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Pho cuswrighttechnologyconvergenceandtraveldistribution2012[1]
- 1. PhoCusWright’s
ANALYSIS
February 2012
Technology Convergence and Travel Distribution
Bob Offutt
Bob Offutt
Mr. Offutt brings over 20 years of experience in information technology, IT management and travel industry dynamics
to PhoCusWright. He was most recently the chief architect and senior vice president for Sabre Holdings where he
defined the strategy and plan to migrate from a monolithic Mainframe environment to Distributed Open Systems and
a Service Oriented Architecture. Prior to being Sabre’s chief architect, Bob founded and led Sabre Labs, a technology
incubator that made Sabre the industry leader in new online products and services. Before Sabre, he spent 26 years in
the U.S. Coast Guard, where he led the agency’s information technology unit. Bob has also served on the faculty of the
University of Puget Sound, George Washington University and the University of Southern California. His education
includes a BS in Engineering from the U.S. Coast Guard Academy and a Masters Degree in Management Science from
the U. S. Navy Postgraduate School.
©2012 PhoCusWright Inc. All Rights Reserved.
- 2. Technology Convergence and Travel Distribution
February 2012
About PhoCusWright
PhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect.
Independent, rigorous and unbiased, PhoCusWright fosters smart strategic planning, tactical decision-making
and organizational effectiveness.
PhoCusWright delivers qualitative and quantitative research on the evolving dynamics that influence travel,
tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation,
sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior
executives, marketers, strategists and research professionals from all segments of the industry value chain use
PhoCusWright research for competitive advantage.
PhoCusWright enables clients to bolster productivity through superior staff training and education. Scalable
products, customized programs and cost-effective delivery improve the performance of thousands of travel,
tourism and hospitality employees worldwide.
To complement its primary research in North and Latin America, Europe and Asia, PhoCusWright produces
several high-profile conferences in the United States and Germany, and partners with conferences in Canada,
China and Singapore. Industry leaders and company analysts bring this intelligence to life by debating issues,
sharing ideas and defining the ever-evolving reality of travel commerce.
The company is headquartered in the United States with Asia Pacific operations based in India and local analysts
on five continents.
PhoCusWright is a wholly owned subsidiary of Northstar Travel Media LLC.
PhoCusWright Inc.
1 Route 37 East, Suite 200 • Sherman, CT 06784-1430 USA
+1 860 350-4084 • +1860 354-3112 fax
www.phocuswright.com
This article is published by PhoCusWright. The information herein is derived from a variety of sources. While every effort has been made to verify
the information, the publisher assumes neither responsibility for inconsistencies or inaccuracies in the data nor liability for any damages of any
type arising from errors or omissions.
All PhoCusWright Inc. publications are protected by copyright. It is illegal under U.S. federal law (17USC101 et seq.) to copy, fax or electronically
distribute copyrighted material beyond the parameters of the License or outside of your organization without explicit permission.
©2012 PhoCusWright Inc. All Rights Reserved.
Page 2
- 3. Technology Convergence and Travel Distribution
February 2012
Technology Convergence and Travel Distribution
Bob Offutt
Introduction
While sometimes it is difficult to see, technology
convergence is happening all around us every day.
Virtually every new consumer and business capability is
the result of converging capabilities in core technologies
such as the wireless phone, personal computer,
television, online services and location determination.
However, as with all technology development, we are
at waypoints, not end points in the evolutionary cycle.
This article explores how these core technologies have
converged to provide the next generation of capabilities
including smartphones, location-based services and
mobile computing systems, and discusses what the next
waypoint is likely to be.
Discussion
The convergence of core technologies such as wireless
telephony, broadcast television, online computing,
location-determining devices and the personal computer
have led to evolved waypoints that include the 2012
smartphone, television as an integrated entertainment
platform, the Internet, location-based services and
mobile and desktop computing systems. There are
more convergence cycles that include Radio Frequency
Identification (RFID) and Near Field Communications
(NFC); however, the five technologies identified above
are the most relevant to travel distribution.
We will look at each of the “evolved” waypoints and
analyze the implications for the travel distribution value
(TDVC) chain shown in Figure 1. We will also look
which of these evolved waypoints is most appropriate
for each phase of the TDVC. We should note that this
discussion looks at the technology convergence, but not
necessarily usage. In many cases, rather than seeking
a converged capability, many users will continue to
use the best tools for any given aspect of the TDVC
(e.g., television for inspiration; desktop computing
for shopping and booking; and mobile device
for experiencing).
While there are some interdependencies – such as the
Internet needing computing devices for access and
content – the more interesting aspect is that there
appears to be a platform that represents the convergence
of all these evolved waypoints. We will examine this
new convergence technology after we review the
convergence that has extended each of the five core
technology technologies.
