 So, a great pleasure to speak back-to-back with Patrick Dixon, who will blow you away later. We do a lot of work together, and it's very interesting to see how we both future it, but with a slightly different approach, mind being more sort of central European also in a way, or Swiss, you could say. I'm originally from Germany. I live in Switzerland now. I lived in the U.S. for 17 years. So, if I speak too quickly, that's because in America, if you don't speak quickly, you're boring. So, unlike Germany, where you have to slow down half. So, I used to be a musician and producer for 20 years. I made 20 records. I lived in Los Angeles. And then in the Internet years, I became an Internet entrepreneur in digital music, the worst place to be, really. I'll explain later why that is. And after founding about 12 companies in the Bay Area, including one that was exactly like Spotify, which you may know, in 1999, my company went bankrupt with 150 people, like everyone else did in 2001. And I found out that the reason for that was primarily because my ideas weren't wrong. They were just 10 years too early. So, in 2001, I started writing a book called The Future of Music, which was about the music business, which quickly became a best seller for people in the music and media business. And from that moment on, I became a futurist based on the book, because, you know, if you write about the future, that makes you a futurist, I suppose. So, I went from music to films, television, broadcasting, marketing, and of course, telecommunications. Half of my work is in this sector of what I call telemedia, the convergence of telecom, media, e-commerce, mobile, social. And I run a company called The Future's Agency, there's 25 of us. We're a global team that does future seminars for companies. And our specific approach is that we work on what we call the operating system. We don't work on the apps. In other words, we work on the world at large, not on how you're going to actually execute eventually. This is part of what we do, but not a big part. We're working on the large picture. And when I talk about large picture, I'm really talking about a fairly immediate timeframe. You know, my approach, basically, in this vortex here, is that I'm all about making the connection between the present and a little bit of the past, but more of the immediate future. So, five years, basically. So, my approach is to go forward five years into the future. Motor of my company, it wasn't raining when Noah built the ark. God knows it's raining now in many places, as far as business is concerned. So, we go five years into the future, and then backwards to figure out how we're going to create our, what we call, the preferred future. There is no such thing as the future, because, you know, everybody creates their future. It's very important to remember that I will not be giving you, today, any recipes. This will be deadly for you and also for me as a consequence. I can do that sometimes, for example, in digital music where it's completely obvious, but it's not about recipes, it's about discovery. So, the purpose of discovery today, those two hours is that we, that you discover a possible, preferred future for your company and of course for yourself, which isn't always the same. So, if you have urgent questions, please lift your hand, fire away. I'll be writing down things that are very important over here as well. You can download lots of stuff in the future of telecom and content from my website, futurewithgird.com. If you have trouble remembering the name, just think of gastrointestinal reflux disease, which is quite common. G-E-R-D, then you have my name. In fact, I'm number two on Google, if you're right after the disease, it's me. I also have a public Dropbox folder called Good Cloud. It's a joke, right, just Dropbox, but it gets you to my public folder on Dropbox where you can download all of my books, my slideshows, presentations. So, if you have a boring week, you know, download everything and the week will be saved. So, first of all, I also want to say that I think part of the process of defining the future is what I call the pain and love process, because, as you know, people don't change unless they have a reason, which usually means pain. The other part of that is love when you're falling in love with an idea. For example, Jeff Bezos fell in love with the Kindle. Nobody asked for it. He actually spent $8 billion on something that he fell in love with, but nobody else did until now. So, now he sells twice as many books on the Kindle than in print. So, for the company to change, the company needs to experience pain, because, you know, why? I mean, if you make lots of money and there's no reason to wonder why, you know. So, because I said earlier, I do about one-third of my work with telecoms. I have about 100 clients all over the world in the telecom ICT business, you know, Ericsson Vodafone MTN, Singapore Telecom. And when you look at Africa, for example, you know, you're selling lots of SIM cards to people in Africa who have the first mobile phone. And if you're still doing that, why would you wonder about what's going to be after that, right? I mean, it still makes lots of money. And here we have actually identified the primary problem of the telecom business, right? The current stuff makes too much money. In many ways, it's actually, we're seeing the output decline which I'll discuss in a second. But in general, the current thing is still going pretty strong. So one of the key questions is how can you anticipate pain? Is that possible? And how can you fall in love with new ideas? So I'll go over that to see if you're ready for this. So first of all, as you can see pretty much as a global phenomenon, is a thing called the switching economy. The switching economy describes a process going from an analog physical economy to a digital economy. And I call this digital transformation. And this is happening everywhere now. So first, of course, the music business. Their response was, we don't like it, we won't participate. So what they have now is a 74% revenue decline as a result because, you know, they basically handed the business to Apple and to Google where it's free. Banks, insurance companies, digital money, transportation, car companies, travel, tourism, all into digital transformation. So part of that process, of course, for people who provide infrastructure is a huge shift of business model in the fact that it's actually no longer about making a connection. Well, it's forced about that, right? But this is not the only reason there's things that happen when you make that connection, including the transformation of other businesses. So when the content business goes online, books, television, music, their entire business is transformed by the fact that it's all of a sudden available. So that transformation creates huge food chain conflicts. For example, how would you describe Google? There's a search engine or not really a media company, not really, but an artificial intelligence company, a maker of drones, fighting robots. You know, what's next? Artificial limbs. So transformation. And this transformation is very important to remember one thing, which of course, you know, you being from mostly technical background, I think, Moore's law of exponentiality. What is happening today is that our technology that we've looked at the last 50 years has taken a long time to actually happen, but now the changes are quicker than anything that we've seen in science fiction. Blade Runner, I know how to report. We have that. We don't have flying cars, but we have self-driving cars. We have electric cars, and of course, we do have flying cars, but they're pretty rare. So we have stuff that's exponentially explosive. And if you listen to Ray Kurzweil and his theory of singularity, which means that sooner or later, machines become more powerful than people as a result of this exponentiality. So it's very important when you think about your business, you know, we're not going on a linear scale, one, two, three, four, five, but in fact, when you go the first three, it sounds very much the same. One, two, four is almost the same as one, two, three. But one, two, four, eight is different than five. So there's a leap that's built in here. It's very hard for people to understand because technology makes those leaps, but of course, people are still linear. We don't think faster because we tweet. Our brain space is limited. So Hemingway is a great saying on this. How does a person go broke? Gradually, then suddenly. Now, this is so true for a lot of businesses. You could say, how do companies become irrelevant? Gradually, then suddenly. Because it takes a long time for that exponentiality to happen, but when it happens, the next thing is a big one. The next leap is a big one. This is sometimes also referred to as a cliff effect. You're going happily along. You know there's something changing down there, but before you know it, the fall off the cliff. There isn't enough time. So the best way to die in this kind of situation is to use a linear approach and basically project forward from today. Taking today's business model and making it slightly better, cheaper, faster. That's the best way to lose that because that's not exponential. So Google's answer, Google's one of my clients, even though we have various conflicts about their business, but their rule of business is that they're not looking to be 10% better, but 10 times is good. They call it the 10x rule. Easy for them to say because they don't have to run any networks or so. It's quite different. But still, the 10x approach for them means let's try to make it so radically better. This is why their email is radically better. At least I think so. I don't use it anymore for various reasons, but it's better. So the main thing about this momentum is the main theme of my presentation to you is what I call the telemedia convergence. And so if you're looking at the world around us, the things that used to be separate, hardware, communication, social media, big data advertising, education, entertainment, transactions, money, I used to be all different businesses, all different silos. Well, guess what? That's all converging now. And the challenge is if you're an operator on ISP, this figure out okay, if all this is happening on top of the network, over the top. What's our position in this? Charge people a lot to ship that data? My view, that's a deadly business model. Clearly, because all the money is generated on top. It's not a bad model. It's just probably won't suffice. And that realization is dawning on a lot of people. For example, you can clearly see Facebook moving into first now, you know, messaging, which will kill SMS soon or later. But not to worry, that's only $300 billion a day, you know, that we go away with that. And then afterwards, of course, making phone calls, making video calls, watching TV shows, paying your bills. Facebook just applied for a banking license. Because I think again, you know, the internet companies don't have a problem with this because they don't invest in any of the underlying structure. What they do in some ways, you know, they're