The Technology and Business Scene

The theme of this article is to reflect how changes in technology and business methods affect the entire industry. 3G (Third Generation mobile technology – W-CDMA, CDMA-2000) was a big disaster in the mobile business scene. Not only is the cost of setting up the network infrastructure enormous for the mobile service providers, the licensing fees charged by the governments for the spectrum was exorbitant. Subscribers stayed away from the 3G services due to lack of killer applications and high subscription and handset cost. The necessity of such high end services is simply not required by most users. It is only now that we are beginning to notice how VoIP (this happens to be the author’s area of work for the last 6 months) has been slowly killing the telephone business. The remarkable fact about VoIP (Voice over Internet Protocol) technology is the low cost of infrastructure and service. In most developed countries, it would result in the entire fixed phone lines go to waste. VoIP not only significantly reduces long distance call prices, in most other cases it makes PC to PC calls free. This is unimaginable compared to scene ten years ago. It is a major time of concern for the entire telecom industry. The internet software Skype has become a big name in the scene. There is even a big debate about implementing VoIP on 3G handsets. This means that all your video calls would be routed through the Internet and not the entire infrastructure which the service provided invested millions on installation. The problem now for the operators is that we now have several competing technologies for communications and each of one of them is an alternative which comes at a different price. We have already seen several telecoms (Ericsson, Siemens, Marconi) merging at this point of time to strengthen their businesses.

Another big example of change would be the airline industry. The recent entry of budget airlines has drastically brought down the cost of air travel. By booking your tickets online through the Internet, the role of the middle man who is the travel agent has been removed, whereby bringing down the cost for the consumer. Who cares about the lack of in-flight service or food when you flying for a short duration of just 2-3 hours. Low travel cost brings in a boost to the tourism industry. On the other hand, high fuel prices have resulted in severe losses for some of the major international airlines. In the last couple of years, we have noticed United Airlines, Northwest Airlines and Delta Airlines go bankrupt and several others struggling to keep themselves afloat. On the other hand competition is quite severe among the budget airlines itself. As the law of business applies, these airlines would eventually comptete for the same set consumers and then consolidate (take Valuair and Jetstar Asia for example) among themselves to achieve greater profitability in the long run.