Evolution 1: Wireless to
Smartphone 2012 (Figure 2)
The initial capability was the wireless phone: big, clunky
with limited coverage and a plethora of standards (the
standards problem is primarily a U.S. problem and not
an issue in other parts of the world). With simple calling
capability, the mobile phone had a large but limited
audience. However, adding email attracted business
Figure 1: The Travel Distribution Value Chain (TDVC) and Associated Business Models
Desire/Be Inspired
Learn
Shop
Book
Experience
Media/Advertising
Media/Advertising
Referral/Booking Fee
Booking Fee
All
Source: PhoCusWright Inc.
©2012 PhoCusWright Inc. All Rights Reserved.
Page 3
- 4. Technology Convergence and Travel Distribution
February 2012
Figure 2: Wireless Evolution to Smartphone 2012
Source: PhoCusWright Inc.
Smartphones
Wireless Phones
Standards
Location Awareness
Applications
Book
Market Penetration
& Coverage
The Social Web
Touchscreen
GUIs
users, and the touchscreen and GUIs added application
capabilities to facilitate a mobile computing platform.
Add in the browser for universal Web content access,
and you have a platform (with limited screen real estate)
for telephony, applications, content access, e-commerce
and social network interaction. With position detection,
navigation and mapping, there is another dimension in
capability. There is even the ability to use streaming
video for access to video clips, TV, gaming and movies.
The versatility of the mobile device positions it to
be somewhat relevant at all points in the travel value
chain, but it is most useful during the “experience”
phase where mobile access is critical. Smartphones
can support the inspirational phase with applicationand browser-based content. Similarly, the Smartphone
2012 can support shopping and booking, but is best as
a platform for en-route services like flight delays, taxi
availability and boarding passes. While it appears that
the Smartphone 2012 does everything, it is limited
by its size, connectivity speed and available screen real
estate. Performing complex reservations and payment
transactions is difficult on small touchscreens or micro
pullout keyboards. Smartphones have lightweight
operating systems and are extremely fast, but are limited
by the available connection speeds when not using Wi-
©2012 PhoCusWright Inc. All Rights Reserved.
2012
Smartphones
Fi. Current state-of-the-art 3G speed is being replaced
by 4G in major cities. This new 4G capability will
provide wireless devices with speeds equivalent to wired
data access points. 4G-capable phones operating in
4G service areas enjoy much faster content downloads
and a substantially improved Internet experience than
3G users, making the smartphone more useful in other
aspects of the TDVC.
Evolution 2: Broadcast TV to
TV as an Integrated Entertainment Platform (Figure 3)
Broadcast television was initially a very simple capability
designed to transmit entertainment and other content
directly to the consumer. With the advent of cable
networks, which expanded the number of available
channels, and set-top boxes that provide selective
content, the nature of TV changed. However, it was still
all about a one-way system that delivers and displays
content. Attempts to provide Internet access on TVs
failed due to performance and user interface issues.
Televisions were not designed to be two-way devices,
accepting input from wireless keyboards. However,
Page 4
- 5. Technology Convergence and Travel Distribution
February 2012
Figure 3: Broadcast TV Evolution to TV as an Integrated Entertainment Platform
Source: PhoCusWright Inc.
Broadcast TV
Cable TV
Set-Top Boxes
IPTV
Entertainment on Demand
Integration with the Internet
TV as an
integrated
Entertainment
Platform
Apple TV
Google TV
Roku Box
Boxee
The Social Web
in the migration from analog to digital, the ability of
TVs to allow interactive activity improved, but was still
limited to functions such as program guides and camera
angle selections. The user interface and the TV remote
control limited interactive capability. Using Internet
Protocol TV (IPTV), content providers were able to
provide TV content through the Internet, enabling
video-on-demand services. One challenge was that these
new video services were on the Internet, and needed to
be modified and rerouted to home televisions. Meeting
this challenge were Apple TV, Google TV, and the Roku
box, to name a few.
Attempts to use the TV as an e-commerce (t-commerce)
platform continue. Comcast has deployed interactive
technology in 14.5 million homes, and is experimenting
with the Apple iPad and other mobile devices as user
interface devices. Experiments with using Interactive
TV to purchase items on the Home Shopping Network
have met with success.1
Several TV manufacturers are delivering “Smart TVs”
which have a computer CPU and an operating system,
making the TV an applications platform. The use of
external devices such as Google TV, Roku and Boxee to
deliver games, content and interaction (particularly with
social networks) is gaining some momentum.
Despite efforts to improve interactivity and provide
useful and practical user interface devices, TV is
predominately an entertainment delivery platform,
and as such only supports a small portion of the Travel
Distribution Value Chain: “Desire/Be inspired” and
“Learn.” Travel and destination videos, which present
the user experience, can motivate the customer to
pursue further learning and shopping, but there are
no easy ways to link the learning behavior to shopping
activity. Without this linkage, a referral fee business
model is difficult and a booking fee model impossible.
