Looking back over the MobCon let me simply say that although many words have been typed the central idea in all this was simply that although the words have changed over the past 20 years our underlying concepts haven't (e.g. The Internet has become the Cloud).

When measuring growth (e.g. social, media and economic activity) we continue to make the mistake of applying metrics that monitor the increase in noise rather than any improvement in the signal (i.e. we confuse fragmentation for growth). and,

We have confused innovation with the fragmentation and optimisation of the value chain.

We are so stimulated by the excitement of the moment that we fail to take the time to look out over the horizon to not only see what the future may bring but also, equally importantly, what the past can tell us about where we are today.

Take for example the business of the future being mobile.

Here I have mapped the big data. The big numbers from the previous decade onto one chart.

As you can see subscriptions are growing. That's exciting. The network is growing. And network economics tells us that growth in nodes = growth in value. But take a look at the dollars. The business end of the equation simply isn't matching the growth in subscribers. Why? Because growth is being fuelled not in the wealthy early adopter markets in the Western Economy but in the emerging economies.

Consequently the global mobile industry has lost 21% of it's ARPU over the first decade of the "networked" century.

What is interesting about this trend line is of course the introduction of the smartphone appears to have had no impact on the downward movement.

Indeed things get even more interesting when we pull the mobile media data out of the big data.

This then is a chart illustrating the percentage share that the media content producers (i.e. Music, ring tones, games, apps, news, adult content, magazines, TV, sports etc) make with in the global mobile economy. (i.e. Not the percentage of mobile revenues that is media but the percentage of revenue that end up in the hands of the media producers).

OK. A couple of things become apparent. Firstly the much hyped Mobile App economy has had little or no impact on the growth in mobile media. In fact, if you factor in the upper range of estimates by analysts for mobile media in 2006 (i.e. 0.7%) it would be relatively easy to make the argument that the "real" mobile media growth story was all over before the iPhone appeared on the market. Secondly, after a decade of mobile media, it would appear that the real mobile media story is well, not much of a story really, because the credit card companies are probably making more money out of the global mobile economy by just facilitating bill payment.

Now compare that to the noise that has been generated around the world over the past 5 years about the extraordinary smartphone revolution and how it is rapidly becoming the future of media.

You see the the big data. The historical data suggests that unless there is an explosion in wealth creation in the developing world then the future of mobile, at least as a media platform, was yesterday (i.e. before 2006). Not today or tomorrow.

I say that because the ARPU's of the global mobile economy are falling and the growth in mobile media as a share of those revenues has stalled (or perhaps maybe even fallen by 40%) since the introduction of the iPhone. And yet we have seen explosive growth in the number of developers and producers of mobile media. There are more players in the market than ever before inevitably driving the price of mobile media towards $0.00. Suggesting a long term trend where by the percentage of the mobile economy that ends up in the hands of the mobile media producers may well fall back to where it was at the beginning of the century. Meanwhile the telcos, and to a much lesser extent the handset manufacturers, will continue to profit from being in control of the network that is the backbone of the mobile economy.

In the end though the core message is simply this. In a MobCon world the analog dollars = digital pennies problem isn't just a problem for media. It is a problem for the whole economy.

As I said before we are busy measuring noise rather than the signal. Plus we continue to confuse innovation with the fragmentation and optimisation of the value chain. So one again, almost inevitably, we find ourselves buying the sizzle rather than the sausage and sadly the health of our economies suffer unnecessarily because of this failure.

Part 2

Ended up with the dreaded "blue screen of death" yesterday and so I now have answer to that most important of MobCon questions: What takes longer? Rebuilding a Windows box or the SuperBowl.

The answer of course is rebuilding Windows... and that's why I was all the more amused when the first Tweet I read upon reconnecting to the Internet was the extraordinary claim the Internet contributed 21% to GDP growth in the developed world over the past 5 years.

My mind immediately went back to my earlier thoughts on Google economics and the original report from McKinsey that tends to be the source that fuels (or is that fools) an increasing number of these infographics about the growth in the Internet Economy.

If you take the time to read the original document you will see that McKinsey nominate a figure of 15% for the Internets contribution to GDP growth over past 5 Years in the USA.

To which I can all hear you draw a collective gasp of WOW!

What McKinsey failed to point out in the report of course is that, once you take debt out of the equation, the US economy hasn't grown at all over the past decade (See Michael Pascoe's US already half way into a lost quarter of a century).

This means, if we take McKinsey's nominated value and times it by the real growth in GDP of the US Economy, we end up with a dollar value of $0.00.

So in real terms it wouldn't matter if the Internet contributed 0% or 100% of growth in GDP the real contribution of the Internet to the growth of the US economy would still be $0.00.

Indeed if there is an argument to be made in relation to the Internet's contribution to the growth in GDP then perhaps we could use the estimate to calculate the Internet's nominal contribution of US Debt.

After all US Debt has risen by $10 Trillion in the 15 years since the Information Superhighway revolutionised the US economy.

Exhausted? Dulled by the magnitude of the magic numbers. Me2.

In the end I was left to contemplate the increase in productivity (i.e. GDP) that the Blue Screen of Death has delivered to the economies of the Western World.

But then another one of those Fauxionary thoughts hit me... like a bus in the street.

What if there is no convergence? No MobCon. What if the reason we can't measure value of the benefits of the so called Internet Economy is because it isn't about convergence at all. It is about divergence. It is about fragmentation. It is all about increasing, rather than decreasing your costs of doing business. What if the reason we cannot measure the ROI of the Internet is simply because there never was, and never will be, any ROI.

Then I wondered what this new model would look like.

So how I suspect it would look something like this.

In the middle is the value of the MobCon. The convergence of the 3 industry sectors (Media, IT and Telecoms) that now generates less than 10% of the combined industry revenues across each of these three sectors.

Growing out of this convergence are the 3 industry sectors (still doing what they did before the arrival of the Internet) generating over 90% of their revenues via none Internet Activities.

The larger outer triangles represent the explosive growth in each of these sectors by new entrants and the digital DIY'ers.

Finally the inner cross-over triangles represent the revenue income being generated by those harvesting (and ultimately profiting from) all of this new growth (e.g. Google and Facebook).

What we can see by this new model is the levels of investment to generate this level of output must be enormous. What is also self evident is that those harvesting this investment are only extracting a fraction of the wealth being invested in "making this online economy happen".

Or, put more simply Analog Dollars = Digital Pennies isn't just a problem for the media sector. It is a problem for the whole US Economy.

Till next time...

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