BE NOT AFRAID:

Big Bang!: Digital convergence is finally happening -- and that means new opportunities for upstarts and challenges for tech icons (Stephen Baker and Heather GreenWith Bruce Einhorn in Hong Kong, Moon Ihlwan in Seoul, Andy Reinhardt in Paris, Jay Greene in Seattle, and Cliff Edwards in San Mateo, Calif, 6/21/04, Business Week)

What's this, A digital role-playing game? There's Dell Inc. (DELL ) selling flat-screen TVs. Microsoft Corp. (MSFT ) execs are unveiling a system to compete with the iPod that plays movies as well as music. And Cisco Systems Inc. (CSCO ) is hawking a Wi-Fi boombox you can carry out by the pool. Nearly everyone, it seems, is venturing far from their specialties. And it's not just tech companies. TV manufacturers in Japan and cell-phone makers in Korea are jerry-rigging their products with microprocessors and software, racing to turn them into a new generation of digit-gobbling, network-ready contraptions.

For nearly two decades, industry sages have heralded the coming age of converging digital technology. But it remained an empty slogan. Now, thanks to faster chips, broader bandwidth, and a common Internet standard, technologies are quickly merging. The market for personal digital assistants, so hot in the late '90s, is vanishing as customers get the same functions in a cell phone -- often with a camera to boot. The latest televisions from Royal Philips Electronics (PHG ) and Sony Corp. (SNE ) have enough computing firepower to grab streaming video off the Net. "Convergence is finally really happening," says Gottfried Dutiné, an executive vice-president at Philips. "Digitalization is creating products that can't be categorized as tech or consumer electronics. The walls are coming down."

That sets up a collision of three massive industries. In one corner stands the $1.1 trillion computer and software biz, with its American leaders. In another is the $225 billion consumer-electronics sector, with its strong Asian roots and a host of aggressive new Chinese players. The third camp is the $2.2 trillion communications industry, a behemoth that extends from wireless powerhouses in Asia and Europe to the networking stars of Silicon Valley. All three groups will have a hand in building the digital wonders that are headed our way. But none of these industries, much less a single company, can put all the pieces together. They all need help. For this they venture into adjoining territories, where they forge new partnerships and take on new rivals.

The result is a Big Bang of convergence, and it's likely to produce the biggest explosion of innovation since the dawn of the Internet.

It's only a matter of time until we get hand-wringing stories about the inevitable dectruction this creation will cause, all of them ignoring the overwhelming fact that each of us will have more knowledge available in our pockets than any nation had in all its universities and libraries just a few decades ago.

Posted by Orrin Judd at July 29, 2004 2:47 PM