eComm Blog

Chair:   The next person on is Michael Bauwens of peer-to-peer fame. Somebody who I really made a personal invite to come over here. As I said, he lives in the "Hills of Thailand". Is that correct? So it was quite an expedition to come over. So, please welcome Michael Bauwens of the Peer-to-Peer Foundation. Thank you, Michael.

Michel:   Thank you. The slide that you see there is basically an overview of what we cover. As you will see, I am not sure you can read it but the green things are the deep changes that we are going through today. You will see that there are changes in ways of knowing, there are the changes in the way you are feeling. I just read a book about young generations in Dutch which says that said sharing is a default mentality amongst the digital natives [the book is called the 'Einstein Generation']. This is one example of how the value systems are changing. Actually, what I want to talk about today is really the changes that are taking place when there is a new mode of production emerging in our society. Basically, what I am saying is that there is a new way of producing value which I call peer production. It is basically the self-aggregation of people through social relationships. If you are familiar with Benkler's book, The Wealth of Networks, you will know what I am talking about.   

I was just talking about a friend I met in the Amsterdam called James Burke. He is with a project called Roomware. This is just a bunch of young people. When they go to a party, they basically want to point their mobile phone and share music and pictures during the party using a randomizer so that everybody can share in the fun and share in constructing the party. There are thousands of projects of young people doing things, inventing things, having social innovation that is happening outside of the boundaries of the corporations. I can guarantee you that this group of young people will be faster with their innovation than 200 paid engineers in Philips. This kind of dynamic is something that we are seeing more and more.

Basically, we are inventing new ways of doing things. What I want to focus on really is on the business models that are involved. I talked for about five minutes briefly yesterday, I think. I said I believe in something called the law of asymmetrical  competition. Basically, what it says is that when a company producing a closed proprietary knowledge refuses any participation from its users and does not create any common value, when it is facing a for-benefit institution like the Mozilla Foundation or the Wikimedia Foundation which is linked to a community producing common value like the Wikipedia or the Linux, that eventually, there will always be a point where that community will make a better product than the corporation.   

If you derive from that the second law which is, two for-profit companies competing with each other with one opening up to participation using open licenses and producing some form of common value, it will be more competitive than the company not doing it. If you believe that is true, then what you get is a little bit of what you see on this slide which is that basically we are moving to an economy where I think, in the United States, only 23% of the people are involved in material production and producing material stuff, so we are clearly the dominant on the immaterial field. If in this immaterial field the place of for benefit production is augmenting, then we can see a good case for growth of peer production.   

Most people think that peer production will be limited to knowledge production to content to free software. But, basically, I think that is a mistake because everything that needs to be produced physically needs to be designed first. Designing a car is essentially not so different from collaborating on free software. One of the pages, if you go to P2PFoundation.net, is called P2P design. It is basically about open design for physical production.   

For example, let us talk about the car. Most people probably know the Oscar Project which, I think is not going well. Last year in Amsterdam, there was an open-sourced car concept model shown at the automobile exhibition, called the Common. One of my associates talked with those people and they said they were very close to negotiating a deal for the production of their design and that they expected production to take place in 2011.   

The thing about peer production is that, as a company, and I can say that as I've have been an entrepreneur for 20 years and I was a strategy director in a large telco, you always innovate relatively, to be better as the competition but, if you do that as a community, let us say the Firefox community, you are always innovating for absolute quality. You want to make the best possible browser. Instead of a product which you freeze at some point, especially if you have no competition, you have a permanent process of innovation. That means that whenever you have an open design community starting a process, and it can take 5,10, or maybe 15 years but, there will always be a point where the open source fridge that they produce will be better, more environmental friendly, more modular, more longer lasting than any design that can be produced by a private company.   

This is a slide that tries to explain the business model. We can do two things. We can define open and closed as a proprietary format, and we can define free and paid. That gives you four quadrants which you can see there. Basically, what everybody knows here is the paid and closed, right? You make something, you have a patent or copyright on it, and then you sell it. This is the classic business model. This is the one that is most on the mind by contemporary developments. In the age where information, knowledge can be copied infinitely at a very low marginal cost, it will be increasingly difficult to protect that information, to protect your designs, to protect your patents. We can see that with free software. We can see that with music, whether they use the law or technology as the DRM, it will be increasingly difficult to stop the undermining of proprietary knowledge.   

