The document discusses the disruption of traditional media and communications business models by the emergence of the "Anywhere Network". The Anywhere Network is described as a seamless and accessible infrastructure that provides a connection for everyone to everything from anywhere. This is liberating consumers and disrupting existing business models. The summary discusses how business models are evolving from ones with total control over networks and users, to displaced control models provided by companies like Google and eBay, to emerging community-driven and user-centric models. It also discusses how revenue models are shifting from subscription-based to advertising-based models due to these changes.

1. Profiting from the Uncertain
Business Models of the
Anywhere Network www.yankeegroup.com
March 2007
Executive Summary
The media and communications industries
By are in chaos. Traditional business models
Philip Marshall, are being severely disrupted as new What Is the Anywhere Network?
Ph.D., SMIEEE innovations emerge and take advantage
The Anywhere Network is
Senior Vice President, Enabling of the low market entry barriers created
Yankee Group’s vision of a seamless
Technologies Service Provider with Internet Protocol, MPEG and for and always-accessible intelligent
internet browser technology. Anywhere infrastructure that provides a
Philip Marshall, Ph.D., joined
Network™ is a framework for navigating the connection for everyone to everything
Yankee Group in 2000. He is senior
vice president of Yankee Group's developing chaos and profitably delivering from anywhere.
consumer research group. He manages services to the Anywhere Consumer™ and
analysts focused on service providers' Anywhere Enterprise™.
perspective to investigate market and
service opportunities and trends for
telecommunication systems. The Anywhere Network is Yankee Group’s
vision of a seamless and always-accessible
Before Yankee Group, Dr. Marshall worked
intelligent infrastructure that provides
in various engineering operations, • Is destroying traditional media-centric
software design, research, due diligence a connection for everyone to everything from
business models.
and strategic planning roles in New anywhere. Internet connectivity moved this
Zealand, Mexico, Indonesia and Thailand. • Will demand interoperability between
control to companies such as eBay, Google
Dr. Marshall also cofounded a software competing solutions for VoIP and
and Yahoo! The framework also encompasses
company specializing in the development of instant messaging that will drive the
database applications and was an electrical community-led and user-centric solutions,
which affords the users increased autonomy, obsolescence of proprietary solutions.
engineer at BHP New Zealand Steel.
service variety, flexibility and personalization. • Has enabled search-centric solutions
Exhibit 1 (on the next page) illustrates the to firmly establish themselves in the
Table of Contents variety of existing and emerging business early phase of the Anywhere Network
Introduction 2 models that could be affected by the and garner significant success with
Business Model Uncertainty Arises evolution of the Anywhere Network toward advertising revenue support. However,
from Anywhere Network 3 it will see it become increasingly
user-centric solutions.
Monetizing the Anywhere Network 4
commoditized with the increased
Business Model Division Over the
Anywhere Network 5 In particular, the Anywhere Network: need for standardized search
Carrier-Centric Solutions 5 • Will demand carriers implement solutions that capabilities throughout all facets of
Commerce-Centric Solutions 6 increase the intrinsic value derived from the Anywhere Network.
Traditional and New Media-Centric 7 distribution capabilities of their networks. • Will see the proliferation of community-
Communications-Centric Solutions 8 centric solutions as the Anywhere
• Will drive commerce-centric solutions to
Community-Centric Solutions 9
support an increased demand for ad-hoc Consumer seeks greater specificity and
Search-Centric Solutions 9
Connectivity-Centric Solutions 10 community and ultimately peer-to-peer control over the services delivered over
Conclusions 11 transactions. the Anywhere Networks.
The Executive Summary continues on next page.
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.
This Yankee Group Report is published for the sole use of Yankee Group clients. It may not be duplicated, reproduced or transmitted in whole or in part without the express permission of
Yankee Group, 31 St. James Avenue, Boston, MA 021 For more information, contact Yankee Group: info@yankeegroup.com; phone: 617-956-5005.
16.
All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice.