While Interactive TV may work for retail items, there
are no studies that indicate it is an effective medium for
shopping and purchasing travel. For travel, television
will remain (at least for the next 3-5 years) an advertisingbased platform that induces potential travelers to use
other means to further investigate possible destinations.
Evolution 3: Online to Internet 2012
There is virtually universal agreement that the
development of the Internet was a seminal event in
the evolution of technology. While the realization
of Moore’s law2 provides the technology foundation,
it is the Internet that gives businesses and consumers
opportunity to extract value from the underlying
computing technology.
1. Donohue, Steve. 2010. “Comcast Accelerates ITV Development,” Light Reading Cable Analysis, November 18. www.lightreading.com/document.asp?doc_
id=200676&site=lr_cable&f_src=lightreading_gnews
2. Moore’s law describes a long-term trend in the history of computing hardware. The number of transistors that can be placed inexpensively on an integrated
circuit doubles approximately every two years. This trend has continued for more than half a century and is expected to continue until at least 2015 or 2020.
©2012 PhoCusWright Inc. All Rights Reserved.
Page 5
- 6. Technology Convergence and Travel Distribution
February 2012
Figure 4: The Online Evolution to Internet 2012
Source: PhoCusWright Inc.
Internet
2012
Semantic Web
Advanced UIs
XML
HTML
Browser
HTML5
Flash
Personalization
Online
Search
Web Services
Many forget that the Internet was designed as a means
for academic types to share documents. Supporting
this usage was the Mosaic browser and a page/textbased metaphor. From this limited foundation has
evolved a global network of interconnected computers,
sensors and devices that support e-commerce, social
commerce, entertainment delivery and a long list of
other capabilities.
The original document-based browser has evolved
beyond documents to support interactive applications
and a variety of media including pictures, movies and
music. The first language of the Internet was Hypertext
Markup Language (HTML). To support business
transactions, HTML was augmented by the eXtensible
Markup Language (XML) and a plethora of other
domain-specific markup languages. To provide a better
user experience, enhanced browser capabilities such as
Ajax and Cascading Style Sheets (CSSs) evolved, along
with add-ons such as Flash. HTML itself has evolved
into HTML 5, which supports many features that
developers were using third-party browser add-ons
to provide. HTML5 will enable a quality Web
interaction experience.
As the amount of content on the Internet has multiplied
exponentially, the challenge to use it to find relevant
information has grown as well. This has led to major
efforts to determine which information is relevant to a
©2012 PhoCusWright Inc. All Rights Reserved.
particular user (personalization) and to improve search
tools. Today, Google’s search tools not only find and
display search results, they break down a site into various
components and display the Google-created index of
the website’s content.
On the content side of the Internet, efforts are
underway to move from what was essentially a textbased information system (with all the complexities and
ambiguities of human languages) to the semantic Web,
which uses semantic constructs to disambiguate Internet
documents. These efforts, once seen as the future of
the Internet, have been slow to gain traction. Despite
the slow growth of the sematic Web, there has recently
been an upsurge in the use of semantic technologies to
improve Internet capability.
The Internet has the content and business capability
to support all aspects of the Travel Distribution Value
Chain, including activities supported by the media
model as well as booking fee and referral models.
Through the browser and advanced user interface tools,
the Internet provides a quality user experience in all
aspects of the value chain, except where a mobile device
is involved. The mobile device’s limited screen size and
relatively slow communication speed restricts mobile
capability and the usefulness of the Internet when
consumers are traveling.
Page 6
- 7. Technology Convergence and Travel Distribution
Evolution 4: Location to
Location-Based Services
Built for defense (accurate location information is
key to such things as submarine missile launches and
smart bombs), the Global Positioning System (GPS)
developed by U.S. Department of Defense utilizes a
constellation of satellites that enable accurate position
determination. Early GPS devices were large and clunky
but have evolved to automotive, handheld and now
mobile devices. What this means is that the location of
any GPS-equipped device can be determined. It should
be noted that while GPS is probably the most dominant
position-locating system, cell tower triangulation
has its uses, particularly in areas that GPS signals
cannot penetrate.
Location is a useful function when shopping for air,
because it sets the expected origin of a trip. However,
it is most useful in the “experience” phase, because it
allows the traveler to obtain information based on their
location. Relevant information such as traffic, nearby
merchants, places to eat, etc. can all be keyed off the
traveler’s location.