Think about the middle ages. Some of the first inventors of the textile machine were killed. But, it was inevitable. Eventually, the textile machinery became an important model because it was more efficient and more productive. Basically, this model is facing two main competitors. The one is closed and free. That is what the book of Chris Anderson is about. It just came out. I have not read it yet. But basically, whenever you are dealing with knowledge, you are competing with somebody. If that other party decides to give its primary commodity to knowledge for free, they will undermine your proprietary  business model. What you do then is you are forced to free up your primary commodity and build a portfolio of secondary services around it. That is something very familiar in the publishing field and in the media field.   

The other competition that you will face is people using open proprietary codes. The same effect is actually free if you like. Free as in free speech and also free as in free beer. These people, of course as the Linux model, will build secondary practices around the free open content. The third one, but it is also competing with you, is the totally open and free alternatives. Think about couchsurfing.com. Some people call it the adventure economy. Couch surfing, I do not know if you have kids who use it, is basically a way to find lodging in the whole world. You want to go to Chiang Mai, if you type it in, you will find about 20 people offering free lodging. You can read their reputation. You can write to them and ask them if you can have lodging and they will look at your reputation. All of this process is entirely without money. It is an exchange. It is a civil exchange of value by civil society which is of course also, in some sectors, counting as a competing modality.   

Basically, if you look at this model, what I am saying is the upper right quadrant is what we have now the most precarious in the future. We will have to look this as a business, the two on the upper left and down right, if you want to make a business. I also make a difference, which I explained very shortly yesterday, and I want to explain it again in a little more detail now. There are three major economic streams that are coming out of peer production and the first is a sharing economy. Look at YouTube. Look at Google. Those companies are no longer producing value by themselves. What they are doing is enabling and empowering sharing to occur, sharing documents in case of Google, and sharing videos in case of YouTube. The motivational people writing documents that you can find in Google, 98% of the documents on Google are not institutional documents. They are written by civil society,a very large percentage of users generate  the content. Most of these people are not doing it for sale. They are producing not for the exchange value. They are producing use value. The model of the sharing economy is that of third party propriety platforms enabling the sharing and lifting of the tension.   

Second example of a business model is a commons model, whereby a community-driven process is creating value, the common value. Think about Wikipedia and Linux as the main examples. Around that, is created  an ecology of businesses adding value. The reason behind that is you cannot sell abundance. The market is about tension between supply and demand. Therefore, if you have something which you can copy for free, it is not going to create the market. But, it is creating a vast opportunity to create added value around the commons. The model we have in the commons economy is not a double model between community and company. It is a triple model.    We have on the one hand the community mostly self-managing it's production of value. We have a new set of institutions which I call for-benefit institutions. Think about the WikiMedia Foundation, the Apache Foundation, Etc., the Mozilla Foundation. These are not for-profit companies. As you see, for example, Wikipedia could make billions of dollars selling advertisements. They are not going to do it. It is not in their interest. Craig's List refuses advertising. The Mozilla Foundation is the same but it is a little different. The Mozilla Foundation makes money by selling the space to Google search, which funds their for benefit infrastructure. Basically, the community of producers at large is not in there for profit. So, we have three players. We have the community. We have the for-benefit institution managing the infrastructure. And, we have ecology of businesses around it.   

I think the key problem for business is how we manage openness and closedness. The basic idea here is that openness creates value but it does not capture it. In order to have market value, you need to capture some form of added value of scarce value. That is the whole thing. You can see that in the competition between MySpace and FaceBook. When MySpace got taken over by Murdoch, whole new kind of measures were introduced to stop the sharing on MySpace and you saw that the growth curve was diminishing. When FaceBook opened up, you saw the fantastic growth of FaceBook happening. Apple, the epitome of the closed company, under pressure of the hacking community, is opening up partially its development to API's. That is the kind of tension that every company is going to face.   

Another problem is what do you do with the dynamic of the community? Profit sharing usually does not work. If the community is there, from a wide variety of motivations and not primarily for profit motivation, paying some people and not others, usually creates what we call crowding out. In other words, if I see that you are getting money for voluntary effort and I am not getting money, then I stop volunteering. Most companies, and I think I mentioned that, like IBM when I spoke with somebody at the company they told me they saved 90% of the software infrastructure costs using Linux. 10% of that savings are sent back to the Linux community but not as profit sharing, as benefit sharing. In other words, it is a general support for the infrastructure of sharing in the commons rather than sharing money with individuals. That preserves the voluntary dynamic in the community.   