2. March 2007
Media and communications industry Exhibit 1. Business Models Collide at the Intersection of Digital Media, Communications
regulators face the challenges of the and Internet Communities
Source: Yankee Group, 2007
market conditions created by the
Anywhere Network. Policy makers are Traditional
grappling with the migration of legacy Media-Centric
network centric regulations, appropriate Operators Producers
New Media- • Comcast • Columbia
regimes to anticipate service evolution Centric • News • Viacom Carrier-Centric
and appropriately manage the efficient Corporation • Disney
• BitTorrent • MySpace • Cablevision • China • Verizon
use of scarce resources such as radio • YouTube • Lime Wire Mobile Wireless
• Apple • Sprint • Vodafone
spectrum, and ensure that there is
sufficient market competition to benefit Enterprise- Connectivity-
the Anywhere Consumer. Centric Centric
Community Driven
• Microsoft • wibiki
• Avaya • FON
• Cisco • Ozone
User-Centric
Commerce- Communications-
Centric Centric
• Amazon.com • AIM
• eBay • Skype
• Vonage
CE-Centric Search-Centric
Community- • Quigo • Wikipedia
• LGE Centric
• Sling Media • Yahoo! • Ask.com
• Sony • Plaxo • XING • craigslist • Google
• LinkedIn • Facebook
Introduction
The media and communications industries This chaos will accelerate and become advantage of the low barrier to market entry
appear to be in chaos. Traditional increasingly disruptive as players capitalize that is the hallmark of the transformation.
communication service providers are fighting on pervasive and open technologies such
market decline with convergence strategies— as Internet Protocol (IP), internet browser, What is going on here? Yankee Group calls
attempting to fend off disintermediation from IT virtualization and media standards such this disruptive transformation the next global
internet upstarts like Skype. Internet and media as MPEG. connectivity revolution as the world moves to
players such as eBay, Google and News Corp the Anywhere Network. The Anywhere
are making lofty investments in unprofitable Players across the value chain will be Network is Yankee Group’s vision of a
companies such as Skype, MySpace and disrupted as new industry models emerge. seamless and always-accessible intelligent
YouTube. Apple recently made a big splash Telecom service providers and software infrastructure that provides a connection for
with its overpriced iPhone, and companies vendors such as Microsoft are struggling everyone to everything from anywhere.
offering media and social networking because it destroys the traditional value of
application seem to be capable of achieving the network and software lock-in techniques The Anywhere Network provides a guide for
massive market scale overnight, albeit with they have vigorously pursued. Google and profitably delivering media, communications
dubious standalone business models. Skype, beneficiaries of the early phases of and internet-based services in support of the
the Anywhere Network, are under threat ever-increasing needs of the Anywhere
from later entrants that take can also Consumer and the Anywhere Enterprise. Its
2 © Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.

3. March 2007
characteristics vary between markets and Business Model Uncertainty Arises from Anywhere Network
market segments. For example, solutions
that enable low-cost basic communications
The Anywhere Network exposes existing During the Total control period, dominant
services in the short to medium term are the
business models to disruption in the telecom and media companies benefited
priority in nascent emerging markets. This
process of enabling new models to flourish. from closed networks and captive user
contrasts with mature markets where basic
As the Anywhere Network evolves, it communities, for whom they controlled the
communications are well established and the
continuously liberates the Anywhere delivery of services. The unleashing of an
convergence of media and communications
Consumer and Anywhere Enterprise from open internet and standardized browser
is a more significant consideration for
business models that aim to profit from technology allowed players like eBay,
opportunities with the Anywhere Network.
exercising control over the user experience. Google, Microsoft Skype and Yahoo! to offer
Exhibit 2 shows that this liberation process Displaced control services such as online
This Yankee Group Report focuses primarily
progresses from total through displaced to auctions, internet search, infotainment and
on the evolution of the Anywhere Network in
community-driven and, ultimately, user- messaging services with vertically integrated
mature markets and segments of emerging
centric control. The Anywhere Network service delivery platforms. These solutions
markets where the convergence of media
environment encompasses the various displace the control from the network to the
communications and internet services is
business model phases that capitalize on the service delivery layer, using highly
ripe. An analysis for economically emerging
open internet environment. Only with a proprietary and vertically integrated service
markets, which focuses on the delivery of
deep understanding of the Anywhere delivery technology with sophisticated
low-cost communications, will be the topic
Network and its effect on the Anywhere portal-based user interfaces.
of a future Yankee Group Report.