starting to, internet.org and so on. But it's, you know, easier for them. Fair questions, please. So in this convergence, now we're looking at three big factors. First, infrastructure and, you know, getting stuff to be shipped, sending stuff. Mobility, which is the prime factor in consumer business, right? That is the number one factor. Everything is becoming mobile. In fact, you can safely say that the mobile is the outsourced brain. Our brain is in the box there. So everything that we can actually get done with our brain, we'll put it into the box. And we look at the maps, we look at our contacts, we find, you know, if we go dating in Japan, you can use your mobile to make a match with somebody. No problem, works fine. Face recognition and stores, eye beaking in the Apple store. The mobile has become our brain. This is extremely powerful, of course, and extremely addictive and extremely lucrative, which is why Google is putting so much emphasis. So you have communications, mobility, and the cloud. The cloud is number one reason behind why you can now do a startup for $100,000 and not have any servers. You can do something that, like Instagram, and just spend $5 on getting it going on Amazon. And then if you do business then you can increase it. And this is where everything is going. That's where our music is gone. Music is in the cloud, just a click now. Our movies, our money, our education will move into the cloud. No more textbooks. It's obvious. All the print will move into the cloud. So, and that, of course, is an extremely powerful place. Now, the challenge here is, of course, in this, this is basically the world, right? This is basically almost everything. You just add politics to it and you're there, right? Government. So, in this complex environment you have to ask the question, well, what is the future role of Vodafone? What is the future role of an operator? And do we understand any of this? In the last 10 years I've done at least, I don't know, 30 CEO summits of telecoms. And I've spoken to almost all CEOs of the handset companies and telcos and so on. And I, it's quite obvious that we have this thinking that's primarily based on technology, infrastructure. Making things work. Because that's good, right? Because it does work and that's important, right? But it's not enough. That is basically now something that's just there as a given. I mean, people expect you to make it work. They don't actually will comment on if it works only if it doesn't, right? And they won't actually say, well, you've invested half a trillion dollars on a network or so, you know, that's not important to the consumer. That's something to take us a given. And we're seeing this happening everywhere. So, now you can observe a couple of things that are happening in this context here. You know, mobile is at the heart of this transformation. So, you can see Facebook's revenues are entirely moving towards mobile very soon. And of course, you know this is all happening on top of networks without the networks by and large getting any money for that. And it's unlikely that we'll have a Netflix, Comcast kind of situation. You can ask for it, but it won't happen. And net neutrality is an underlying pillar of this whole conversation that will remain despite of what happens in America where if you have enough lobbyists, you can get anything to work there. Mobile is also the new media star. You know, all of the growth is in mobile and of course online. All the shrinking is a radio print and a little bit of television. 80% of all internet traffic will be on mobile devices in five years. 80%. You know, a lot of people are saying that 80% of that will be video. So, you can imagine, I mean, we're talking about not just exponential growth. We're talking about, you know, growth that is, you know, if you're here now, it will be up there on top of the roof in terms of, you know, bandwidth requirement. The movie business is a great example for what happened. You may have known this site called Popcorn Time. It was very popular four weeks ago and they shut it off again. What they did is basically a bunch of students figured out how to suck the tones of bit-torned and generate a streaming engine. So, this is like Netflix, but every movie known to man. And you don't have to download anything. You download the Popcorn Time software and they figure out how to get the torrents to you streaming in HD real-time for free. It's not illegal because of the software. It's not actually providing those, you know, not illegally as such. Of course, they found a way to shut it off anyway. But Popcorn Time shows something very important. In a very short time, they got like $100 million. Because, you know, people would love to even pay for this. Of course, the reason it won't happen is because all of the movie companies around the world have like a thousand different rules as to why they make things available and when. And, you know, they've got, you know, it's a myriad of issues, not just one or two. But the CEO of Netflix calls this managed dissatisfaction. And he had a speech last year about what's happening with movies on the Internet. And he said, primarily what's happening is that all of us got used to be dissatisfied by HBO or cable or satellite. But we kind of got used to it. And now we're realizing, you know what, Popcorn Time? I've always been dissatisfied. And especially millennials, you know, kids, between 15 and 30, you can give me 500 euros if they're going to sign up for cable or satellite, right? They have internet. So this is one of the biggest issues in telecom is that many of your clients are somewhat dissatisfied but you manage them nicely. Roman costs, right? Speed, availability of 3G in rural areas. High-speed internet in Brazil or whatever, you know, you have lots and lots of issues, right? So, managed dissatisfaction only works when and where there are no real alternatives because then what are they going to do, right? In the case of movies, you use Popcorn Time or BitTorrent or you just pay iTunes. I mean, talk about being foolish, right? I've done this for a long time until I spent about 4,000 euros on iTunes. What a crazy idea, right? So, when there are no alternatives. So you can ask the question, will there be alternatives for mobile operators? So the answer is quite simply yes. Many. They're starting to emerge. How exactly that will work? I'll have a few slides on this. But for the time being, it's still a fairly safe place to be, right, because if you want to connect in your SIM card, that's it for now. So now I want to introduce you to the Valley of Death. Give me a positive message to start the day, right? You can dream about this tonight and, you know, look at the classified jobs. But I'm just kidding. What we have here is quite clearly a disconnect between the old world and the new world. This is really true for all businesses. And you're not in the worst spot. The worst spot is print, right? Print and publishing in books. As I'm sure you would either identify, you know? So what happens here is technology has changed the world and has changed user behavior. And we have a new business emerging based on that technology. For example, rather than buying textbooks, you know, I subscribe to the cloud of textbooks. This is what they're doing in Brazil or in India right now. It's to figure out a way for kids to study without having actual books, right? Because the biggest problem is not to pay for the books, but people don't have the books and they can't print them distribution and they go away and, you know, these kind of things. So Brazil is looking into buying 60 million tablets, roughly at five or six dollars each. They connect to the cloud and all the students can connect to the cloud. And that's here, right? But imagine the publisher saying, you know what, we're not so happy about this because, you know, we have a business over here. We have this old technology that's called books. And we count them when we ship them and that's how we make money. They sell units. In this new world, they have a potential market of six billion people, roughly six billion people connected to the Internet in five years, you know, nine billion inhabitants. So it should be a good business, right? To sell stuff to six billion people. Or, of course, the problem is we aren't here yet. We're over here. How do you monetize in the meantime? How do you figure out how to get from A to B? Music business, same problem. You know, if every person in Europe that is connected to the Internet, roughly 800 million people in Europe, we pay 10 euros a year, a year, not a month for music. It'd be 8.5 billion euros a year, bigger than the entire current music business. And how would you pay the 10 euros? The telcos would be happy to pay the 10 euros to include music because it's marketing. Less than one euro a month. So that would clearly work. But how do you get through this? So part, I'm sure part of your future mission within your company is to figure out how to get through this, right? Because that is coming. It's the place to where the old model is declining and the new model has to be built. This paradigm shift of transformation. And I think it's actually good news because as I said earlier, if you don't have pain, you don't change. So there's lots of pain here. So basically you have three responses in this case. You can say, here, okay, we know this is coming, so we're saving up money to go through this. Which companies are doing? Or you're saying, you know what? We don't believe this is coming. Screw it. We just keep going and just ignore this, right? And then you just fall off and you die. Basically. Unless you're extremely lucky. Or third approach is to say, well, if this is coming, can we flatten this curve a little bit, right? And keep the valley a little bit less deep. This is also, of course, very important for your personal strategy. Because you know, of course, that technology is making people superfluous. Artificial intelligence, intelligent robots, software, marketing automation. So we're in our own lives going through this, right? To where we can say, many machines will be able to do some of what we do now. In fact, there is a competition, a TEDx competition for the TED speakers, using an artificial intelligence robot to hold the keynote speech. It's actually held next year. So a robot will give you an inspiring talk. In fact, I am a robot. Not just that. Okay. Before you mentioned politics. Politics of what is this value there? You've seen in the U.S. over the last couple of years with the car ministry that they threw politics and they bail failing companies out. I think they're just cleverly delaying it. It will just get deeper if you do that basically. As you can see in the U.S., yeah? It's not avoiding it. It's just delaying it. Or creating an artificial bridge that eventually collapses. You don't really have a lot of options here. I think that in this scenario, you can tighten the belt and go through it and hope to come out with one water bottle left at the end of the valley. Or you figure out how to make it shorter. So I think politics is a great example because government is going completely digital