This is happening more and more. For example, when I say that peer production is also very important for physical production, I would say two things. One thing is that, typically, you would say capitalism is about entrepreneurship. But, capitalism and entrepreneurship are diverging more and more. The example you could use is the BitTorrent. Bram Cohen had no money. He used a series of credit cards and he produced the most important, most valuable software that we use today for multimedia distribution on the Internet. So what happens, and we can see that in the Web 2.0, is that you do not need capital to start because that is a design process. It is just brains working together with other brains. Capital only comes in, not in the beginning but, at the end. It is when you have success. It is when the users are breaking down your servers, that you need capital. More and more we see entrepreneurs that are creating value by self-aggregating capital.   

I actually already said that. This is a business model. This is another important element. This is the kind of modeling that is done by a man called Xavier Comtesse. He is Swiss. He shows that the evolution is from a corporation towards increased participation. You have passive consumption and you go self-service or do-it-yourself. Co-design up to co-creation. Something is missing there. Basically, what I think is missing is the power of the community. So what I am proposing is to enrich his model by a model of community involvement. What you see there, and I will not have time to go into it but, there is a whole variety of new business models that are emerging not on the side of the polarity of the institution, but on the polarity of the community. It is very important because I think that this is what the new business models are about.   

Classic business is about, I am an institution or corporation, I see atomized individuals organized as a 'mass', and I would practice mass marketing to sell to those consumers. I think the new model is recognizing that the users and consumers are always already connected in various peer groups that they are doing all kinds of self-aggregated activities and value production amongst themselves. Therefore, I will position myself on the side of these communities and see what they need.   

For example, in China, we have these group-buying companies that are very powerful there. As far as I understand it, they are not going to a company and ask what they are selling and then looking for consumers. But, what they are doing is they change the polarity around. They are talking to the consumers and saying "what do you need?" then, with that knowledge, they go negotiate with companies and asking them for discounts for the community. Basically, the model I think will be a model whereby a tribal economy is emerging, whereby businesses are emerging that know from inside-out the needs of a particular community and that creates services around that.    I just want to say a little about the relation between peer-to-peer and the market. It is a pretty clear that peer production can only exist when there is a surplus and abundance in the existing world. In other words, peer-to-peer is depending on the market. There is no doubt about it. But on the other hand, the market is increasingly depending on peer-to-peer or on peer production. Remember, you are all in this business. I had a web company in 2000. The crisis happened. Everybody was saying it is the end of the Internet. There will be no more innovation for a few years. What happened? The opposite, the innovation did not stop without the companies but it increased and it accelerated. That shows that, actually, the results are reversed.   

In other words, innovation is more and more social. It is an emerging property of the network. This is a form of innovation which is more and more prevalent that it is the communites, the exchanges and the sharing within communities that lead to innovation, which are then captured. In the book from Eric Von Hippel, The Democratization of Innovation, he mentions Gatorade, the sports bra, the mountain bike. He describes the sports industry, kite surfing, as all industries where the community lead user innovation is primary and captured by commercial companies after the fact.   

We have dialectic between both. I think there is a problem, which I call the crisis of value which is a following. We are producing more and more use value as communities and as citizens. But, only a marginal part of that use value is captured by monetization. If I had a slide for that, I wouldshow the following. The growth of use value on YouTube is 100 million per day, growing exponentially. But, the growth of the advertising is like this, growing only linearly, and the gap between the creation of use value and the monetization of it is increasing every day. More and more young people choose for passionate production. If you talk to young people, which I regularly do when I go to Amsterdam, "yes, they work." They work for Microsoft, they work for different companies. But, what they really want to do is have a meaningful activity.   

They usually work around projects. In between projects, they want to do their passionate production. This is increasingly so. They define their identity through their engagements in their common projects. They do not say "I work for Microsoft." They say "I work on RoomWare" which is the free software project they are working on. I think this creates a precarity in our society. A precariousness because we do not have a mechanism for funding this common value production even though the market increasingly profits from it. This creates a serious problem.       

In Europe, we have a partial answer for that which is what we call transitional labor market theory. Basically, what we are doing in Europe is creating all kinds of mechanisms that make it easier for people to transit from job to job. Because now, by the time you are 35, you have I think 13 jobs in average. They are trying to smooth out the transitions. What I am saying is that it is actually between the transitions that we are most productive. It is in between the jobs that we actually do the most innovative work.   

