 1
67
A Two Class Society

Those who spend a lot of time to save money
68
A Two Class Society

Those who spend a lot of money to save time
69
How did all this happen?
70
Internet Hosts (Log Scale)
10,000,000
1,000,000
100,000
Hosts
10,000
1,000
100
Date
1990
1995
2000
1985
1980
71
Internet Hosts (Linear Scale)
8M
7M
6M
Hosts
5M
4M
3M
2M
1M
Date
1990
1995
2000
1985
1980
72
More machines than people
73
More Barbie Dolls... ...on line...
than Americans
74
Machines Overtake Mankind
100
Network Traffic
75
Mankind
50
6Bn
Machines
Machines
25
20Bn
0
2010
1990
1985
1980
2005
2000
1995
2015
75
Customer Engagement
Time
High
One on One
Carbon
Outlet
Cost
System
Net
Call Centre
Low
Silicon
Limited Availability
High
76
People - Revenue Mismatch
INCOME
CUSTOMERS
PEOPLE
30
30
30
Where we are now.....
77
People - Revenue Mismatch
CUSTOMERS
PEOPLE
INCOME
30
75
20
30
5
30
Where youd like to be, but.....
78
People - Revenue Mismatch
PEOPLE
75
5
20
20
5
Machine
75
MACHINE
CUSTOMERS
Technology to the rescue.....
79
Speech recognition is tough.

• Let us pray
• Let us spray
• Lettuce spray

80
The Future is Chaos!
2000s
Hierarchical Structured
Self- Organised and Chaotic
Intranets
Telephone
Internet ?
Telegraph
81
Everything will be in Cyberspace covered by a
hierarchy of computers!
Cell
Body
Continent
Home
Region
Car
Building
Campus
World
Fractal Cyberspace a network of networks of
platforms
Original by Gordon Bell 1998
82
A connected world is chaotic.
Net visitors come in packs.
Active Site Visitors
Hour of the Day
Peter Cochrane
83
We could all be a bank...
Ordering and delivery
Merchant
Customer
Internet
Submit and confirm payment
Billing
Existing mechanisms
Clearing
Card Acquirer
Card Issuer
84
money bits
1001110100011111001100111000111100000001111100111
0001001110100011111001100111000111100000001111100
1110100011111001100111000111100000001111100111011
1000111110011001110001111000000011111001110000001
1010001111100110011100011110000000111110011100111
1000111110011001110001111000000011111001110000000
0011101000111110011001110001111000000011111001110
0100011111001100111000111100000001111100111011110
1111010001111100110011100011110000000111110011111
1010001111100110011100011110000000111110011100110
0011101000111110011001110001111000000011111001110
0001001110100011111001100111000111100000001111100
85
Law of Diminishing Returns
1.07
Average cost of retail banking transaction
0.68
0.27
0.10
Branch Telephone ATM Internet
86
Printed Transponder MIT Media Lab
87
If time money... ...then so does position
Positioning systems will become as essential
as communication networks in the future economy
88
Soon
2cm
89

A multimedia world..in transition..
Copper to glass
Radio Satellite IR
Fixed to mobile
90
PARASITIC NETWORKSZero infrastructure!
91
PARASITIC NETWORKSZero infrastructure!
92
PARASITIC NETWORKSZero infrastructure!
93
Sooner or later... ...a carrier will come
in range...
94
Sooner or later... ...a carrier will come
in range...
95
Sooner or later... ...a carrier will come
in range...
96
Sooner or later... ...a carrier will come
in range...
97
Sooner or later... ...a carrier will come
in range...
98
Does a freeway become an optical fibre?
99
Opportunity
Mobile
FM
TV
100
Net Spectrum
Economy
100
100
Telephone
Resilience Latency Flexibility Reliability Scalabi
lity
Hierarchy Control
Internet
Parasitic
0
0
Random Bursty Chaotic
Static
Mobile
Traffic
101
Focus
Marketing Evolution
1
Adaptive
Targeted
Direct
Mass
All
Marketing Evolution
Sense Respond
Make Sell
102
Evolution of Platforms
WAPs
Business Platforms
Value
Packaged Application
Application Servers
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
103
Evolution of Platforms
Value
- No personalized content and services -
Rudimentary hit counters analysis - No demand
for ROI measurement
Static HTML
94
95
96
97
98
99
00
01
104
Evolution of Platforms
- Limited personalization - No Common Gateway
Interface analysis tools - Limited site analysis
tools
Value
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
105
Evolution of Platforms
- Basic customer profiles - 1st generation
Learning Engines - Maturing site analysis tools -
Demand for ROI measurement
Value
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
106
Evolution of Platforms
- Learning engines - Integration of corporate and
customer data - Analysis tools with real-time
data - Increasing demand for ROI
Value
Application Servers
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
107
Evolution of Platforms
- Customer profile database - Simple reporting -
Focused e-marketing
Value
Packaged Application
Application Servers
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
108
Evolution of Platforms
- Integrated customer profiling, analysis and
learning engines - Packaged Apps for profiling,
analysis and personalization
Business Platforms
Value
Packaged Application
Application Servers
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
109
Evolution of Platforms
WAPs
- Mobile profiling, analysis and learning - User
controls personalization
Business Platforms
Value
Packaged Application
Application Servers
Dynamic Page Engines
CGI Scripts
Static HTML
94
95
96
97
98
99
00
01
110
Business savings...
Term Life
Airline
Software
Banking
Bill Payment
Insurance
Tickets
Distribution
Policy
Traditional System
8
1.08
2.22 to 3.32
400-700
15.00
1.2 to 2.2
Telephone-based
0.54
5.00
Internet-based
1
0.13
0.65 to 1.10
200-350
0.20 to 0.50
Savings Percentage
87
89
67-71
50
97-98
On-line procurement gt30...
111
At a modest estimate eCommerce can...

