In 1925, a soviet economist Nikolai Kondratiev observed in his book “The Major Economic Cycles,” that the growth of human history has been intertwined with economic cycles that resemble waves spread across multiple decades. The duration of the cycles might vary but the pattern repeats itself. If we study the technology revolutions of the last 300 years that have shaped human history – industrial revolution, the age of steam and railways, the age of steel, electricity, and heavy engineering, and the current age of information and telecommunications, each of these cycles lasted on an average of 50 years. There was GDP growth with every cycle and with each technology cycle, we made earth a better place to live even though sometimes it might not seem that way.
Early in the 20th century, an Austrian economist, Joseph Schumpeter expanded on the theory of business cycles and development and wrote perhaps one of the most influential book in economics – “The Theory of Economic Development.” Schumpeter posited that entrepreneurs changes the equilibrium of any business cycle and is the prime cause of economic development, which proceeds in cyclic fashion along several time scales. In fashioning this theory connecting innovations, cycles, and development, Schumpeter kept alive the Russian Nikolai Kondratiev’s ideas of 50-year cycles.
In 2003, another economist Carlota Perez from Venezuela expanded on the Kondratiev cycle theory in her book, “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and the Golden Ages.” She drew upon Schumpeter’s theories of the clustering of innovations to explain why each technological revolution gives rise to a paradigm shift and a “New Economy” and how these “opportunity explosions,” focused on specific industries, also lead to the recurrence of financial bubbles and crises. By analyzing the changing relationship between finance capital and production capital during the emergence, diffusion and assimilation of new technologies throughout the global economic system, Carlota’s book discussed some of the pressing issues in front of us.
This brings us to the present time. Where are we in the big economic cycles? Are we in the golden age of the last technology cycle of “information and telecommunications” that gave birth to the Internet and the modern wireless ecosystem as we know it or are we perhaps on the verge of a new age that will transform human history for the next 50 years? Given that the markers of transition are not always clear, we won’t know for sure which wave we are embarking on for some time but we are fairly certain that we are entering the golden period of the mobile industry.
There is also a good possibility that we might be on to something new, something more transformative, something different that we would humbly propose is the start of the “Connected Intelligence Era.” These two operative words are going to define the next phase of human evolution. The confluence of mobile broadband network, smarter devices, pervasive connectivity, and our ability to program the intelligence around us is going to dramatically change every industry vertical from the ground up. Consider the health industry – sensors inside the body can alert days before a stroke, telemedicine can help conduct a surgery in remote parts of Bhutan, mobile devices will educate and guide us on nutrition, wellness, and medicine compliance. In fact, technology might eliminate the need to go to a doctor completely except in the case of chronic diseases or an emergency. Some of this is already happening but we will see the implementations at a global scale that will hopefully reduce the enormous burden on the global GDP.
Similarly, the travel and tourism industry is being transformed by intelligence at the fingertips in unfamiliar lands. The education segment especially in the developing world is being changed by the availability of the affordable tablets. M2M is making the energy sector reinvent itself. In a few years, it will be hard to imagine a car without mobile broadband connectivity.
As we outlined in our Mobile 4th Wave paper last year, change is in the air. Mobile is becoming the critical tool to drive human ingenuity and technological growth. Fueled by the revenue growth curves of voice, messaging, and access, the industry has flourished beyond anyone’s imagination.
We as an industry are on the verge of incredible milestones in human history. Very soon, for the first time, mobile connections will exceed humans on the planet. Mobile broadband networks are being deployed at a fastest pace ever. Smartphones are in such great demand that in some countries, feature phones are already getting extinct. The trifecta of fast broadband networks, well-designed mobile computing devices, and the insatiable supply of content, applications, and services has unleashed consumer demand for more like never before.
The last thirty years of industry growth were primarily driven by network access to voice, messaging and data. The next thirty will be defined by the access to services and solutions that are customized to the individual consumer lifestyles. As an industry, we have done well to reach the annual run rate of $1.6 trillion in revenues. But how will the next trillion dollars be generated? Which services are going to dominate? Which players will get the lion share of the revenue stream? How will regulators regulate? How will consumers adapt to the changing dynamics and will we truly realize the potential of the 4th wave? The next decade will yield the answers and determine the new winners of the mobile ecosystem.
The growth of revenue on this fourth curve will be critical. For some players, a weak fourth curve will be fatal. They won’t be able to arrest the fall in the overall net revenue and investor pressure will force them to consolidate or learn to live with lower margins or go out of business. As such, it is important to understand the significance of the fourth curve and formulate strategies that extend the lifetime of the previous three curves such that net revenues and net profitability stay healthy over the course of this decade.
That’s why we have endeavored to gather all of you to talk about the next phase of the industry growth. To paraphrase the legendary Wayne Gretzky, we ought to look at where the mobile puck is going. That’s what Mobile Future Forward Executive Summit is all about. This book has the same goal. We have a collection of great articles that will inform and inspire you to formulate your own strategy on the fourth wave. These articles are written by executives who are shaping the mobile industry landscape in the most fundamental ways.