I said we are talking about conflicts. So this is a slide I did not produce it. I have the source of it on my slide show. Basically, this shows a new dynamic which is exists between communities and institutions. Again, they are different in YouTube, for example, in the sharing communities where the people who share on YouTube are individual-oriented. They want to share their creative expression. They do not have strong links with each other and, therefore, they are depending on a third party. That does not mean they have no power because the power eventually is the power to leave. And the companies are struggling between the openness that creates value and the closing down that captures the value. But if they close down too much, the user community will be tempted to change and to opt out. We either have a user revolt, which we had in Digg, FaceBook, or we have what we call a forking which is a departure of the user population from that particular site to another one.   

There is a price to pay, however, since people invest in this social network, they put their pictures there and their friends. So, if you are really invested in YouTube or any other social network site, you have a price to pay. This creates a particular social tension between community and corporation. We could call the class struggle of the knowledge society. There are differential interests there. The community wants total openness. We want the social graph. We want to be able to own our identity, to control it, to control our privacy, to move from one network to another. The problem for a company is that if they allow total openness, they are afraid that they lose the control over the scarcity and cannot have a business model because, of course, if you open up totally, then any other competitor can take that value and market it as well. This is a difficult tension that we have in this sharing economy.   

An answer, and this is something that we are working on with the P2P Foundation, is that some people within the sharing community will take a commons-oriented approach and actually produce their own infrastructures. One of the things we do is we monitor all of the communities which decide, for example, "Why do we not make our own video sharing communities and why instead of a centralized server part, why do we not use a distributed even server-less system?" because, basically, what creates the need for proprietary  platforms and the need for capital is the fact that you need a centralized service.   

Can we design around that and actually create true peer-to-peer infrastructures that do not need propriety or platforms? It really depends on each case that we are working on. Most people, if they are happy with a proprietary platform, will not want to make the effort to create an alternative. Basically, this new situation, this new dynamic, creates all kinds of social tensions around different things like who owns the platform, how open and free is it, how much sharing is possible? This is an important issue. Where is the power in a distributed network? In other words, you cannot see it. But, it is usually in the invisible architectures. Why can we not remix in YouTube? It is in the design. Therefore, it is very important to have value-conscious design where the value's diversity and autonomy are actually included in the design itself.   

Another example is ownership of the content. I am not sure it is still that way, but it used to be when you entered your video on YouTube you basically signed away all your rights. I think they have changed it somehow, but I am not sure about the details. This is a kind of recurring problem that when you enter a proprietary site, you lose your rights to your content. Revenue sharing is another issue. How do you solve that? It is not easy. For example, YouTube made 2 billion dollars. It did not give any money back to the millions of people who have created the value. As I said, profit sharing is, obviously, not the good solution because that might actually harm the sharing that takes place. So, how do that?   

I am not sure how much time I still have, but I will conclude with a more political statement which is the following: there is undoubtedly, not just the business aspect of peer-to-peer, but also a political aspect. Here is my five cents worth  of analysis of what is wrong with the world, it is very simple. We have a world today which combines the worst of both worlds. We live in pseudo-abundance, false abundance. We think that we have infinite nature. Therefore, we have an infinite growth machine functioning within a finite environment. I personally do not think that will last very long.   

The second thing we do is we think we need to create artificial scarcities in the immaterial world so that we can create a market in it. Basically, the proposition, of course is just to turn that around. Let us have an economy which recognizes natural limits and let us have an immaterial field of sharing in culture and knowledge where the natural flow, the infinite flow, and the infinite replicability of information and culture are recognized. This political aspect is not my invention.   

If you would look at P2PFoundation.net, we basically recognize three emerging paradigms, three emerging social movements in the world. They are growing everywhere, from spirituality to business to politics and to the following: open and free. It is easy to explain because if you want to peer-produce, if you want to create value through self-aggregation, through sharing and cooperation, what do you need? You need raw material. If that raw material is not open and free, you cannot work together. This creates, in almost every field, free software, open source, open access publishing, open education text books, open reiki, open yoga, open [inaudible]. It creates a wide variety of social initiatives in every field, stressing the need for open and free raw material. The second aspect is participation, which is basically "how can we design social systems?" And the third one would have been commons-oriented output. That is it.   

Chair:    I really want to ask you some questions. I will probably need to limit myself to one because that is just so incredibly important and needs so much reflection. Can you relate what you said to the telecom's industry? I know it is an exceptionally hard question. I believe you can do it.