now. So U.S. is a very special scenario for this for several reasons. Because 74% of senators are millionaires. So what would you expect in a country like that to have something that actually helps the other people? But different discussion. So here's a slide from O3B Networks that you may know. O3B Networks is putting, has already put, I think, 18 low-flying satellites around the Earth to create Internet access for the other 3 billion, which is why I call O3B. I think 12 are operative and very soon they're going to switch on that service. It's similar to what Google is doing with Google Loon, you know, the balloons that are connected to the Internet and the Facebook drones which are supposed to connect to the Internet. Same idea. It's to bring the other 3 billion online. Main investor in this company is Google. Also. And they have a really cool slide that I want to not keep away from you. Same version of what I just showed you earlier. They call it like this basically. As traffic really just explodes because everybody's doing stuff when they're connected. It just goes crazy. And we're not talking about just a little bit. We're talking about, you know, telepresence, holographic, e-commerce, money transaction, with this, you know, all happening at the same time. So that goes like this. The revenues that you're getting in return, they're staying flat or even, I think, they're actually declining because the guys who do the action on top, they get the revenues. They're not part of the same slide. And this is happening everywhere now. In fact, Reliance Telecom in India just half a year ago announced a special deal that only with Reliance you could use WhatsApp for free without the data agreement. Or just include it. And you didn't have to sign up for data. It was just include. Because they had to. What is that? I think 150 million people are using WhatsApp and other platforms like this in India. So you see this discrepancy, right? Revenue is in traffic gap. I'm sure you're quite familiar with this. And then we have, of course, the phenomenon that most of the developing countries, you know, people call the Brick or Civits or Mint, whatever you want to call them, all of the countries that are not in Europe and the so-called developed countries, on their end, they're taking giant leaves in how they develop. They're going, for example, in Indonesia, where I do quite a bit of work for Telcom Indonesia. They're going from not having radio on television to having mobile phone with YouTube. I mean, can you imagine an island off the coast of Bali somewhere? And all of a sudden, they've never actually had radio and now the kids can watch YouTube. I don't know if that's a good thing or not because, you know, clearly, you know, this changes their behavior, right? I mean, they can watch my videos, which is a good thing. But, you know, still, it's a challenge, right? And Unilever and Facebook are now partnering in India to bring internet access to Indians using various methodologies. Three billion people will connect. Three billion new people from the so-called developing world. In fact, we can very soon call us the developing world if this continues. Because, you know, of course, all the innovation is moving in this direction as well and all the funding. And Nigeria and Bollywood already makes about 47 times as many motion pictures as Hollywood. So we see a clear trend towards these huge leaps in those countries. Huge technological breakthroughs. You've seen the movie Her? I think it's actually running in London still. Her is a movie with Joaquin Phoenix where he falls in love with the operating system of his computer. If you have kids, you know what I'm talking about. You know, they fall in love with their mobile phone. Same thing, right? But this is actually much deeper because, you know, the operating system is played by Scarlett Johansson. So her voice is very nice. I'll play, I'll play a short clip. So. I don't think you're too funny. Here are, I saw in your emails that you'd come through a breakup recently. You're kind of nosy. Am I? You'll get used to it. So I've watched this movie in California with my son who was 19. And I was thinking, this is really scary because, in fact, we already have a lot of these same issues. People falling in love with their technology. And my son thought, you know, it's just completely normal. This is actually science fiction, he asked me. Like, yeah, yeah, it's not quite here yet. But for him, it was like imminent. So it's interesting to see that a lot of these things are breakthroughs that we're going to see. For example, 3D printing. Being able to print stuff on demand. Jet engine parts, for example. Printed already. Food being created, artificial meat. I mean, those are breakthroughs that people have worked on for 50 years. I tasted the other dates. I wouldn't buy it, but you know. But these are breakthroughs happening now in the next decade, right? Automated language translation. Think about how that will change our society. This is a Dokomo app that works fine. That was two years ago, in fact. You could speak in English. And it comes out in Japanese in real time. It's 98% accurate. So you have to be really careful how you announce it. Sure. But basically, this technology is now ready. And of course, Google is one of the market leaders as well. In semantic speech analysis. And this will come in reality in the next two, three, five years depending which language to which language to where you can make phone calls in real time with automatic translation. You can have conversations with strangers using your app and you can watch a movie using a synchronization app. So you have your headset on using an app and then you can watch the movie in Farsi. And of course, it's not synchronized with the lips and everything, but you can watch the sound. You can hear the soundtrack in Farsi in real time. Think about what this will do for books. I mean, all these things. And of course, it's amazing to see, of course, all of these things require a network. There's no network, no cloud. You're dead. So it's a good business model. But real-time translation requires something different than just sending a short 2K file or something. This is big data stuff. So interesting thing that happens here. Automated language translation. So I think it's safe to say we have now arrived in a world that's been referred to as WUKA. This is a military world that summarizes it pretty well. This is the life that military people lead. Volatility, uncertainty, complexity, ambiguity. And this is all happening now. And the more people are connected, the worse this gets. Actually, that's not necessarily a bad thing. It's just because a lot more creativity and innovation also comes from this. So we have a new thought leader in corporate strategy, Rita McGrath, who's taken over from Michael Porter, who went bankrupt two years ago. She wrote a book, The End of Competitive Advantage. You have to read this book because you're in that spot. You have a huge competitive advantage, being large, owning a network, being a gateway, walled garden, whatever you want to call it, being large. You have lots of competitive advantages until now. So when you read this book, she shows that basically what's happening is because of technology and because of this exponential growth of technology innovation and because of the fact that people are connecting and going through the digital transformation, a lot of these previous, sustainable, competitive advantages are now becoming what she calls transient advantages. In other words, they're windows. You use them, you build the next one, you go on. And this is a very bitter bill to take. I mean, think about this for a second. If you're a Hollywood studio, you're competitive advantages that you have copyright, you have a distribution network, you've got lots of lawyers, you've got lobbyists, you've got the whole thing rigged up. Now a bunch of other guys come in and they say, okay, we can do this differently. We don't need license agreements with the satellite carriers or HBO, we can go through the internet. So your painstakingly-built advantage in the last 70 years is being eroded by the consumer and the companies that work with the consumer. Like WhatsApp, Facebook, same thing. So this is her central theory and basically, she describes this also in all the exponential part again. This is, you know, we're going to see waves of exponential disruption as part of this coming. And I sometimes use this image to show how the world has changed in this wave of disruption. This is our old world, right? A two-piece chess game. You guys are the operators, you run the network and the other people are the consumers, you know? It's a clear game. It's only two pieces. And you know what to do. It's not rocket science. You make them pay, basically. Now, this game here with Spock is a three-dimensional chess game. That's three boards. So you're in trouble here because, you know, on this, the rules are off because in a two-dimensional chess game, a computer can win. And of course, you can win because you know the rules and you make the rules. A three-dimensional chess game, you can't because the rules are actually being written as your player. They're not fixed. And this rule, this game is, of course, the network provider, the consumer, and then the new entities who are coming in to connect the two. So now, as I was showing earlier, we basically have this scenario of, you know, all of these components of our lives are built into this new game. So in Africa, M-Pesa, for example, mobile money is 57% of all money transactions is done with M-Pesa. Where are the banks? People don't even know what a bank is. They're the unbanked called the unbanked, right? So they use the mobile to spend money. It used to be Western Union. Now, how much Western Union charges do I have to send from Zanzibar to Madagascar? 