Consumer and Anywhere Enterprise will
players escape the calamity and profit from A hallmark of the Anywhere Network is the
At the heart of the Anywhere Network are
the phases of ecosystem maturation low barrier to market entry that enables the
business models emerging as a result of key
illustrated in Exhibit 2. proliferation of a seemingly infinite variety of
technology and market innovations. This
report develops a framework for navigating
the emerging variety of the business models Exhibit 2. The Anywhere Network Evolution Drives a Business Model Revolution
illustrated in Exhibit 1 (on previous page), Source: Yankee Group, 2007
with particular emphasis on their current
and emerging characteristics. Legacy Closed Anywhere Network Environment
Ecosystem Maturity
Media and Open User-
Communications Centric Driven
Service Delivery
Open Network
Open Community- Networked User
Driven Services Communities
Open Network
Controlled Service Networked User
Communities
Open Network
Controlled Service Networked
Controlled User Community
Network/
Distribution
Captive User
Community
Total Displaced Community User
Control Control Driven Centric
Apple Craigslist Amazon EC2
eBay Facebook Google Desktop
Google MySpace
Microsoft Wikipedia
Yahoo! YouTube
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved. 3

4. March 2007
services and applications. In the past, these As Anywhere Consumers become
Monetizing the Anywhere
services and applications were implemented increasingly sophisticated, they will seek
Network
using vertically integrated service-delivery greater autonomy and control over the
silos. Vertical integration is necessary to manner in which media, services and
The emergence of the Anywhere Network
support nascent services and applications applications are delivered. This will drive the
and the displacement of control from
that standards-based architectures cannot need for services and application
traditional media and communication
support. However, these solutions present personalization of the user’s context and
providers also shifts the monetization of
challenges for the Anywhere Consumer. efficient management of the lifecycle of
services and applications they offered.
services and applications as needs change.
Although traditional providers continue to
The Anywhere Consumers are now locked This emerging User-centric category offers
seek subscription funds, emerging business
into the vertically integrated services. But as massive upside market opportunities.
models that derive revenue from
users become more demanding and seek a
independent sources, such as advertising,
wider variety of offerings, the providers’ Early implementations of user-centric
have emerged and continue to evolve.
challenge is to offer broad service delivery offerings such as Google Desktop and
Players such as Google have mastered pay-
applications that are suited to the mass Amazon Elastic Compute Cloud (EC2)
per-click advertising, while others such as
market. The recent “Peanut Butter provide early (and relatively rudimentary)
Yahoo! have been more effective in branded
Manifesto” article in the Wall Street Journal illustrations. Google’s Desktop application
advertising. Major players hope the
articulates the challenges Yahoo faces enables users to federate services and
emerging Anywhere Network business
supporting a wide variety of services with a applications in a single portal environment.
models—and the associated convergence
vertically integrated market strategy. Although there is some some
between media, communications and the
personalization, the structure of the services
internet—will create revenue that will
Community-driven solutions continue to be and applications are relatively static.
offset subscriptions.
supported on vertically integrated service Amazon EC2 offers virtualized grid
delivery infrastructure, but the media and computing capabilities that offer flexible,
Although Google and Yahoo! see the lion’s
services delivered over this infrastructure are user-provisioned computing capabilities.
share of their growing revenue coming from
facilitated by like-minded communities, Others such as HP, IBM and Sun have offered
advertising, upside opportunities for
typically with the service being essentially similar solutions. However, these are not as
advertising in other sectors of market are
user generated. Early communities, such as versatile and tend to be targeted at large
unclear. For example, the large MySpace and
craigslist, LinkedIn, Plaxo, Facebook, enterprises. The intrinsic value providers
YouTube communities seem to be prime
MySpace and YouTube, focus on managing that offer community-led and user-centric
targets for advertising but these communities
local advertisements, contact details and solutions derive depends on the extent to
filled with young members tend to be fickle
user-generated media. The accelerated which they liberate the Anywhere
with limited disposable income—not
growth in these solutions shows the Consumers’ experience.
necessarily ideal advertising targets.
value that comes from
federating services to As Anywhere Consumers become increasingly
Because only 3% to 4% of total advertising
like-minded
sophisticated, they will seek greater autonomy expenditures globally are internet based,
communities. Google
and News Corp and control over the manner in which media, there appears to be significant upside
potential. Communication providers hope
recognize this value services and applications are delivered.
they can capitalize on personalization and
and, with acquisitions
user behavioral characteristics to offer
of YouTube and MySpace, respectively, are
targeted advertising. But, to succeed,
looking to complement their existing offerings
targeted advertising strategies require vastly
with community-driven solutions.
increased sophistication, particularly in the
case of premium advertising.