Michel:    Actually, Lee asked me some questions about the telecom. I used to be the e-business strategy manager or Belgacom five years ago. I told him that I was no longer the expert he thought I was. But, my answer would be the following: the basic problem is about abundance and scarcity. You cannot have a market when you have abundance, therefore, the telcos will never build fiber because they can make money only once while they are building it. Once you have it, there is such an overflow and such an abundance that you cannot market it after that. I think one of the answers I gave you is you cannot absolutely expect the telcos to ever build a fiber infrastructure. They will never do it. It is just totally counter the institutional and commercial interest that they have.   

So how do you do that? I think Brough Turner, I am not sure I pronounced the name right, gave kind of an answer to that. We have three models of production now. It is very important to know that. We have the private way, companies building and selling. We have the public way, centralized planning, public provisioning. But, we also have the direct social aggregation, the peer production, way. The wireless commons is an example of civil society taking up itself the task of building bottom-up through distributed capital this kind of task.

Chair:   We need to do lunch tomorrow. Please thank Michael Bauwens.

Transcript below from Mark's keynote at the inagural eComm 2008. The corresponding slides can be found here.

Chair:   We are now moving off the lightning talks and we're moving to a 20-minute key note. We are moving to a trio of talks based around design. We have Frog Design, we have Bug Labs, we have Yuvee and we have Mark Rolston, who is the Chief Creative Officer of the legendary Frog Design. And I think that Mark is going to be speaking about what problems that we are here to solve, what the value proposition is for consumers and what the drivers are. So please welcome Mark.

Mark Rolston:   Thank you. So, I think that I am going to slow things down a little bit at least. I got 20 minutes to burn here and I probably do not have 20 minutes material. [Laughing]  I was telling Lee [Dryburgh] I feel like a little bit like a fish out of water with some of these topics [previous talks]. What I bring is more of a message from a user experience perspective in a little less industry specific look at things. But perhaps that's something important today.

First of all, rule of thumb in what I have to say. Change is inevitable and it is an important idea to us and that is the business we are in. We are either an enabler, a catalyst or at times, a provocateur on this basic idea with industries. The two important parts of this idea are changed in what largely I hear everyone talking about today is in terms of making things better. But there is another kind of change which is different. I want to talk a little bit about that. And the way to frame that story up a little bit is to first talk about maybe the life of the product or "it". This is the singularity that I am referring to. And this mental model that is so critical in a product's success and the life span of a product.

So, if we start in the beginning of a product's life, there are some sort of inspiration. Something gets it going. It comes from nothing and becomes something. We are not sure what it is, what is "it."  I want to dwell on this word "it" because I think that that is a critical idea in the minds of consumers.

A new model emerges when we have that. We may not know quite what it is at that point. The author of that may give it a name but the public does not know quite what to think about it. And over time, it becomes "it", a way that a single word might express the common understanding of what this thing is in an industry. Even then, it may undergo some evolution. It may change course. It may actually bifurcate. It may become multiple things. And even better, it may come in collision with another market with its own perception of what it is. What is interesting about that is quite often, more often than not, this product in many of these industries, I am going to come around with this industry, is still beholden to that original mental model, that original "it."  The way the world thinks of it and it ends up being a box. It ends up of being a limiting conceptual boundary for what it is. So change becomes beholden to this singularity. Almost likely, the astrophysical phenomenon, it is sucking in every attempt to escape out of that reality.

I will give you an example. I will try to be a little bit more concrete here. The car. Do not take me to task for the genealogy here. I took some exceptions. But the automobile, it starts with a basic model hundred years ago or more than that. Even through all of the innovation, what we call innovation with the automobile, it still is basically, even with a number of iterations, and this is just one manufacturer,  the number of iterations that we have created still basically is the same thing. The way we buy it, the way we use it, the value proposition and the way that people understand this product is still the same thing. So, that leaves me to this industry. Sublime statement here. We unfortunately, are trying to apply that kind of thinking to a model like this.

I want to introduce this idea and where this might be going. We have the telephone. I am going to focus on the handset itself. I know that a lot of folks have been talking about the services behind it but I want to talk about what the users gets and the way they focus their attention on what "it" is. And, that is often through the device that they hold in their hands. The physical and functional expressive reality and not all of the business behind that.