15 to 20%. M-Pesa, $1. So they own the money, the digital money now. So you can see all this happening in a multitude of ways in all the different sectors of society. So back to Rita for a second. She talks in her book about one main thing that we have to think differently about is the future success formula is you don't think about an industry. You think about an arena. So forget thinking about the telecoms business. You think about all the things around it. So if that's you here, the green turf, right? What is the stuff around it? What's in the arena? All those different pieces I showed you. And which of those pieces will you play in? There have been lots of discussions about this business model for the last 10 years that I was involved with here where lots of people said, well, this is nice, but you know, if we have a nice green lawn, we can just do that. Let the other guys fill the seeds. Used to work will not work in the future because guess what? It's all interdependent now. The business models are converging. You don't get your investment back by having a nice lawn. You need to think about the arena. So she talks about what that means in terms of the difference, right? So arena thinking means you capture territory. You share potential opportunity spaces. You have inter-industry moves, disruption of existing models. Sounds like Google, right? I mean, in a way, they have amplified this arena thinking to a very extreme level to where you have to be worried about them because they're so good at being an arena that they're pretty soon will run the global everything. This slide shows what she means with this, right? So companies in high-velocity industries, which is you, must learn to cycle rapidly through the stages of competitive advantage. Cycle through the stage, not stay in the stage. So in this pyramid, you ramp up, you build, you exploit, you reconfigure, you know, fine-tune, you get out. You have the next one. And that's kind of what we're heading at right now. I'll give you some examples. You've seen the slides here for Europe, you know, brutal decline in core revenues. Now, this is not just Europe. I mean, this is facing all countries. I'm sure you're aware of that. ARPU is declining, and it will be much, much worse than anything we could show on this chart. I mean, if you want to know where this is going, just think about DVD sales in movies. I mean, if you look at that chart, you can see the line dwindles quickly. You have to take a microscope to still see it. Going from, I don't know, something like $15 billion in DVD sales, the line is dropping like this, you know? Do you know anybody that still buys DVDs? My mother. But she stopped when I gave her an iPad. So you see this happening here, right? If you're thinking about extending existing models, you're heading for irrelevance. It's hard to believe because, you know, hard to believe for big companies to head for irrelevance. And this is, of course, a relative term. So I'll give you a parallel example in the car industry where I do quite a bit of work. The car companies looked at the same thing, and they're seeing this thing and saying, okay, a lot of kids are not getting driver's licenses. Not the kids in Norway, but the kids in Singapore or in America are not getting driver's licenses. And car ownership is the worst case, actually, because the most popular model of car ownership is to rent one or to share one or not to have one. So looking at this and saying, well, if this is what's happening, you know, we should be in this other business, which is to provide mobility. So is it better for Audi to provide 100,000 self-driving cars to the city of Singapore or Beijing in 10 years or to sell to guys like us an S5 every now and then? My answer is pretty clear. If you can do both, you should do both, right? But it gets you to the point there. If you're talking to your CFO about this, don't. You know what you're going to hear there. You're going to hear, well, we have huge investments. We need to plan for a turn of this investment, and we have a plan how that works, right? Because we're building essentially a system to get the customer to pay back what we're investing. But in the digital economy, the digital future, we're talking about a different ROI, which is referred to as return on involvement, not the return on investment. How involved are people in your brand? How much can they not do without it? Now, if you're looking at telecoms like MTN or Singapore Telecom or even China Mobile, this is what they want to do, right? They become a lifestyle provider. They do a lot of things. I mean, this is the fear of God for financial people, of course, because how are you going to monetize return on involvement? That sounds like a bunch of hippies from California. So ROI 2.0. Because otherwise, I live in Switzerland, which is the prime motivating factor of Swiss people, Swiss business people, is to never take a risk. So the prime thing there is to say, you know, we could be doing this, but why? You know, that's minimized the risk of latency. This latency attitude will get them killed. Because in this fast-moving environment, the pressure is enormous, and the runway gets shorter. I mean, we're seeing where this is going. Our smart devices are becoming sort of medically cheap. The Kindle will be free. I mean, a Kindle costs only five bucks to make some of the basic version. So Amazon might as well give it to all of us for free. So our devices are going to drop like crazy. They are our cash tablet here. $31 in India, I think. Anybody from India here? Some $30, I think, right, the basic version. How many? I think they sold 23 million in a week once. That's crazy. So when devices becoming so cheap, smart devices, people are connecting, of course, then that work has to be cheap. And of course, guess what? The more people are connecting, the better the network has to be while it's being getting cheaper. It's like this. So this leaves us at a very interesting place. This leaves us in a transition. Now, this is what it used to be, and now there's something new happening here. And this will be your job, because you're supposedly the next leadership by here. So congratulations. This is a good spot to be in, actually, because timing is perfect. I mean, in the business case, it's getting clear. It's basically about platform thinking, not being a network, but being a platform. And I know you've heard this before, 10 years ago. It didn't work. So phones, telecom, and Orange, and all the other guys have spent, what, 700 million euros on trying to get music into their system. It didn't work. They're trying to get into the movie business. It didn't work. And there's lots of reasons why it didn't work. People weren't ready. Everybody was trying to get stuff for free. You know, the first wave of the internet. That has changed. And the internet was still a special thing. The business case wasn't there. And the content owners weren't ready. So platform thinking is not on an advanced stage. In less than two years, we'll be seeing global social media telecom broadcasters. Combine, you know, Facebook, of course, is the ultimate example of this. I mean, Facebook is a broadcaster. And we are the show on Facebook. We make the show, right? We are the content of Facebook. So it's good for them because they don't have to pay for the show because we make the show on Facebook, right? They can broadcast it globally. And you combine all these things. I mean, would it be too far-fetched for Facebook to buy one of the big telecoms? Probably not because there'd be no real reason until they die to buy them from their point of view. I mean, in China it's different. Anybody from China here? Okay. China is different because in a state-run system, you can combine these things in very powerful entities like Baidu or Webo, right? I mean, you can create different kind of business models that are irrespective of what we have to do with fear in terms of regulation and all these things. You can create those things that are further looking because you have less issues to consider. In five years, imagine something like all of these guys, you know, being in every segment of your business. And I literally speak about every segment. Connectivity, communication, banking. Now, that's already happening. And what are you going to do about it? You're going to go to the European Commission and complain. You can do that, but, yeah. Okay, so in America, I made a deal with Netflix and Comcast. That was a good thing for Comcast. You know, they get paid to be quicker. Okay, fine, but this is America, right? Well, you know, these kind of things work. But here, you know, basically what it comes down to is you have to figure out this business model of, you know, these companies are controlling the Internet. You guys control the network, at least in theory. I mean, look at all of this. You know, it's a mind-programming. Google's stock is like at what, $1,250, it split a couple of weeks ago. And all these new guys are coming in. What do they actually do? I mean, WhatsApp was sold to Facebook for the entire evaluation of Lufthansa and Singapore Airlines combined, an app. So clearly, huh? So we have to think about making that shift. This is why I think you're lucky. Going from the industrial and mechanical mindset, the infrastructure, the engineering mindset, you know, which I'm not saying it's a bad thing. I'm just saying that is, of course, a background of all of this, right? I mean, replace these tubes here with towers and satellites and then you've got, you know, you've got the situation. And this new situation is much more colorful and chaotic, a digital and exponential. How can you do that? Mark Anderson, Netscape founder, said something very powerful, which has been true for years. You know, software is eating the world. Everything that can is becoming software. I mean movies, films, books, banking, cars, everything is becoming software. So you're extremely lucky because a tower can't be software. A tower is software, but, you know, there is an infrastructure there, right? You have to actually do something. You can't just program something. You have to actually run it. But even in your business, of course, you would safely say that most of technology has become software. Most of products have become software or what I call experiences. Television, right? From here to the cloud. In five years, you know, all of the major terrestrial broadcasts are just an app. So CNN is just one of the choices on your television. It's not just something that, I mean, you know, we're sitting today, if you're my age, you sit and you zap up and down with the remote control, you forget it, right? Because here is all in the cloud. You just tell the television, give me coverage of Korea. Boom. You don't even know where it comes from. Books, right? Textbooks. And we're talking about, I mean, this is roughly 2.5 trillion dollars a year in public expenditure in textbooks. It's all going here. So I mean, talk about business opportunity, education, right? Humongous, of course, telecoms have worldwide discovered this. Saying now, we don't know anything about it, but we'd like to take your money. So figuring this out is quite a mission. So as an example of not to react to this, you know, I love the New York Times, right? You guys are familiar with the New York Times. If you like the New York Times, you get punished, right? Because when you go there more than 10 times, you get this. And then it says, you've read your 10 things that you can read this month if you use the same computer that is, right? Now click through to find out. And, you know, when you click through, they ask you for 350 dollars. So what they are saying, essentially, is that this whole thing is about scarcity, right? They're forcing me to pay because they're scars with money on their end. And their figure I should be paying for something that has always been free, which is reading stuff. So they are actually doing the flip side of what people have referred to as abundance, which is that there's plenty of it. So the New York Times has this paywall called Paywall, right? They have achieved 1.2 million subscribers, you know? But they don't all pay the 350 dollars, right? But even if they did, I mean, we're talking with the biggest newspaper in the world, in a country of 3.20 million people. So if you use that approach, you know, to create artificial scarcity, which means you're generating, you're putting a wall