4 © Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.

5. March 2007
As disruptive business models continue to
Business Model Division Over the Carrier-Centric Solutions
emerge under the Anywhere Network
Anywhere Network
umbrella, business models for monetizing
Carrier-centric solutions provided by major
services will come and go. For example,
As Exhibit 1 illustrates, there are a wide telecommunication providers that own and
Apple currently derives the lion’s share of its
variety of service offerings and associated operate massive facilities based network
music business profitability from iPod
business models emerging under in the infrastructure, such as China Mobile, Sprint,
devices. Apple cannot sustain this model
Anywhere Network. To understand the Verizon and Vodafone, garner the bulk of their
indefinitely. Similarly Google was
evolution of the Anywhere Network through present-day $2.7 trillion revenue from
unprofitable before it launched its
the various stages of development, we’ll traditional circuit switched telephony services.
advertising-supported internet search
investigate the existing and emerging
model. In general the effective monetization
business models associated with the Carrier-centric business models rely on closed
of services, whether through direct
networks and service delivery environments
Anywhere Network. In addition, we’ll look at
subscriptions, ad-supported or campaign-
that exert significant control on subscribers
their traditional and emerging control points
type offerings, will depend primarily on the
(i.e., the total control category in Exhibit 2).
in the value chain, their prospect of survival
scale, consistency and reliability of the
The Anywhere Network will ultimately destroy
as a category, and the various technology
underlying service offerings. Important
and market innovations that they mustthese business models. The internet has
considerations when evaluating business
already created an open environment to
implement to capitalize on opportunities
models include:
allow the delivery of an abundance of
with displaced control and self-service
• Are there obvious direct and indirect
internet-centric services, such as search and
paradigms. We will discuss the enterprise-
revenue streams that can be derived from
e-commerce, over the telecommunication
and consumer electronics-centric business
the service? For telephony, cable and
networks without carrier intervention
models in subsequent Yankee Group reports.
broadband services, for example, this
or control. More
could mean revenue sharing associated Carrier-centric business models rely on closed recently, peer-to-peer
with e-commerce transactions or pay-per-
networks and service delivery environments VoIP services, offered by
click type advertising models. These companies such as Skype,
revenue streams tend to be associated that exert significant control on subscribers.
have enabled the delivery
with specific transactions as opposed to The Anywhere Network will ultimately destroy of voice telephony
less tangible brand-led initiatives. these business models. services over the internet
• Is there a consistent service offering and at a fraction of the price carriers traditionally
usage model that has intrinsic value and charged.
can be monetized in its own right—or by
a third party with a parallel revenue—or These innovate services achieve global reach
value-generating capability, such as with relative ease and distribution over a
sophisticated indexing and cataloging of variety of fixed and broadband networks. Until
existing offerings? recently mobile networks had not enabled an
• Are the multiple identities and profiles of open internet environment because of network
the Anywhere Consumer managed in a performance and difficulties in delivering
unique way? These might include a variety services to mobile devices. Higher bandwidth
of trusted party security solutions and networks, data-enabled laptops, devices with
techniques for service brokering. standardized operating systems, fixed mobile
• To what extent can providers combine and media convergence initiatives, and the
profitable services with others that lack emergence of access technologies such as 3G
standalone business models to magnify and WiMAX, are enabling the mobilization of
the internet.
the aggregate intrinsic value of the
service offered to the subscriber?
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved. 5

6. March 2007
As the Anywhere Network evolves, carriers To profit from the displaced control, carriers creates. To achieve this, carriers are
must establish business models, deploy must harness the existing and emerging essentially serving two masters. One master
associated technologies and develop service capabilities in their service delivery, network requires that the traditional best-of-breed
distribution strategies to capitalize on the and service distribution solutions. Carriers services are delivered efficiently and is
business models that arise from displaced must either optimize their business models optimally addressed with vertically
control. The business models might focus for wholesale network operations, or integrated service delivery solutions. The
on offering wholesale and retail network alternatively create an efficient means for other requires the federation of a breadth of
connectivity—relying on others to enable federating internet and other dedicated services, which requires horizontally
services over the networks. Or they may play third-party (off-net) services and integrated service delivery solutions.