That telephone, while simple in its initial incarnation is actually beholden to a lot of functions. We sort of plugged in all these different things; all of a sudden "it" is now challenged by a lot of different players and a lot of different mental models. Those things are born out of other realities or other sources for what these mental models, you might say interface, the market approach, the technical realities, the boundaries. Just the thinking that defines these products. And all of the sudden, the phone is incredibly challenged. And those things all come from different corners of the world that you might say. And again, you could look at these six ways to a hundred but hopefully this gets the basic idea across.

In the end with this happening, the phone ceases to be a phone. It ceases to be the "it" that it was originally born with. Why is that?  What we are facing here is that software is allowing for the product's ever shifting identity. That original product, the thing that we hold becomes almost a non-object to this dynamic reality that sits within that. It is almost just like a hole in the world, a portal that allows something dynamic to come through. "It" can essentially be anything you want it to be. And that, in a way that we normally think about products is really challenging. We want to design something with a sort of singular identity where everybody says that this is what it is supposed to be and what happens when "it" becomes some anything that you want it to be?

So, we move from a literal, from a design perspective, from a product creation challenge. Something where the form, and function, the story is easy to tell, it is literal. You can almost look at something as an alien from another planet and over some exercise,grok what it was suppose to be doing for that culture, for those people, to a more abstract relationship between form and function.

The physical object of course looses its functional identity. What it is instead, as I said is a portal. The physical object does not become meaningless, it takes on new roles. Here, it is fashion and it is self-identity. Like what people have been talking about portals, this physical object becomes another part of my outfit or my dress but it is not what it was. In that, it was at one point an expressive way of identifying what it does. At this point, it is not, it is instead something that is just part of my outfit. What it does is a dynamic reality beneath that. So, what are the drivers of this change?  Technology easily,democratization of these tools, these types of platforms allow folks like us in a direct idea relationship and folks like you to move more quickly from idea to execution for the concept itself is that much closer to the execution. And therefore, the opportunity to make a radical change to escape that sort of singularity is much easier.

The ecosystem is driving that. In other words, a product does not exist in isolation anymore. We have a lot of discussions about this today. This I think is one of the most fascinating things and as a design consultancy, one of the most difficult aspects. There is less and less opportunity to create that sort of singular statement that almost a mixture of political, emotional, fashion statement in this one gesture. Folks, we have been around since 1969 and we very practiced to that. But the new reality in making products is a much more systemic challenge.

Form and input, I think that for whatever reason, there has been a culmination of these radical ideas that for many years just floated around in Power Points in the back rooms of large companies and small. They were tossed around inside the design firms but they never went anywhere. But one or two products managed to escape and that leads to the next two points.

Competitive landscape, just at the time that that was hitting critical mass, you have some players getting weaker and some new players are entering the market namely this one.

This is a shot of the opening sales day in New York for the iPhone. And when customers demonstrate a willingness to accept these new models in the industry dog piles, then you have this opportunity to truly move from the current model or the current singularity to something new. And that is the opportunity in front of us. "It" is changing. "It" is becoming something else. This industry has an opportunity to seize that moment and to define something new.

Chair:   Any questions?

Audience:   So, when you are looking something like the iPhone which has grown tremendously, what is "it"? What do you see the "it" is?

Mark Rolston:   I think that if we over simply the story, it is the new computer, you might say. "The PC is dead, long live the PC" or you could throw in "The phone is dead, long live the phone."  But the two were colliding. Apple's essentially, if you watched to SDK release last week, they essentially pulled - some of our folks inside called the Windows '95 moment. They unified this development platform, they have opened it up and I think that the iPhone, you are going to quickly see, is going to move away from being phone to being sort of ubiquitous, mobile portal into your life. Telephony may actually be a very minor feature in sort of the net use that occurs on the phone. I might even say that it might even end up sub 10% if you measure across the customers. They are going to be doing everything that they do on PCs today. And what has been so beautiful about the PC is that it is agnostic. It does not give a crap on what you do with it. You do what you want to do on that. An invention, a need and even random or just whimsical desire can be expressed on that device and there is no business model to get in the way. And I think that the iPhone just jumped into that pond and we are going to see a lot of interesting invention.

Chair:   Mark, were you here when I opened up today?

Mark Rolston:   No.

Chair:   Because, you have actually echoed what I said about the telephone is dead. You have echoed many things. So that was cool. Can you comment on Android?  Any general comments on Android?

Mark Rolston:   Android takes what one company is doing as a provocateur and makes it wide. Android is the antidote of what Apple has presented. Apple is going to go off and do that on their own but the whole world cannot get behind that model. The last time that they did that, we had Microsoft becoming a giant gorilla and Apple actually I think will be a lot less friendly as a Gorilla than even Microsoft. And so, I think that Android is a fantastic antidote to end up. We are actually doing a lot of development with android so we are incredibly behind it.