to make a scar so you can get money, right? You're creating the opposite of the model that you should be looking at. So what happens here is that because of this value reduction that we see of the efficiency, you have to find new reasons to buy. In your case, value reduction is our poor decline. Translation, same thing. Our poor will decline. Other guys will be cheaper. This is an ongoing thing towards zero. So what do you have to find other new reasons to buy? So this is a key word for you to remember. Between your nightmares tonight, you can think about that. RTB, reason to buy. Why would people be your customers? Not because there's no other alternative. Not because you're the cheapest. Not because you've twisted their arms like in the New York Times. I mean, I'm in fact, I am a subscriber now, which is ridiculous. So they have been very successful with me. But how will you do that? Here's a great slide for my fellow futurist, Ross Dawson in Australia. And when you download the slideshow, you can take a good look at this. But basically what he's saying is that in news, in the newspaper business, there's like a hundred different reasons why I would pay for a service. Why would I pay for a newspaper app or not pay? But the service, the reasons are all over the map. They're fragmented. And that applies to you as well, which is why I'm showing you this. So the reason that people would get engaged and say, okay, I'll pay something, or I'll pay a premium or something, is because they see a value here somewhere. For example, they may enjoy the interface, the way that you present data. Dropbox, for example, is a good example of this, that interface example. I mean, you can get storage for free. Dropbox has a better interface. Spotify, same thing. Insights, design, reputation, community. So it's a cocktail of these different reasons why people would pay. And how? It has to do with price, of course, as well. So having a premier bank account, having a pre-concealed service, or something that kind of tops people up. I would like to stand apart. I'm higher on the hierarchy of needs. Well, of course, this will be different for each brand, for each industry, right? But really what it comes down to is this is a question of branding. People pay for brands. And if you know the brands that people are paying for, are happy to pay for, give you some simple examples, Red Bull, right? I mean, that stuff is awful. But they create this thing about, this cult about drinking Red Bull. And it's truly awful shit, right? And you know it's also bad for you. But, you know, they figured out a way, and this is about a college, right? It's cool to drink that. Or Harley Davidson. In a world where people are getting less driver's licenses, they sell more motorcycles. Because it's about this culture of being different, and you know, this fashion thing, right? So, I mean, the story goes on and on here, but this is very much the landscape for you to figure out how you can add value. How you can create new product offerings. So when you look at this, you know, later on, you can say, well, let's find a way that we can create something. For example, I subscribed to four magazines, I think four content things on the web. One of them is The Economist. And the reason I subscribed to The Economist is because The Economist allows me to listen to the magazine as an audio track. So because I read a lot of stuff in my eyes, get tired of reading, so when I'm driving, can't read anyway when I'm driving. So I connect my iPhone to the car, right? And I can listen to The Economist magazine. So I drive for two or three hours. I learn a lot from driving. You know, I can listen to that. I can still drive. So I'm paying $150 for The Economist, but I would never, ever read it in print. In fact, I throw it away when it arrives. Goes into the recycle and never read it. If The Economist wasn't a good magazine with good writers, I certainly wouldn't listen to it. But if The Economist did not have the audio version, I certainly wouldn't pay for it. So bottom line is with that, it's about this combination of finding a reason to buy. Giving me something that I like and many of you wouldn't care about listening to The Economist because maybe we never drive. Maybe you don't like to listen to stuff. Maybe you listen to music. So it's fragmented. And this is your challenge if you're thinking about marketing and creating a competitive advantage, right? Because for a lot of people, I don't give a damn about personalization or about whatever, right? But the person right next to him cares a lot and that's the reason to buy. No, not really, no. Why? I could imagine I would buy your story but I might not pay for it. I might buy a concept. I'm not paying for it. Yeah, it's just important. I think that the primary thing really is that it's the lesson that we have in the last five years in the digital economy is really that when people see value, they'll pay whatever. I mean, it's mind-boggling to observe Farmville, right? When it was still successful. You know the game Farmville on Facebook? Made $600 million a year. People buying artificial curates, you know, virtual curates. Netflix, you guys know Netflix, right? 48 million subscribers. Paying $10 a month for something you can get for free on BitDoran, right? I mean, my son still thinks I'm crazy for even paying the $10, right? Because you can find stuff streaming for free. Yes, you can. And it's not even illegal to stream for free. Yeah, it's impossible to track. In most countries. So finding an approach, you know, Netflix says for example, okay, give us a $10, you're not actually paying for the movies. You're paying for the interface. You're paying for the fact that you can watch on the iPad and then go to your television and be at the same place. Convenience, right? And a clear mind, so to speak, right? And that is where you want to get to. People say, you know, you become indispensable, which is my keyword number three. If you're not indispensable, you will be dispensed, right? This is digital Darwinism. And this is the harsh reality of the valley of death. How do you personally, within the company, but also how does your company become indispensable? This is not the same thing, but clearly a similar strategy. And guess what the answer is? Just like you as a person will not be indispensable because you're smarter, you can forget that. There's always somebody else and a computer that's smarter. In fact, computers are getting so smart, it's scary. You can't know everything and you can't save everything and you can't compute everything as a human. You're not going to be on the level of smartness, right? You're going to be on other levels like creativity or storytelling or stuff that other people can't do. So as a company, how do you become indispensable? Not by being cheaper. Not by being faster. This is all part of it, of course. If you are expensive and still not good, that's also not a good mix, right? But this is the key question. What is your future position in this ecosystem? It's a question that all of you see, you see all your top level management is asking every single day. It's the question of how do you become indispensable in the future? Because as you know, look at Nokia, right? Talk about indispensable. If a single person in developing countries had a Nokia phone, it was like air. And now, as a single person in Indonesia or India, what their next phone is, it's not a Nokia. I mean, they still have the old Nokia's, which work fine. There are some advantages to it, but it's all Android now, whatever. It's a different story. So what's happening here with telecom is that you are in a lucky place, again, I think, because you're going from the water glass, which is your own little bubble of providing infrastructure to the fishing bowl, to the world at large. And the world at large now, if you're this fish here, and it looks like I sketched you very well here, with all of these things that are happening, social, local, mobile, big data, business intelligence, artificial intelligence, machine to machine, Internet of Things, all the stuff that's happening, right? I mean, without the network, all that is dead. I mean, talking about, you know, this is a, can't ask for a better business case than that, I mean, that has to be there. But unlike the past, it's not enough to just make it work. They also have to decide what it is. Peter Drucker, who's a great management guru and a great virtual mentor of mine, has a great quote saying that, the greatest danger in terms of turbulence is not the turbulence, but to act with yesterday's logic. Of course, you know, we can't really avoid acting with yesterday's logic. Everybody does that. Because there is no future logic. It doesn't exist yet, right? We have to make it. So in a way, I'm going to ask you to be schizophrenic. You know, you have yesterday's logic. You have a job to do. When you get back to the office, you're judged. Your KPI is judged by all that old stuff that probably won't matter in five years. But you have to think of two levels now. You have to think about the old logic and how you excrete on that, because that is the current measurement. And the new logic. The new logic is basically not to live in those silos of saying, you know, we're here. There's the money people. There's the infrastructure people. And there's the content people. None of that will be the case in five years. So let's talk about data, because I think this is a big point, right? In 2006, the American Marketing Association termed this word, this tagline, data is the new oil. And I've been using it ever since, you know. So it's not for me, but if you haven't heard it before, then you can safely assume that it's been around the globe. So if data is a new oil, what it really means is that now the importance of data has grown so tremendously that in next five to eight years, people are estimating it will surpass the value of oil for self-use, which is currently 7.8 trillion dollars a year. Because everything that's happening today is based on data. Transactions, connectivity, all the stuff that's happening with business intelligence, you know, storage, cloud computing. I mean, basically all of these things are happening now in the way that's fueled by data. In fact, when I was in Abu Dhabi in Dubai a couple of weeks ago on the seminar, of course, they would love this idea to take care of data as the next oil, rather than all the next oil, which they know eventually will be less powerful. So what we're seeing here is moving forward into an economy that's entirely based on data. For example, you can assume that most companies are going to start using their business data and, of course, telecoms have lots of this kind of data in a way that generates extra value that is referred to as data mining or business intelligence. So all the stuff that are happening, you know, this is basically a way to figure out how to use data to create an asset. And, of course, most important for big data is this rather confusing slide here. This is the Google self-driving car, I have virtualized. Basically, what it means is, for example, the Google self-driving car cannot move an