a greater role in the service enabling applications while they drive cost down and
process. Because most carriers resist the add advanced functionality to their
notion of being bit-pipe providers, the offerings. In both cases, carriers must focus Commerce-Centric Solutions
analysis emphasizes their active role as a on driving service offering beyond an
service provider (or, more appropriately, a intermediate displaced control approach to Companies such as eBay and Amazon, which
service enabler). a completely user-centric orientation. In provide online e-commerce portals for third
doing so, carriers must capitalize on context parties to buy and sell merchandise, support
The challenge for carriers is in profitably awareness, such as device and access commerce-centric solutions. These
transitioning their business models, market network type, location and presence, media companies capitalize on the global reach of
strategies, and capital and operational category and subscriber profile. the internet and extend the span of
investments. They must pay more attention distribution they can manage and control.
to areas where they can differentiate, such To succeed, carriers must carefully The persistent fragmentation in the e-
as monitoring and managing service prioritize their technology investments to commerce market coupled with intense
distribution, and complex and dynamic simultaneously deliver their traditional competition from specialized e-commerce
business process management. Exhibit 3 services economically and capitalize on the and brick and mortar companies, and the
illustrates that transition. opportunities the Anywhere Network continued need for managing logistics,
provoke players such as Amazon and eBay to
continue developing solutions that extend
Exhibit 3. Anywhere Creates Opportunities for Openness in the Process of
the variety of merchandise they offer,
Destroying Closed Carrier Silos
Source: Yankee Group, 2007 improve communication and business
process capabilities, and lower overall
Displaced Displaced Control
Total Control Control and Beyond transaction friction. See Exhibit 4 (on the
next page) for an illustration of the areas of
Services and Services and Services and
Applications Applications Applications strategic importance in the e-commerce
value chain:
Network IP SDP IMS
• Third-party plug-ins facilitate integration
Network IP
with existing customers, managed
Network
e-commerce services, and enable new
Dedicated Open Network Context-Aware, transaction orientated applications to be
Network Distribution Open Distribution
efficiently implemented in A2P, P2G and
P2P environments.
• Transaction management capabilities
aimed at managing electronic transactions
Services and Devices Services and Devices and Services and Devices and
Applications Applications Appliances Applications Appliances over the Anywhere internet. Transaction
Google Yahoo! management capabilities will evolve in
AT&T Bell BT Amazon.com eBay To Be Determined
lockstep with functionality created by
third-party plug-ins.
6 © Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.

7. March 2007
• Integration between Anywhere The combination of ubiquitous communications,
Traditional and New Media-Centric
Network and bricks and mortar access-independent service delivery, low-cost
includes logistical functions, such as the and diverse media aggregation and distribution
Traditional media-centric businesses cover a
delivery of merchandise, and must methods has spawned competitive media
broad range, including: Dow Jones and
incorporate both business process and sources. These range from community-based
News Corp, which offer print and online
communications capabilities (such as solutions such as MySpace, YouTube and
information centric media; cable companies
Skype and instant messaging), blogs to music-sharing sites such as
such as Comcast; and media content
particularly as transactions become LimeWire and media-sharing solutions such
publishers and distributors such as
increasingly ad hoc. as BitTorrent. Apple capitalized on the early
Disney and Time Warner. These players
digital content distribution solution offered
historically enjoyed significant control
by Napster and disintermediated the music
over the development,
Virtually every service and application delivered industry with its vertically integrated iTunes
aggregation, rendering
solution. Because the lion’s share of Apple’s
over the Anywhere Network incorporates digital and distribution of media
profitability in this area comes from selling
media of some kind. This significantly disrupts and entertainment
iPod devices rather than the music
services. Leveraging
media-focused players and has pushed the entire content—it is not beholden to revenue
their market control
share arrangements with content providers,
value chain to develop innovative solutions that in conjunction with
and disrupted traditional content-centric
encompass media in some shape or form. the quality of their
business models for music distribution that
content, brand and
were based on the physical distribution of
they audience developed lucrative revenue
digital content on compact discs. As large
streams from subscriptions and advertising.
media providers lose control over their
These models are under considerable
traditionally captive markets, revenue from
pressure as the Anywhere Network begins to
subscriptions and advertising have fallen
take hold.
significantly. The Anywhere Consumer is
spoiled by choice and at the same time
Exhibit 4. Strategic E-Commerce Hooks in the Face of Stiff Competition overwhelmed by the variety of media and
Source: Yankee Group, 2007 entertainment services and the excess of
information available on the Anywhere
Integration
between Anywhere Network. In some cases, consumers are
Network and opting for solutions that were not
Bricks and Mortar
developed for monetary purposes.