To add, what is really fascinating about that and I cannot name people, but a lot of players who have no business in this industry, they are not about communications and not about telephony but they are just about consumer features and consumer products in a broad sense are using that and some normalization of platforms to jump in and make products that are going to fly right in the face of people like Samsung, Motorola and the carriers. It is a fantastic time. You are going to see that real soon.

Chair:   So, it means that the phone is no longer a phone and the television is no longer a television. That is just a terrible battle. We talk about convergence but that is where we do not know what the damn thing is or what it wants to be because it can be potentially everything and voice becomes secondary anyway.

It is a computer, the iPhone anyway. So we are still calling a phone. Do you think that in twenty years time we will be talking about telephones?

Mark Rolston:   We might use the word but the word would have ceased to become what it meant. We may use it just to describe it in its form factor.

Chair:   What if you spend most of your time shopping on or looking up information and the only place of telephony...
 
Mark Rolston:   Again, the word becomes sort of a meaningless carrier to that. We may come up with another word. That actually is a brand challenge and that the [inaudible] to how that is accepted. I do not think that it is something you plan on or can talk about with any accuracy. It is like fashion.

Audience:   A question from the back since you are talking about fashion. We are still talking about "it," right?  There is just this thing that I have got in my pocket or the guy  [James Body] has got and all these things that he is going to security with.

What do you see as the future of wearable computers and everyone's got this bluetooth thing. When are we going to become borgs to some extent because everyone got this little bluetooth devices in their pockets. It seems to me that people at some point are going to stop wanting to carry these things and just wear clothing or something that even more of a statement, I guess.

Mark Rolston:   I think that is easily true. But that is far enough out there. That would be a talk with the futurist rather than a designer and I am what you call a near futurist, you might say. So, I am focused on what we can actually accomplish within a reasonable amount of time. I think absolutely that a lot of sociological change has to happen. We still identify with a point of contact even with devices just like with humans. So holding something in our hands, is very meaningful even if its meaning that I try to imply is actually being driven by lots of outside forces and outside systems. There is an infliction point there, that singularity that we like to have in our hands and we will define as a single thing even though it represents many things.

Audience:   I am from UK and the average number of mobile devices and subscriptions per person is 1.6. That is an interesting number because it is going up. And I think that in Italy, the number I think is above 2. Most people I see with iPhones have at least one other phone as well. And I am so quite interested in what you are thinking about. The fact that people will have multiple devices, in my belief is because they are cheap, they are differentiated and so you might have an iPhone but you will have a phone as well perhaps.

Mark Rolston:   Sure, I think that two ways to answer that is, one, iPhone is a baby. It is not what it will become and I am not here to defend the iPhone. I think that the point is that looking at the phone as just phone is what is about to change or what is about to blow up. So people may own multiples but each of those may represent different modulations of that dynamic reality. That sort of hole and space that is possible or they may actually intentionally from a fashionable perspective and I say fashion in a broad way, narrow their functionality. If you look at what Apple did with the iPod, sorry about that Apple again example, but they narrowed the offering there to tell a simpler story. And that in essence is sort of a fashionable way of addressing the product's identity. It is not a technically bound thing or it is not a market thing but it is the way of crystallizing the value that they want to define in that product. And I think that people having multiple handsets is a similar type of phenomenon.

Audience:   I guess the question over here to your left. Could Nokia pull this off?  Nokia having 40% of whatever or the market.

Mark Rolston:   Nokia certainly could pull it off. But I think Nokia with their platforms is a little too subscribed to an agnostic take on value. And, that is not how you give birth to a market that is how you follow-up. And so, the market is too young right now and what you need is a lot of high value and highly contextual applications that say, "This is the way to go" and what I have seen so far in the touch platform that they are developing and the existing platform is that the experience is shabby. It is kind of cobbled together and the market is growing out of that. It looks like the technology underneath and it should not. This is too late for that. Those things will be challenged.

The agnosticism is a great growth stage but you cannot end up there so Nokia needs to grow out of that. I think that they have the capacity to but they are also slaved to the success of that early platform. All the developers are going to bitch and whine if they try and move the direction that I am suggesting.

Microsoft faces that, right?  That many PC platforms, that many variations of the PC, that many application developers, it is hard for Microsoft to make a bold escape from their own destiny. Nokia is a smaller version of that, easily.