inch unless it has a data stream of 850 megs per second, telling it what to do. It's actually, the Google car is driving on data. It's not driving on electricity. And it's interesting to see that, you know, I wrote in it the other day. It works great, but there are, of course, a multitude of hurdles. For example, in the Google car, you can see that it can digitally see things around it. But it's not smart as such. It has rules. For example, if you're driving this car, you're going down the road and there's a frog on the road. The Google self-driving car would look at the frog and would recognize it's a frog. But if there's a double yellow line, it could not decide what to do because A, you can't cross the line, it's forbidden. You can't kill the frog, also forbidden. You can't drive a little bit, you know, with one wheel on the left, one on the right, not to hit it because it's unlikely to work. So the Google car says, you know what, I'm stopping. That's it, I'm done. And it will sit there for five years until the computer explodes. You know what a person would do? Kill the frog if you had to. Cross the yellow line or try to avoid it. And it would take you like a fraction of a fraction of a fraction of a second to decide. So this is how far computers have gone, you know. They can do all these things, but they can't do that. And if you let the computer decide to kill the frog, you're in deep trouble. Because the computer learns that you can break rules. How are you going to teach a computer how to break a rule and when not, right? You have to have other rules, how to break the rules. In any case, digitally seeing things is becoming mission critical now for businesses. For a sentiment analysis, for example, of brands on the Internet. Data analysis of who does what and who likes what and who connects to whom. And of course, the huge business of surveillance which is becoming not important just for government but also for brands. In fact, you could say it's the same purpose. One is for marketing, one is for surveillance. But anyway, this is becoming mission critical now to get this data. And of course, you in the business are selling this data. And Google makes roughly $2.5 billion a month on selling mission critical data. That's what they do. When you run AdWords on Google, you sell data, right? Google says, oh, here's a match for you, you know, in this territory at that time, Facebook, same thing. So that, you know, roughly the global advertising marketing economy is roughly about $1 trillion a year. And this will all move to mobile platforms. So this is a huge opportunity there for things. You know, business intelligence, you know, is seeing through things. Sometimes referred to as omniscience, seeing everything. It's becoming possible. It's entirely possible now to look at you and to predict whether you're going to buy this product or not. Just like to predict whether, you know, you're going to vote in this direction or that or whatever, right? It's a scary thought, in fact. But this is a huge, huge business area of the future. So you can bet that all of these things that are happening, for example, now you have with the Internet of Things, you know, connected devices, Cisco and GE and SAP and other companies are betting very heavily on this that will probably have about a hundred times as many connected devices as we have people. Sensor networks, traffic lights, house climate control systems, point of sale systems. Of course, yeah, as you know, you know, this is the number one topic for telecom companies because they want to sell embedded SIM cards. I'm sure you're familiar with that thing, but... And then we have, of course, artificial intelligence now getting so good that you have companies like this one, Narrative Science, writing articles for newspapers. Forbes magazine articles and some of the Guardian articles are written by intelligent software, not by journalists. That's a scary thought here, right? Can that be done? I think, you know, if we're looking, this is the primary changing force in our environment is how technology is impacting this and what we're going to do about this. Internet of Things is the biggest thing of force for companies because of efficiency. You know, I do some work with Unilever and it's quite clear if they collaborated with other people on logistics, they could save 50% of logistic costs. And we're talking about a lot of stuff here, right? By connecting everything that goes, they could save 50%. If we connected all of the energy networks, the grids, our houses, our refrigerators, our cars, we could save 40% of energy. So we could solve climate change by having efficiency through sensor networks and by making a switch to renewable energy, we could solve it in 20 years. Technically speaking, possible. And actually make money with it too, which is another interesting side angle. I mean, if you're looking at the global installed devices, it's clearly wearables, smart TVs, Internet of Things. I mean, if this is not a business model for companies like Vodafone, I don't know what would be because clearly. But the thing is in the end, in this case, you have to create the ecosystem around how this works. It's not enough to make it work. This is a crucial lesson because the ecosystem where the money comes from. Making it work is a service job that will eventually be pushed towards zero. I know you're skeptical and I can see that, but we'll discuss later. So the Internet of Things, you know, clearly, I mean, I don't have to tell you this, but you know, we, Jeremy Rifkin's latest book, you know, he's a sort of a green economist, right? He says by 2020, at least 50 billion sensors, right? Private connectivity gains will exceed 14 trillion dollars, the gains of efficiency based on this kind of system. Of course, you could argue the flip side of that would be that everything is monitored, you know, which could also be a rather scary thought. And so if you, if you lived in Iran, of course, maybe it wouldn't be quite, somebody here from Iran? Sorry. Oh, you are? Okay. Okay, sorry. Okay, we'll talk about that, but you know, it can be used on both sides. This is, of course, really, you know, the whole Snowden-NSA affair is also about this, right? Because what happens with all this data? The connectivity data? Who is in charge of that? So added to this, of course, the trend towards wearable computing. So in the next few years, we won't be having what's called bearables, you know, what we can carry, but we're switching to wearables. So that the computing that we do and the connectivity we're doing is connected to things that are basically monitoring us and telling us in advance what's happening. If you want to know how this works, just try an app on your mobile phone called Google Now. It's on, it's on every, every Google app you download has Google Now built into it. So Google Now basically says, okay, we'll take all the information that you've given me through Gmail and Google Search and YouTube and whatever you're using in the Google Universe, which is the world, basically. Then Google will tell you what's gonna happen next. Google will tell you through the app, Google Now, saying that if you go to a place that will tell you, you know, when you land there's a traffic jam going to the office, shall I call your colleague and let them know that you're coming late? And Google will make the call for you. So that's wearable computing in a way to, you know, this whole commercial out there when you need it, you know. So we're really moving into a world where we use the type and then we use to speak to the computer and maybe gesture to the computer. Very soon the computer is sitting on top of us and then it's in us, basically. I mean, this is not science fiction, sadly enough. I have to confess, of course, I would never wear Google Glass in a social setting. But you can imagine, for example, the power of this technology for a doctor. Would you want your doctor to wear Google Glass? Probably, right? Because the doctor could, at that moment, when he's with you, see your entire record, you know, for example, in the emergency van or something, right? In an ambulance, you know, could see your entire record floating by and could make an instant decision, which otherwise they would have to do on the mobile, which does take longer, right? Or a fireman who can see what the layout of the house looks like. But then you think of the flip side, for example, of an entire police force using Google Glass, which they want to do, right? Imagine that. That would be scary, because they could see your Facebook profile and everything, right? And they could make estimations and infer things on that, right? So there's lots of confusion about this, what's going to happen, right? But basically, Apple already has patents to bring the Internet inside of us. And this is not far fetched down. You know, this is clearly going to happen with brain-computer interfaces, but just something to keep on the horizon, you know, as the next thing. And I'm not immediately a business case, I don't think except for science fiction office. So world of computing will probably become as common as smartphones. This is a new Motorola 360. It's part of the Android project. And it connects to your Android phone. It basically gives you a display that you wear and you can make it do whatever you wanted to do. For example, show you the stock market, show you the traffic. You can have apps for it. And the whole thing, right? Talk about addiction, right? This is mad thought, right? I mean, you already have people walking around like this, now they're going to walk around like this. But I don't know. But anyway, clearly this will also increase the data flow and the need for connectivity. So it's a business that's about to happen. And then we have artificial intelligence. All of the companies that we know, not the telecom sadly, which is, I still don't understand why that is happening. Just like I don't understand what the publishers haven't figured out how to use e-books and stuff themselves. They had to wait for Apple for that to happen. But all these guys, Microsoft, Google, Facebook, they're buying up every single artificial intelligence expert around the world and every company they can find. Because you know what the future of the internet and search is artificial intelligence. So artificial intelligence simply put is to use machines to do what humans use to do. To emulate humans. So for simple tasks and for complex tasks, for example, here in this case, in the case of search, you don't actually search anymore. The computer knows you're working on a project, you need to follow the stats and images and stuff and it collects it all the time for you and puts it into a box. And you can slice and dice it any which way you want. It's always there. You don't actually search for it. And it learns what you like and it actually writes a research report for you. This is already happening, but imagine what happens there. You know, when you look at this and what happens here, you know, basically the network inside, everything has been networked. Big data, real-time artificial intelligence. So there's lots of business