We postulate that when the industry realigns based on functional capabilities, the dominant players worldwide are very likely to be from the entertainment, consumer electronics, personal computer, and communications industries.

The Information Content Industry

Content is the driver behind all of the information industries. Networks will evolve to deliver increasingly rich content, eventually full broadband multimedia. Similarly, appliances must advance to display content in color, full video, and high-fidelity stereo. The expense of these advancements will be rationalized by the content they will carry and display.

Publishing and entertainment companies will converge into the digitized content business. Increasingly, content is being created or translated into its binary equivalent. Once digitized, content becomes increasingly valuable because it can be reproduced perfectly and transmitted instantaneously to almost any point on the planet. Much of the information users need is already out there but is inaccessible in a timely and convenient manner. Providing greater time and place value on existing information will thus be a big part of the future content business.

Packaging of information and verifying its accuracy (symbolized in information brands) will be an important value-added function provided by content players. Newspapers and magazines are well positioned for the future, because they already deal in digitized information.

Adapting to the New Paradigm

Of the three new form-based industries, the content area is farthest along in moving to the new model. First, a great deal of content is already digitized. Second, the rationalization of content businesses has been underway for some time, so that we already have large content entities such as Time-Warner, which owns magazine and book production, television programming, movies, music labels, sports teams, and cartoons. Consolidation will continue between the entertainment industry and the publishing industry on a global basis. The two will dominate the content business in all forms (including voice, data, and image content), not just the forms in which they previously specialized (video and text). They will also take over content from other businesses; for example, they are likely to acquire the Yellow Pages and White Pages directory businesses currently owned by telcos.

The Information Appliances Industry

Consumer electronics companies and PC manufacturers will converge into the information appliances industry. Companies such as Sony, Matsushita (Panasonic), Sharp, LG (Lucky Goldstar) Thomson, and Philips have already moved ahead in developing a new generation of content display devices. They dominate the manufacturing of traditional consumer electronics products as well as for telephony and fax machines, which places them in a superior position to PC manufacturers and traditional telecommunications providers such as Lucent, Motorola, and Nokia. These companies will continue to dominate in infrastructure but will cede the consumer markets to electronics manufacturers.

Devices were originally manufactured to display content in the form in which it was created. Separate industries were created around designing and building phones, televisions, computers, and printing presses, and developing and printing film. Devices are now being designed to handle content in multiple forms. For example, digital wireless phones have an LCD display that can receive alphanumeric messages, including caller ID and eventually e-mail.

The PC versus TV Debate

As the PC becomes more passive (receiving video streams like today's televisions), the TV will get more interactive; hence, convergence will occur. The convergence of the telephone, television, and computer will lead to hybrid devices that combine the strongest features of each. Like the television, the new devices will display video, sound, and text and be familiar and easy to use. Like the telephone, they will allow people to communicate anywhere. Like the computer, they will be intelligent, powerful machines that take raw data and turn it into useful information. We believe that the PC and the television will converge into a device with a flat screen and broadband connection to the world. Savvy manufacturers will also design devices that can be customized to meet the preferences of each consumer and grow with the menu of services on the network.

The Information Transport Industry

Public telephone networks, the Internet, wireless networks (including satellite), cable television, broadcast media, and private networks will be consolidated into the information transport business. The nerve system of the future information industry, indeed of the future global economy, will be a communications network of enormous capacity and sophistication. By the year 2010, a global network of virtually infinite capacity will be in place. It will be a network of networks, consisting of multiple overlapping and interconnected webs that collectively will realize the promise of huge (by today's standards) two-way bandwidth to virtually every node.

During the next ten to fifteen years, convergent technologies will lead to worldwide end-to-end voice, data, fax, video, and image services. These services will begin between hub cities and work outward toward suburban and rural areas, much the way telephone service did in the 1920s and 1930s. The global network of networks will be both a transparent communications service and a platform for content-filled or content-enhanced services.

In the future, we will see integrated, not just interoperable networks. By this we mean that the same network can serve multiple needs, and the network will have a common backbone and shared resources, such as telephony and video-entertainment applications or wireless and wireline applications.

In the information-transport industry, a premium will be placed on managerial attributes such as efficient operations, timely maintenance, and outstanding customer service. The information-transport industry will be the heir to today's telecommunications industry. Other players, coming from industries with lower standards, must upgrade their capabilities rapidly and adjust their mind-sets. The cable industry, for instance, has been rightly criticized in this area. Most customers will have a choice of transport suppliers in the future, and companies will have to provide the type of customer service that makes those customers feel close to their suppliers.