Chair:   Thank you very much Mark.

In the transcript of Jonathan's talk which was put up yesterday, Jonathan made reference to my introduction twice. Now that two people have asked what I said, I thought for the sake of transparency I'd put up a transcript.

My introduction was written in the car on the way to the venue that morning (only a four mile trip) so it is far from polished, but the gist is certainly correct.

Lee:   Good Morning and Welcome. I am glad that so many of you could all make it. It seems we have a full house. Which is not a bad start to a new event.

It's a special day. It's a day when a line is put in the sand. And we say. We've had enough. We've had enough lack of innovation.

The telecom innovation space has been stagnant for at least a decade and the opportunities during this time have grown so great, that we need forum, a community.

What we want to do is to gather like-minded people. People who are interested in enabling, expanding, and pushing forwards innovation around the field of communications.

We've already had the VoIP revolution. It's done, now it is time to move on. VoIP brought us the tools to democratize voice. But it is only that - a tool. Alone it is neither profitable nor exciting. And don't take my words for it; look at how consumer traction has been so poor. And that is for a reason - quite simply it does not meet any new user needs.

We need to build something far more changing - Something further reaching - Something far more transformative.

The telephone itself is dead long term. What replaces it - is a device -  which combines content, information access, entertainment, ecommerce as well as ever expanding modalities of communications. Voice probably takes a secondary position in that multi-modality suite. So we are talking about a device which is clearly not a phone.

I'm not sure of what words we will use to describe this new platform. I've got a non-sexy description, that I use - a "relationship lifecycle management" device. I don't think marketing will like that. Relationships going forwards become the number one foci. You can kind of see it this way - the WWW has been about connecting pages. The future is in connecting people, not pages.

So I repeat the telephone is dead. That was a hard wired application. It makes no sense today. It's very primitive, distractive, cumbersome. Rather the replacement is something that understands your social life. It looks out for your best interests. But that is a long term vision. A socially aware, small form factor (or wearable) piece of networked computing equipment - which is used to discover, search, share and transact across the planes of what we now call information, content, ecommerce and communications.

I said what we call now - because they will become so fused, that it gets hard to distinguish one from the other. When information, content, ecommerce and communications fuse on the device, we are in a new world, entirely. It's exceptionally exciting and there is so much opportunity there.

But we're not there yet. The last 12 months have shown promising direction though. The iPhone was released and it was tightly locked. But a high school kid spent the summer cracking it. Hacking iPhones went critical and Apple was forced to open it up and release an SDK. We're talking about a phone that runs a computer operating system.

The FCC stated that the next block of radio spectrum would only be allocated to an open network. Google announced first that it was willing to spend billions towards such open spectrum. And we're talking about a search company.

Google also released Android, a new open mobile phone operating system. Another 30+ companies joined the Open Handset Alliance including T-Mobile and Sprint. Even Verizon, and AT&T made PR noise about becoming open networks.

So quite clearly the landscape is shifting. The power of innovation is shifting towards the edges. Operators are loosing control of innovation. Their centralised model does not work any longer. What they need to do is to facilitate edge innovation. To build winning ecosystems around it.

This conference, has gathered those interested in innovating around communications. We want to move it out of the stagnant space and we want to prosper from the opportunities.

On that note, I wish to introduce my co-chair, Dr Norman Lewis who was the former Director of Technology Research for Orange-France Telecom until 2007. He is now the Chief Strategic Officer of a new startup, called Wireless Grids Corporation.

Norman:   Good morning everybody and a very warm welcome. Thank you Lee. I'm not going to take a lot of time, I just wanted to make one simple point and it is this. I thought this morning when I got up why go to another bloody conference?

There are so many of these damn things and we all traipse around the world. I think the reason why we are here is because of who is here. It's not just the speakers it's the audience.

What I am interested in during the next three days is networking with all of you. To really talk about innovation, about how we can take this enormous opportunity that we have in front of us, how we can translate this into real new applications, products, businesses, entrepreneurship, Etc.

I think that is what this conference is about. It's about really making a difference in the real world, really seeing the opportunities, exploring the opportunities that now exist in how we can reinvent voice, how we can reinvent telephony  and communications.

If that is your objective I think it will be a very productive three days.

I am not going to say anymore. You will hear more from me later today and throughout the rest of the conference. Very welcome, hope you enjoy it, thankyou.