cases around this why this is powerful. There's lots of issues about why this is possibly dangerous. But as our friend Larry says, you know, we as Google, all of you, we're only at 1% what's possible. It's funny. Now when I talked to the CEO of a major telecom three months ago, he told me that we've pretty much done everything that's possible. The opposite view, you know, what else can we do? And then of course the Google mantra in our way has dramatically changed. In 2004 they said don't be evil. In 2010 they said evil is tricky to define. And in 2013 they bought a military robot maker. So we have this new version of the Internet coming up which is really a scary thought, you know, as to all the things that may be possible. We have massive global broadband growth not just coming from incumbents like telcos, but you know, from the lives of Google Fiber and Google Balloons and, you know, the connectivity lab on Facebook and then we have, you know, the Internet organization saying that connectivity becomes a human right. Which it is in Finland by the way. You can sue the government if you can't get online. In Switzerland it's a reverse. You can sue the government if you can't get offline. So anyway, so these game changes are coming up massively. You don't believe that these guys can make a dent? I don't think that Google is really serious about fiber in terms of them becoming a provider of this. This is just like the Google self-driving car. Google doesn't want to make cars. You know, what Google does is they make the operating system for the car. So the likes of Audi and other ones, they make the cars but Google creates the ecosystem. Much better. You don't want that to happen here. Google will not compete with you on a global level on providing fiber to every village in Africa. They're only doing this to sort of get things going because what they really want to do is they want to run the whole ecosystem around this connectivity. Data. Transactions. And the rising tide floats all boats. That's the concept. When people connect, it floats their boat. So here's your key opportunity for Vodafone and for all big telecoms and ISPs and mobile operators. The opportunity is to create tomorrow's ecosystem. You have today's ecosystem. In fact, you could say it's more like an ego system. It's a system that is kept inside. And that has worked well for a while because there wasn't much of an alternative. What are you going to do? Not make a phone call? So it was quite safe and protected. But now, if you're looking at cars, for example, what's happening here is mind boggling what's happening in the car ecosystem. Is that tomorrow's ecosystem is either self-driving or remote-controlled or shared or public. But it's not at all like today's. And it's mostly electric. So now you have companies like Tesla. You guys familiar with Tesla from California? They're selling twice as many luxury cars as BMW and Mercedes combined in the US in 18 months. Talk about tomorrow's ecosystem. I mean, this happened all in two years, basically. We're much harder to do in Europe because of various reasons. But so the key is to create an ecosystem. For example, a Tesla would be useless if you can't fill it up. How are you going to go from LA to New York? It's possible now because Tesla has these stations. So in your business, same thing. Connectivity is part of this, but this is an ecosystem. And you have to put all the pieces in place for that to happen. For example, one of the pieces in the future telecom ecosystem is security of users. What has been referred to as a digital rights bill, a global understanding of what happens with my data, which we currently don't have. As you know, of course, the entire infrastructure of the internet is run by American companies who are subject to an American emergency loss since September 11th as we found out last year. So this creates a huge friction between what should be happening and who should control it. IBM is a great example for doing this. IBM is a really boring old company selling hardware. They decided some 10 years ago, beginning of the Web 2.0 about eight years ago, to rebrand themselves and say that IBM is about the smarter planet. So it's not about hardware. It's not about computing. It's about the smarter planet. And so now they basically own this space of saying that they can make the planet smart by using data, by using connectivity, by improving smart cities. And so they have rebranded themselves by not saying, you know, IBM makes computers, or does consulting. That's a larger story. Something very similar could be done, I think, with Vodafone to create something that emphasizes the original purpose, which is to sell hardware and services, of course. But that's not the reason why people think of IBM. So here's the challenging paradigm shift. Telcos and ISPs used to be over here in a system that can now really be summarized as an ecosystem. You know, a system based on infrastructure, of course, which is locked down and secured and access control and so on. And which is based on this sort of, in economics terms, on this pyramid. You either in or you out. And now what's happening is that all of a sudden we realize that the world has become very complex. And there's other ways to make money. So now, basically, it's moving over here, right? Where it's more like, you know, we still have big players in this system. It's a woman, by the way, not a guy. That's interesting. But so in this system, it's an interdependent system. And you can be a big player, but you can't own it and you don't control it. So therein lies the economic difference. You know, the transient advantage is that you're creating an ecosystem where you are indispensable in the ecosystem. But you're not the ecosystem. You follow the difference? And that is a painful shift, right? Because from an infrastructure point of view, when you own the infrastructure and you can control access, then that's your business model. It's exactly like the Hollywood studios who used to say, you don't want to watch this damn movie, pay us. Go to the movies, buy a DVD, otherwise you're a pirate, right? Very simple. Well, of course, that doesn't work any longer because, you know, everybody is a pirate. It's so easy. So they have to create a new ecosystem. So in this system, I took this clip from a movie that you should watch called Connected, the movie, where it's basically a little bit like this, you know, to where these trees are all interconnecting and now interdependent is the new normal. This is basically everything is shaping up in this direction. And that is the success factor behind Amazon, behind Google, behind YouTube. There's an interdependent system of all of these things that have belonged together. Digital money is the best example of this. The 2 billion unbanked people are joining now via mobile and they're creating their own ecosystem of how this works. In fact, a lot of these people in developing countries are now going to be ahead of us as far as banking is concerned. Paying for their cocaine or whatever, using an RFID chip or using a mobile... Which we don't have to do because, you know, it works fine like this, you know? And we're used to paying very high fees to the banks. So you can imagine, you know, banks like Credit Suisse or so, or UBS or other big banks, you know, they're looking at, later studies are saying that 45% of what banks do can be taken away. And this is an interesting term that's being used for this. It's called digitally contestable, that you can use digital means to contest your business. And that's what's happening here on this whole turf. This entire turf of money has become digitally contestable. For example, Bitcoin, you know, which isn't quite ready for that, but, you know, I think telcos will play a very big role here in facilitating this. And of course, everybody's looking at mobile money. I'm sure Vodafone is looking at mobile money. So, a great way of showing the end of these silos to go beyond the core has been shown by a consulting company, I think it was Accenture, actually, who said that all of the big tech players are doing the same thing, right? They have their core business and then they go out and create satellites around it that amplify the core business. But by the time they're done, the satellites have become so big that the core business is just one other thing that's also there. For example, Google is in a search business, advertising. But now they have an OS. They have different software. They have different services. They have platforms. They have devices, right? So, they have essentially gone and become a platform based on their core. Now, if you put Vodafone here, and the key question is what are those platforms? And how will you get to build them? Because I think it's quite clear here that if you adjust this, I think it would work if you're in the nuclear power business, you know, because it's, you know, it's very hard to contest with that. But otherwise. So, the cloud and the total digitization that we're seeing, the ubiquitous computing, machine intelligence. Very, very big data, as I call it. They will require new rules, new norms, and markets, and social contracts. And companies like Vodafone have to be involved with that as well. This is politics really, right? Who gets to decide who can use that data? Where should your data center be? How do you collaborate with governments? I mean, these are all big international questions that cannot be answered in one sentence, right? But clearly, you can see right now what's happening with the debate about the future of the internet, right? Who controls the internet? And who should charge whom? These are big topics. Lastly, and then we'll take some questions and we'll have a discussion. Once everyone is connected, which is happening in the next three to five years, right? We also have to make sure that once people have a broadband lifestyle, right? That they also remain human, which is actually a real danger. I'm not kidding you here, right? So, you see this little cartoon here with that guy. He's like, I'm trying to find more friends, right? And lots of friends waiting. And this is actually happening everywhere where you have broadband. In Korea, you have 47 clinics for internet addiction. I've visited one, not as an inmate, but just to take a look. But it was very interesting, right? Or living in a bubble of information. That's based on your connectivity. To keep the internet open, you can see right here right now this is a really highly politicized topic, but it's quite clear in economic terms that the more closed the internet is, the less economic throughput you have. So the more you control the internet, the less you get the economic benefit. You can see on this chart here, internet contribution to GDP is very high in the UK because it's fairly unrestricted. If you're going all the way down here, for example, in China, we can discuss if you want to comment on this, is the economic contribution is low because the restriction of internet is high. So as a direct relationship, you can see in these reports about what's happening with the utility on the openness are interrelated. Utility meaning