Virtually every service and application
Logistics, Business and Operational Support Systems delivered over the Anywhere Network
incorporates digital media of some kind. This
significantly disrupts media-focused players
Internet and has pushed the entire value chain to
Third-Party Portal Transaction
Browser Device
Plug-Ins Interface Management develop innovative solutions that encompass
Interface
media in some shape or form. Google focuses
on harvesting digital and video content,
Third-Party Transaction
Federation Management combining the content with its robust search
Services capabilities and communities to broaden its
(e.g., eBay,
PayPal) advertising revenue. Carriers are implementing
solutions such as IPTV, mobile TV and
partnering with companies such as Apple to
deliver content and video services over their
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved. 7

8. March 2007
networks. Sling Media and others are The communications solutions offered by players
Communications-Centric
capitalizing on their ability to redirect video such as Skype illustrate the benefit of bringing
Solutions
media from set-top boxes to the internet. And communications and messaging capabilities to
companies such as Amazon have extensive captive communities. As the Anywhere Network
Communications will continue to be an integral
catalogs of digital media that they distribute continues to mature, personalized and access-
function of the Anywhere Network. Social
from their e-commerce portal. News Corp neutral communications capabilities will became
networks and communities have shown the
made a series of strategic acquisitions, standard within the Anywhere Network business
potential of peer-to-peer connectivity and
including MySpace, expanding its portfolio models. As this occurs, Anywhere Network
communications. Communications was once
from the traditional to the new media users will come to expect the availability of
the sole domain of telecom network operators
domains. News Corp, in conjunction with key interoperable peer-to-peer VoIP and IM
with carrier-centric business models.
partners such as Google is also exploiting the capabilities, leading to the eventual
The openness of the internet, the proliferation
MySpace community to bolster its media commoditization of technologies that support
of VoIP and instant messaging technologies
distribution and advertising capabilities. them. With Skype, eBay has a powerful
paved the way for a new breed of
communications-centric asset that provides a
communications to emerge in the internet
New media will infiltrate the variety of services competitive differentiator for the near term.
environment. Companies such as Vonage
and applications enabled by the Anywhere Skype functionality, which eBay acquired for
have a very similar business model to
Network. Traditional and new media players $2.5 billion in 2005, will be commoditized
traditional carriers, but designed their
must aggressively integrate sophisticated within the next 24 to 36 months.
technology and operations from the outset
media search, management, integration and
for VoIP These companies offer competitive
.
personalization capabilities, user-generated
plans and packages similar to traditional telcos
and premium content, communication and
and more recently
transaction capabilities that rival those offered
by specialist providers. The Anywhere
cablecos that offering The Anywhere Consumer will utilize an
bundled telephony
Consumer will utilize an ever-increasing volume ever-increasing volume of media and benefit
services. Players such
of media and benefit from its integration with
as Skype and Yahoo! from its integration with other complementary
other complementary functionality. At the
same time, the market will be surprised how
offer peer-to-peer VoIP functionality. At the same time, the market will
solutions, which, by
users consume these integrated services. For be surprised how users consume these
offering low-cost
example, the vast majority of music video
services that capitalize integrated services.
downloads from Apple’s iTunes are viewed on
on global internet
PCs and laptops rather than an iPod.
connectivity, significantly disrupt the
According to Nielsen Media Research, Video
underlying business models of the traditional
iPod users consume video 1 of the time.
1%
carriers. Through viral adoption, Skype reached
136 million subscribers at the end of the
Digital rights management (DRM) and
third quarter of 2006, less than 5 years after
copyright continue to be major issue as media
being established.
is unleashed over the Anywhere Network.
Media distribution through social networks
and peer-to-peer connectivity will tax
traditional approaches to DRM and copyright
management. It will drive careful evaluation of
the intrinsic value of the underlying media and
content versus the manner in which it is
delivered. Because the social networks tend to
disrupt traditional subscription-based
distribution models, indirect revenue sources
from advertising, e-commerce and other
transactions will become critical.
8 © Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.

