TREND: Increasing levels of technological standardisation and interoperability (potentially coupled with pressure from regulators) is likely to result in long term disintegration of many vertically integrated business models which ring fence consumers into proprietary walled gardens. Opportunities will potentially arise for new proprietary cross-industry/horizontal value chains.

The long term trend towards increasing standardisation and interoperability (potentially coupled with pressure from regulators) is likely to result in the potential disintegration of many vertically integrated business models which ring fence consumers within proprietary walled gardens (e.g. Amazon, Apple….etc). At the same time, opportunities will potentially arise for the development of new proprietary cross-industry/horizontal value chains which will have new implications for consumer access to content and information.

The 2007 World Economic Forum report on the Digital Ecosystem: scenarios to 2015 (see page 8) also proposed some thought provoking questions about the potential trends likely to define the future of digital society.

  • The first trend-related question was whether future digital information/content distribution and processing systems (alongside the aggregation of digital products and services) would be primarily controlled and led by industry – or organically shaped by communities and individuals. This question also focused on whether future innovation and the commercialisation of valuable digital assets would be controlled and led by industry – or whether communities would serve as incubators for innovation with individuals successfully commercialising their own digital products and services.
  • The second trend-related question was whether the digital ecosystem would evolve towards being increasingly closed or increasingly open in its future operation.  An open system would be characterised by the interconnectedness of networks, platforms and devices supported by interoperability and common standards, a broad constellation of international actors and a supportive regulatory environment. In contrast, a closed system would be characterised by proprietary networks, platforms and devices operating within closed silos, vertically integrated content, services and conduits, maintained by a restrictive regulatory environment.


Figure 4 (see page 9) provides a helpful diagram which demonstrates the three potential outcomes from these trends acting together. These three outcomes are outlined below:

  • Safe Havens (closed & industry led digital ecosystem) – in an unstable geopolitical environment high profile cyber trigger concerns about online security and a clamour from consumers, businesses and governments for virtual safe havens. Industry responds by vertically integrating to create secured walled environments which provide all digital services. This leads to a small number of digital services conglomerates approved by governments offering services based on proprietary platforms which lock in users. Value lies in creating bundled network and content packages.
  • Middle Kingdoms (open & industry led digital ecosystem) – in a stable geopolitical environment consumers demand open and interoperable products and services. Industry and government co-regulation establishes common standards on privacy and security. The creation of secure identity banks ensure the protection of personal data. Governments support open systems and competition. The network is dominated by a few powerful intermediaries (middle kingdoms) between the users and a fragmented market of specialised providers and offerings. These intermediaries use powerful algorithms that find information and contextualise the results to individual needs. Value is captured by intermediaries and content creators.
  • Youniverse (open & organic community led digital ecosystem) – in a stable geopolitical environment, users want to take control of their digital experience. New organisational structures and grass roots communities grow in power while distributed innovation models become mainstream for products, services and business models. Established businesses need to find ways to engage with this new digital ecosystem by attracting communities. Traditional aggregators are superseded by personal digital agents. The joint actions of all players lead to a new equilibrium which is based on interoperability, open systems and common standards. Open source software and collaborative community structures increase in sophistication.