the result of what's happening. This is why it's very important to have it an open and public internet as well because they're interrelated. As you can see on the slides here is that countries with more internet restrictions have slower connectivity. The more they are closed, the slower it gets. So free countries have higher connectivity. For obvious reasons, like it harder to get online. This is something you have to keep in mind where you have to prepare for this, right? If you're in the telecom business, you're going to have data wars because just like we had wars about oil which is actually the primary reason for war. Now, in the future, we'll have war about data. In fact, you can safely say that about 50% of all military budget will be spent on cybersecurity because clearly, if everything is connected, I could kill a country by remote controlling their public cars or I can make it very uncomfortable for you by turning up your thermostat remotely. You have a smart TV? You guys have smart TVs like Samsung smart TV? Okay, the first thing you should do is put tape over the camera because I'm not a tech guy. I can hack your smart TV to watch you. It's actually quite amazing what's happening there is that they are even less secure than any computer known to man, right? But everybody has one. So we're looking at those issues becoming primary issues of integrity, of trust on the Internet. You can expect a lot of people to not participate unless they find a way that it's actually secure. There's already been calculations that the NSA, Snowden problems have resulted in roughly about $55 billion loss of revenues for the U.S. for cloud computing. So a lot of companies don't want to put their data anymore there because apparently, you know, pretty much anyone can get into it. So these are big discussions. I think we should prepare for that especially with wearable computing. I mean, if you're going to wear a fit band, right, that monitors your weight and how little you walk because you're at the computer all day long, right? If that data is actually shared with your insurance, that could be a good thing because it could be cheap. You know, they would say, well, you're blaming on dye anyway. So you don't need insurance. But, you know, you don't want that to be shared without permission. So that creates all kinds of problems. In the end, it comes down to this, right? Trust and technology are directly related. People don't trust Vodafone because you give away the data or because you do something bad or because you block the network when the president says so or whatever, right? It creates huge trust problems. This is a primary issue of failure. And, reversely, also, it's funnily enough when people trust you. It doesn't matter if you actually suck, right? I mean, in many ways, you can do something that doesn't work and people say, you know what, these guys are trying. They haven't succeeded, but I trust that they will get around to it. I mean, lots of examples for this, like Dell computers. I mean, for years it was, you know, a Dell sucks campaign on the Internet and now they have 60 people twittering about Dell failure, right? They're twittering about all the problems with Dell and very few of them are getting fixed. But they have trust. So, I don't know. I mean, I have a few more slides about entertainment. Should we take some questions now or should we move to the summary or because it's been already very long. I know I don't want to kill your brain space for the rest of the day here, but... Let me give two slides of this and I move to the end and then we'll take questions. But this is very important, I think, for you to realize if you're looking at the future of telecom. What's happening in visual entertainment and video and satellite is that we're moving in this succession through an exponential explosion. They're from broadcasting to cable and satellite and now to the cloud. So, basically all of the films and television shows in the future are moving into the cloud. They will not leave cable and satellite, of course, but this will be extra. And imagine what happens when you have 6 billion people using this. And, yes, we pay incrementally less. So, here we pay something like $100 an average on a global level between $50 and $100 and here we pay $10, right? We pay $110. But there's a lot more people and there's driver connectivity. So, this is a great opportunity when Hollywood is being reinvented, you know, to get into this, for example, to solve piracy. Oh, what's that? So, it's a conversion of these things. I think that's important. This sort of new living room situation where people are using over-the-top devices for entertainment. This is the number one trend for millennials. You know, for people between 15 and 30, we're going to see that on a global scale. Very powerful business model requires very high broadband connectivity, of course. So, this has great impact on telecom sectors and you can see what my friend here, Martin Geddes, who's a telecom expert, he says, we're moving into a world that's no longer service or technology-centric, but that is product-centric and experience-centric. And that is a platform, you know, experience basically combining those two things. And I think that will be the challenge for the future. And I think if you're looking on a global scale, finally, of course, the guys who own the rights for all this stuff, they're finally ready to do business. That wasn't true five years ago. But it's now happening. And this is a game of only large players. Only large players can do this because we're talking about billions here. We're not talking about chump change here. The only people who can do this are either telecoms or the internet giants. But it requires huge scale. So, this is a very, very powerful situation. Over-the-top content is a very lucrative opportunity. Look at here what's happening in the U.S. People are leaving cable because they have internet. Look what's here, what's happening with entertainment, what people are doing here, the growth of Netflix. I mean, we've talked about this already. What's happening in social media? How advertising is shifting? So, a quick summary on this. I think we're looking at the fact that on an exponential growth scale, Lodifone is somewhere around here, around the pivot point basically. So, there's only two ways to go. To move up the scale will require adding lots of layers of services and activities. Because at this pivot point, there's new players coming in, doing other things, competing with you on various levels. And the key question to me is how will Lodifone do this? Which of those segments would be of interest? And which ones are realistic? Of course, the primary problem with this is that most people in telecom business don't know anything about entertainment or content or licensing or the multi-level world. It requires leadership. You know, a great saying here about Henry Ford. If Henry Ford had asked people what they wanted, they would have said faster horses. He made cars. He didn't make horses. You ask your users what they want. You know what they're going to say? I want a cheaper price and a faster network. And I want it to just work. Why? That's a faster horse. You know what? You have to make a car. You have to think about what is after this obvious claim of the consumer. And John Hagel said the job of leadership is not to make money. It's to make meaning. Don't tell that to your CFO. Who the hell are you? Get out of here. So back to VUCA in the summary and then some questions. So I think what we need to do is we need to flip the VUCA as I call it, right? Go from this old principle, which is rather dystopian and depressing, you could say. Because when you're looking at this and you're saying the world around me is basically heading in this direction. Everything that used to work is under fire. Well, a few things left. I mean, go to Brazil or India or Indonesia. This is the VUCA world personified. I mean, we are sheltered here. You're on the US from those kind of things being in the open. But if you go to developing countries, it's extreme like this, which is why they're moving ahead. So we need to flip this and say, OK, let's flip this and talk about another VUCA velocity, unorthodoxy, co-creation, and authenticity. Velocity being speed, right? Unorthodoxy, challenging the old paradigms, changing stuff, disrupting things. Yeah, easier said than done. There's quite a claim here that we should discuss later. And lastly, customers want to know what your purpose is. Is your purpose in life is to make money? I mean, not you personally, but the company. Patagonia is a great example. Patagonia run this ad two years ago in the US. Run full-page ads in all fashion magazines. Don't buy this jacket because you don't really need one. You can get the old one fixed or you can trade because it's more environmentally friendly if we don't buy new shit all the time. That was the main message. They sold 16% more jackets because their purpose in life is not to sell. That's a side effect because that's harder for you guys to do. Don't make this phone call. Don't use our data plan. So that wouldn't work here, but think about beyond that, what is the purpose of this brand? I mean, this is a clear consumer message that has to be answered. And the first ones are emerging in the mobile market who have a purpose, who are looking to design a purpose around what they do. So don't act with yesterday's logic. Consider telemedia as your future. Oh, now we're jumping over there, okay? Think of what you have as a platform, of your company as a platform. Think about how this will play out. Think about the shift from eco to eco. This is very important to think about your business as an arena. Read the book, you know, it's fairly simple to read. Also, you can watch Rita McGrath on YouTube. Got some pretty good talks there. This is a huge challenge, your overlap of machines and people, and also a huge business opportunity, clearly. But I mean, if you think about the future, that could really create some interesting scenarios. In entertainment, moving to the cloud, or content moving to the cloud, you know, books, education, everything. So this is a must-involve kind of place, right? Because this is what creates the bandwidth load. This is what people do. This is what people want to do. And there's a huge business there, and it's just, it's very nascent still. You know, the only real success story there is really Netflix. And a few like BBC iPlayer also, maybe. But Spotify, for example, is not a success story, unfortunately, from music, because the business case is difficult. I have about 10 million subscribers. It's very small. So that's kind of the summary. I know this is a lot of stuff, so I think it's good to just get some questions. Now, look at the PDF. Send me an email if you have a question. Don't Twitter me, because I can't read all my Twitter messages, but just send me an email. I'll put the address up here shortly. And also download my other stuff that you can see on Gert Cloud, so you can read some more stuff about this. As a summary, I want to say that I think you're, you're right at the pivot point, right?