9. March 2007
Services and applications that offer community
Community-Centric Solutions Search-Centric Solutions
are a natural evolution of the Anywhere
Network. They enable much-needed service
Community-centric solutions incorporate Google and Yahoo! made search and ad-
segmentation to better manage the seemingly
offerings ranging from blogs to a variety of supported search-centric business models
infinite variety of potential services and
structured social and commercial networking hugely successful. Google mastered a business
applications. Furthermore, players will combine
applications where much of the content is model well suited to non-premium advertising;
community-centric services and applications
user generated. Blogs are the most widely Yahoo! has focused more on premium
with powerful search and discovery capabilities,
adopted community-centric solutions today. advertising, such as complex brand-focused
which will demand a degree of personalization
They are easily applied to the traditional campaigns run by ad agencies. Non-premium
and ultimately drive the Anywhere Network
internet allowing ad-hoc interactivity. Other advertising opportunistically drives users to
towards the delivery of user-centric solutions
community-centric solutions offered by particular company sites based on complex
illustrated in Exhibit 2. In addition, the
LinkedIn, Facebook, Plaxo and XING, enable prioritization algorithms, and premium
coordination of like-minded parties will create
subscribers to coordinate and expand their advertising is focused on the subtle activities
viral peer-to-group (P2G) and peer-to-peer
contact networks for personal or business associated with bolstering company brands.
interactions that capitalize on the integration of
purposes. These solutions help members
seamless communications, media distribution
identify and contact former college friends Both Google and Yahoo! aggressively pursue
and ad-hoc transaction capabilities that will
or previous work colleagues. Solutions expansion strategies to implement
emerge from the commerce-centric capabilities.
support personal-generated content such as complementary solutions, such as instant
pictures and videos, and other functionality messaging, e-mail, video and other types of
including targeted job media services, partnerships with telecom
advertisement outreach. These Services and applications that offer service providers, and a variety of infotainment
companies create viral networks community are a natural evolution of the solutions. Although diversification is critical for
of like-minded individuals by these players, they run the risk of diluting the
Anywhere Network. They enable much-
allowing friends and business value of their core solutions by spreading
acquaintances to share contact needed service segmentation to better themselves too thin. Vertically integrated
information. Facebook has more manage the seemingly infinite variety of technologies and approaches will challenge
than 40,000 virtual networks in them to move beyond highly complementary
potential services and applications.
which users affiliate with a offerings, such as the storage and indexing of
particular community. MySpace media and search capabilities.
and YouTube have emerged from community-
centric origins, but captured greater mind Both players are known for their dictatorial
share by applying user-generated content to approach to the market, which does not
interested groups with both direct and indirect position them as particularly good ecosystem
relationships with the content authors. partners. Their current search capabilities
need to evolve to offer greater granularity and
search accuracy with the increased market
demands for personalization, service discovery
and ubiquitous capabilities. A slew of startups
aspire to be the next Google with improved
search capabilities. Chances are that Google
will acquire one or more of them, particularly
while it still enjoys a lofty enterprise valuation.
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved. 9

10. March 2007
Craigslist and Wikipedia are among the other Traditional internet search providers must
Connectivity-Centric Solutions
search-centric business models. Wikipedia is a innovate to broaden the scope of their
nonprofit and relies on user-generated content offerings. In the process of doing so, they
Throughout the Anywhere Network,
for its electronic encyclopedia. Craigslist will face challenges in migrating beyond
residences, enterprises and municipalities are
classified advertisement service operates with complementary service offerings, without
deploying private networks to meet specific
modest revenue essentially to cover its costs. dramatically changing their vertically
requirements (such as Wi-Fi in the home or in
The approach that craigslist and Wikipedia are integrated approaches to technology
hot spots throughout a community). These
adopting disrupts ad-supported search- innovation. Yahoo! has already confronted
wireless solutions typically rely on unlicensed
centric models. It dilutes usage of sites such as this challenge—one of its senior executives
radio spectrum, operate independently of
Google and Yahoo! and offers search and acknowledged that it has spread itself too
other networks and use rudimentary
discovery capabilities without being thin in the marketplace in a memo leaked to
management systems. These are in contrast to
encumbered by advertising. the Wall Street Journal (the so-called
the highly coordinated networks offered by
“Peanut Butter Manifesto”).
