As 2005 draws to a close, in the e-Business Center newsletter we look back at the year’s developments in Information Technology. In this edition, we have selected some of the articles and comments that best reflect the year’s top stories. We hope you will find this Christmas special helpful for taking stock of the ICT year. We here at the e-Business Center wish you a happy Christmas and look forward to seeing you again in January.

A recent OECD report noted that the growing popularity of Internet telephony or voice over IP (VoIP) threatens the fixed line revenues of traditional wireline carriers. A price comparison between fixed line operators and VoIP providers such as Skype reveals an average saving of 80% in the cost of calls for Skype users. Platform and network convergence call fixed line operators’ profitability into question and force them to reinvent themselves daily to remain competitive.

VoIP is a serious challenge to mobile phone operators, too. The OECD warns that mobile operators will face stiffer competition than they originally anticipated when they bought their 3G licenses. The combination of VoIP and WiFi mobile phones and PDAs means that mobile operators will be similarly challenged, as users will be able to call from anywhere with an Internet connection, bypassing the mobile operators and drastically cutting their mobile phone bill.

According to the Telecommunications Industry Association, IP-based telephony could reach 26 million users by 2008. It is no mystery, then, why eBay acquired Skype or some of the big players such as Microsoft, Yahoo! and Google have also taken positions in this business. Current trends point to a future of free (or almost free) calls over IP networks. Like e-mail, but with voice. Or like instant messaging services, which likewise are free and already include voice calls. Just a few weeks ago, Yahoo! and Microsoft decided to merge their messenger services. Together, they now connect more than 275 million users, who could talk to one another without using the services of a telephone company. The problems are growing for the telcos…

According to the Netsize Guide, 2005 was to be the year when business data transmission by mobile phone took off. This was expected to revive the telephony market and help operators boost their ARPU (Average Revenue Per User), which had fallen in recent years due to trends in voice services in the more developed economies. Another report, from GAPTEL, warned that the mobile business is reaching maturity. To maintain growth, European mobile operators should focus their strategy on developing 3G-based broadband and new applications and services to cover all market segments.

In 2005, 3G handsets at last became widely available (though not as widely as expected). 3G handsets (such as the much awaited Apple iTunes-enabled Motorola ROKR) allow users to take high quality photos, stream and store video and play MP3s, among other things. The 3G service and application offering is still embryonic, however. In particular, migrating corporate applications to mobile environments is a challenge still to be addressed.

“Users are looking for a mobile extension of their Outlook, Exchange and Office. There are 130 million Office users and increasingly they want mobility.” This is how Bill Gates justified the alliance between Microsoft and Palm, as part of which Microsoft has licensed its Windows Mobile operating system for Palm's line of Treo smartphones. The absence of a dominant platform has so far delayed the development of mobile applications, but the Microsoft-Palm alliance is expected to catalyze the development of corporate applications in mobile environments. In fact, the next few months are likely to see a general increase in the range of solutions on offer. At the same time, companies such as Siebel and SAP are likely to react by developing mobile applications for Windows Mobile.

ARPU for mobile data services–SMS, Internet browsing, value-added services and business applications– is growing at an annual rate of between 10% and 20%. This is an additional revenue source that operators, and also software developers and service providers, need to exploit. In fact, revenues from this source look set to climb rapidly as technologies such as WiFi and WiMAX gain popularity.

In addition, mobile operators will have to deal with growing competition from mobile virtual network operators and decide how to respond to moves by fixed line operators, who are starting to use WiFi connections to offer VoIP services.

Partly to make up for declining ARPU in conventional telephony, traditional operators have turned to alternative markets. To retain their subscriber base and encourage spending, they have started to provide additional services such as VoIP or television over IP (IPTV). Now, the telcos are broadcasting over the Internet, allowing their customers to view television content delivered through broadband lines. So far, the only broadband television service in Spain is Telefónica’s Imagenio, although ONO (formerly Auna), Wanadoo and Jazztel are gearing up to deploy similar IPTV offerings. All the operators will use the same infrastructure and the same technology, so the only differentiating factor would seem to be content. Companies may try to attract users with so-called triple play offerings, integrating telephone, broadband and television in a single package.

Different types of operators– cable, satellite and ADSL– are competing for one and the same customer. And now Digital Terrestrial Television (DTT) has joined the fray, expanding the offering and adding excitement to the battle for the viewer.

The battle for the viewer does not end there, however; it also rages in mobile services, thanks to the arrival of mobile TV. The first mobisodes were broadcast in the United States and Great Britain by Verizon Wireless and Vodafone 3G, which offered one-minute chapters of  “24: Conspiracy”. A few months later, Amena and producer Globomedia presented Supervillanos, the first Spanish series produced specifically for mobile phones.