• Remove 2,000Bn of marketing sales costs in the
  global market

112
eBusiness value creation...
Cut Costs
Grow Revenues
eBusiness has to focus on all 3 benefits
Build Community
113
Extended view...
Information Influence Relationships Networks Acces
s Speed
Cut Costs
Grow Revenues
eBusiness has to focus on all 3 benefits
Build Community
114
Markets are being... ...disintermediated
Distribution
Distribution
Customer
Customer
Retail
Retail
Customer
Services
Services
Customer
Wholesale
Wholesale
Retail
Services
Services
Manufacture
Manufacture
Wholesale
Customised Manufacture
Manufacture
20th Century
21st Century
115
Trust is a key issue limiting adoption but
it is an age thing
Language
1
Training
3
Lack of skills
7
Cost
9
Implementation difficulty
10
Lack of knowledge
10
Technology resistance
10
Customers not connected
24
Security worries
25
116
In the world of bits..
.massive intermediation
Distribution
Yahoo
Virgin
Tesco
Amazon
Dixons
Ebay
Customer
Services
Today Tomorrow?
peter.cochrane_at_bt.com
117
In the world of bits..
.massive intermediation
Can your Company friends do all this?
Services
The day after????
peter.cochrane_at_bt.com
118
Too Complex Too Flakey
39 of shoppers failed - sites were too
complex Estimated Loss gt24billion/year
56 of e-commerce search attempts
failed Estimated Loss gt 3 billion/year
119
57 of online households research products online
before buying Poor search experiences can cause
companies to lose offline sales
120
95 rated the importance of Ease of Ordering as
High or Very High. Customers go online for
convenience not for flashy features, compelling
experiences, cross-media branding, etc
BizRate Survey 99
121
Customer Reaction Experience
Based on accomplishing goals quickly/easily
Site experiences shaped customer reaction
Reaction formed brand impression Online brand
customer experience Site brand is affected by
visual appearance, but the holistic
experience creates the brand Online the brand is
the customer experience, not the visual
appearance
122
The Page Paradigm
On any given page, customers will do one of two
things
Click on something that appears to take them
closer to their goal OR click to escape
123
Relationships
Business
Company
Other Co
Avatar
Colleagues
Contacts
Customers
Team
Cyber- friends

Self
Net friends
Family
Friends
Local society
Neighbors
Clubs
Net community
Geographic
Personal
Community nets
124
Business Modes
Past
Present
Future
Face to Face
Faceless
Screen to Screen
Remote National
Virtual Global
Local
B to C
Remote International
Virtual Global
B to B
Local
Virtual Global
Distributed Regional
C to C
Local
125
Past
Present
Future
Face to Face
Faceless
Screen to Screen
Remote National
Virtual Global
Local
B to C
Remote International
Virtual Global
B to B
Local
Virtual Global
Distributed Regional
C to C
Local
Virtual Global
N/A
BCM
N/A
126
Adults Active in Start-Ups
Finland
Japan
France
Denmark
Germany
UK
Italy
Israel
Canada
US
0 2 4 6
8 10
127
Stop Press!
of US adults who read a newspaper
80
70
60
Projected
50
40
1970
1980
1990
2000
2015
1964
Source NAA Market and Business Analysis
Newsweek Projections
128
USA On-Line Shopping Revenues
Web Users
x M
Forrester Research 99
129
(No Transcript)
130
Business to Business - Old
Support
Sales
Marketing
Production
RD
131
Business to Business - New
Support
Not all companies do everything Most have
now virtualised and outsourced to create a huge
B-B marketplace B-B is a network activity and a
vital eCommerce activity
Support
Support
Support
Sales
Sales
Sales
Sales
Marketing
Marketing
Marketing
Marketing
Production
Production
Production
Production
RD
RD
RD
RD
132
Business to Customer - Old
Support
Sales
Customers
Marketing
Production
RD
133
Business to Customer - New
Support
Sales
Customers
Marketing
Production
RD