broadband, media and communication
The Anywhere Network is enabling the
companies, which leverage dedicated resources
commoditization of traditional search
such as licensed radio
capabilities, requiring major players such as
Ask, Google and Yahoo! continuously Non-premium advertising opportunistically spectrum and operate over
wide coverage areas. Lacking
broaden their capabilities. Although these drives users to particular company sites
coordination between local
players have well-known brands, they run the based on complex prioritization algorithms, networks and challenged by
risk of losing their market positions if they
lag in innovation. The key drivers for the and premium advertising is focused on the using shared resources such
as unlicensed radio spectrum,
commoditization in traditional internet subtle activities associated with bolstering
the private residential,
search include: company brands. enterprise and municipal
• Increased demands of Anywhere Consumers
networks have traditionally
as their usage of the Anywhere Network
been unable to scale beyond local and metro-
becomes more specialized, personalized and
wide network area solutions.
sophisticated.
• The emergence of companies with limited
Companies such as Wibiki, FON and Ozone
revenue aspirations, such as craigslist offer connectivity-centric solutions that
interest groups, rely on user-generated capitalize on the widespread adoption of
content such as Wikipedia, and other private residential Wi-Fi technology. These
companies that offer compelling substitute players give owners of residential Wi-Fi the
internet search capabilities. opportunity to opt into community-wide
• Increased variety of online advertising, networks of consenting residential access-
and increased sophistication and point owners. These companies aggregate
expectations of advertising agencies. and manage the residential Wi-Fi access
• Increased integration of search capabilities in points into a patchwork of wireless coverage
other Anywhere Network service offerings, offered to those consenting parties. This
including media and service-centric social nascent market’s success will depend largely
networks that seemingly emerge overnight, on the level of service ubiquity and network
such as MySpace and YouTube. coverage it can achieve with the early
adopting market and the extent to which it
can incorporate networks with broader
coverage into the initial patchwork. British
Telecom signed an agreement with FON to
create an integrated wireless network as an
10 © Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.

11. March 2007
extension of its FusionOne fixed-mobile Conclusions
network offering. In the interim, this approach
requires hybrid solutions, perhaps based on
The media and communications industries Yankee Group’s Anywhere Network research
least-cost routing algorithms in the devices,
are in apparent chaos as they try to meet the agenda will tackle these topics with
to enable adequate service coverage. Success
ever-increasing demands of the Anywhere interviews, primary research and analysis
of connectivity solutions will accelerate
Consumer and Anywhere Enterprise. As during the next 24 months. Upcoming
improvements in the performance of
solutions drive support for community-led Yankee Group Reports include:
unlicensed systems, including low-cost
and user-centric control, they disrupt • Next Trillion Dollars for the Anywhere Telco
transmission solutions and low-cost smart
existing and emerging business models and • Anywhere Networking in Economically
antennas and cognitive radios.
continuously create opportunities for new Emerging Markets
entrants. Although it’s clear how existing • Regulatory Rights and Risks on the Road
The creation of ad-hoc consumer networks
business models must evolve to capture the to the Anywhere Network
holds promise in creating significant
emerging Anywhere Network opportunities, • Navigating the Anywhere Network
Anywhere Network communities that could
there are a variety of unanswered questions Technology
support business models. If they succeed,
that will be investigated in future Yankee
these networks will dramatically change the
Group publications. In particular:
delivery of media and communication
• What are the technological underpinnings The media and communications
services to the Anywhere Consumer. Even as
that will enable the proliferation of the
the provisioning of fixed network capacity industries are in apparent
continues, wireless and mobile resources will Anywhere Network?
• How will the Anywhere Consumer and chaos as they try to meet the
be deployed in an ad-hoc manner and
minimize the role of mobile service providers Anywhere Enterprise respond to the ever-increasing demands of
in network operations. opportunities afforded to them by the
the Anywhere Consumer and
Anywhere Network and its associated
service offerings? Anywhere Enterprise.
• How must vendors and service providers
prioritize and appropriately time their
investments to maximize their revenue
opportunities?
• What innovations and business models are
likely to act as change agents and how can
industry players position themselves to
capitalize on these change agents?
• What appropriate transition strategies
must vendors and service providers use to
capitalize on the evolution of Anywhere?
• What are the primary anchors and major
technical and commercial sensitivities
associated with the various solutions
enabled by Anywhere?
© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved. 11

12. Yankee Group
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© Copyright 1997-2007. Yankee Group Research, Inc. All rights reserved.