The real revolution, however, will come with live mobile television, which will allow users to receive multiple channels, thanks to the European DVB-H (Digital Video Broadcasting-Handheld) standard for DTT in mobile devices. Using this technology and digital terrestrial tuners, live television broadcasts will be sent to mobile handsets at a resolution to match their screen size.

According to the Informa group, five years from now almost 125 million users will watch television on their mobile phones. Nokia already has announced the launch of the first handset with integrated DVB-H tuner for the first half of 2006, and Ericsson is developing prototypes containing a chip to receive TV signals.

Although DVB-H technology will not need the phone operator’s network to deliver the signal, telecom companies are hoping to benefit indirectly from the take-off of mobile TV. That is because 3G or GPRS networks will still be needed for viewer interactivity, which is one of main attractions of the new TV. Also, mobile television is expected to trigger a boom in mobile advertising.

2005 has definitely been Google’s annus mirabilis. The company has launched a steady stream of new free online services and applications. The list is extensive: Gmail for sending and receiving e-mail, Desktop Search for searching PC hard drives, Google Search Appliance for large corporations and multinationals, Google Mini for SMEs, Google Web Analytics for analyzing and streamlining web sites… And for reasons of space we'll leave it at that.

Google has gradually spread its tentacles across the Net by extending its range of services. The drip strategy –with frequent releases of new services and applications– is working well: Google’s stock has risen (already it is trading above 410 dollars), and accumulated profit for the third quarter of 2005 was 381.2 million dollars. That’s seven times more than in the same period of the previous year.

2005 will also go down in history as the year in which Windows went online. Having put its house in order, Microsoft has decided to become a provider of Internet-based software services, with Windows Live and Office Live. These Web complements to the company’s PC operating system and productivity suite will be available online. The move was announced soon after Google and Sun revealed details of an agreement to jointly develop and market Web-based software applications. Many analysts speculated about the launch of a hypothetical Google Office.

Microsoft seems determined to go head-to-head with its rivals on the Web. Google, Yahoo!, Linux and Salesforce.com are much smaller companies, but they have moved faster, exploiting rapid Internet growth to expand their business and anticipate users’ needs.

The notion that “the computer is the network” is steadily gaining ground, backed by the open source movement and supporters of open content, who have reignited the copyright and software patents debate.

According to a study by the Consumer Electronic Association, MP3 players, digital cameras and game consoles head Americans’ Christmas wishlist. This is a striking change from 2004, when MP3 players were not in the top ten and game consoles came ninth. 

Yahoo! and ComStore Networks both agree that the Xbox 360 and the iPod were the most popular purchases on Cyber Monday, the Monday following Thanksgiving Day, which marks the start of the online sales season in the United States. This gives a foretaste of what we can expect during this Christmas season, which usually sets the trend for the rest of the year in consumer electronics.

The new Xbox 360 game console is Microsoft's bid for the digital home. In the year ahead, it will have to join battle with Sony's PlayStation 3 and the Nintendo Revolution in what has been dubbed the war of the game consoles.

In the case of MP3 players–a market dominated by Apple (70%)– sales are expected to top 700 million dollars in the last quarter of this year. Apple's stylish iPod, in any of its versions, has taken the world by storm. The company's iTunes online music store has also been a hit, giving wings to the legal music download market, which in 2004 grew tenfold.

Having started as a hobby, blogs are becoming big business. Many large corporations already have web sites through which they interact and exchange opinions with customers and suppliers.

Bloggers also pioneered the RSS (Rich Site Summary) standard, which has revolutionized online content distribution. Thanks to RSS, it is possible for a web site to display regularly updated content from hundreds of other web sites without having to connect to them all individually.

The RSS standard has ushered in another of the year’s novelties: “podcasting”. Coined from “iPod” (Apple’s popular MP3 player) and “broadcasting”, the term refers to the syndication of audio content for distribution in RSS format. Podcasting is a very recent phenomenon, yet companies and large media organizations are aware of its popular appeal and are looking for ways to make money out of it. As yet no clear business model has emerged, but companies are experimenting with different forms of podcast advertising, or “podvertising”.  

The crucial thing, though, is the idea underlying these and other new ways of accessing information: content must be dictated by the users’interests, rather than vice versa. With digitization and the new forms of communication in which the receiver decides what, how and when to receive, the classic barriers to content distribution– time, space and programming– have been abolished.

El e-business Center PwC& IESE le invita a la I Jornada de movilidad en la empresa, que organiza conjuntamente con la empresa Tempos 21. La sesión tendrá lugar los próximos 25 y 26 de enero, en el IESE de Barcelona y en el de Madrid respectivamente. El objetivo del acto es ofrecer una visión general sobre la movilidad y sus aplicaciones en la empresa y su impacto positivo sobre la cuenta de resultados. Para ello se repasarán tres experiencias de éxito de empresas que han implantado soluciones de movilidad en distintas áreas de negocio. La jornada está dirigida a Directores Generales, de Operaciones y de Marketing.
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