February 2012
Evolution 5: Personal Computer
to Desktop and Portable
Computing System
There were many early personal computers, including the
Apple II, the Commodore 64 and the TRS-80, mostly
for home and hobby use. The advent of the IBM-PC,
along with the PC-DOS operating system in 1982, set
the trajectory for desktop computing systems. Today’s
networked PCs, with high performance CPUs, obtain
content from local and distributed storage, and from the
Internet. These desktop units act on content stored on
local drives, division or corporation-central sites and on
the Internet. With a broad range of content available,
search engines such as Bing, Google, and Yahoo! provide
the ability to perform fast, global searches. However,
these search engines do not handle the ambiguities
of language, giving rise to semantic search, which
has the potential to markedly improve search. The
PC also provides a platform for electronic commerce
(e-commerce, buying and selling). In recent years, the
social Web has become very popular. Dominated by
Figure 5: The Location Evolution to Location-Based Services
Source: PhoCusWright Inc.
Location-Based Services
Handheld Devices
Integration with
Mobile Devices
GPS
Automobile Devices
Location
©2012 PhoCusWright Inc. All Rights Reserved.
Page 7
- 8. Technology Convergence and Travel Distribution
February 2012
Figure 6: Personal Computer Evolution to Desktop and Mobile Computing Systems
Source: PhoCusWright Inc.
Desktop and Mobile
Computing System
Semantic
Search
E-Commerce
F-Commerce
Search
Content
Networking
The Social Web
Personal
Computer
Laptop
Internet
Facebook, the social Web provides virtual global human
interaction. Commercial use of Facebook have evolved
into the term f-commerce.
The continuing relevance of Moore’s Law3 has led to
the development of very capable portable or laptop
computers that provide most (if not all) of the functions
of desktop units. Desktop and portable computing
systems support all aspects of the travel value chain well,
except “experiencing,” since travelers need information
when they are not at home. While portable computers
can obtain access at hotels, airports and Wi-Fi points,
they are difficult to set up and use on-the-fly, and they
have a limited battery life. The problem of battery life
may be resolved with the relatively new Ultrabooks4 ,
but the setup and use issues remain.
Analysis
As shown in Figure 7, each of the technical advances we
have discussed provides capabilities to support the travel
value chain, some more than others.
The 2012 Smartphone is not an ideal platform to use
in most stages of the TDVC, except for “experiencing”
the trip, when mobility is essential. TV as an Integrated
Entertainment Platform supports the early stages
of the travel value chain, but doesn’t provide tools to
carry through to the remaining TDVC stages. The
Internet 2012 would seem to do everything in terms of
acquisition and distribution of content and to support
e-commerce; however, its usefulness is limited during
the “experience” phase because of the size and speed
of smartphones. Location-based services are also great
enablers for the “experience” phase, but are marginally
3. Ibid.
4. Niccolai, James. 2011. “Intel Launches New Class of ‘Ultrabook’ Laptops”, PCWorld, May 31. www.pcworld.com/article/228991/intel_launches_new_
class_of_ultrabook_laptops.html
©2012 PhoCusWright Inc. All Rights Reserved.
Page 8
- 9. Technology Convergence and Travel Distribution
February 2012
Figure 7: Converging Technologies and Relationship to the TDVC
Desire/
Be Inspired
Learn
Shop
Book
Experience
2012 Smartphone
TV as an Integrated
Entertainment Platform
Internet 2012
Location-Based Services
Desktop and Portable
Computing System
Fully Supports
Partially Supports
Source: PhoCusWright Inc.
relevant for the other TDVC phases. It would appear that
the desktop and portable computing system capabilities
could support all aspects of the TDVC, but the need
for easy portability during the “experience” phase limits
its effectiveness.
We are close to having an effective solution to all aspects
of the TDVC: mobile devices and smartphones use
the Internet and location-based services to support the
entire TDVC, albeit at different levels of capability. All
of these devices and technologies support activity on the
TDVC, but fall short in the “experiencing” phase, where
device interaction and portability are prerequisites. In
addition, technology used during the “experiencing”
phase must be able to access content that was created (or
previously researched) at other points in the value chain.
The good news that there is an emerging technology that
provides mobility, access to centrally stored information
and easy interaction, overcoming the deficiencies
©2012 PhoCusWright Inc. All Rights Reserved.
identified above. This technology is the tablet computer
(see Figure 8), which combines the best capabilities of all
of the technologies discussed above. The tablet supports
full Internet and application-based content access from
network devices, TV and video displays, location-based
services and, with 4G connectivity (coming soon),
high-speed communications. All of this with an
effective display size, and either an integrated or onscreen touch keyboard.
The tablet computer is truly the convergence point for
travelers who wish to use one device to plan a trip from
the “desire/be inspired” stage through the “experience”
phase (see Figure 9)
At the 2012 Consumer Electronics Show, AINOVO
announced an US$89 tablet. This places the tablet at an
affordable price point for nearly everyone.
Page 9
- 10. Technology Convergence and Travel Distribution
February 2012
Figure 8: Convergence to a Tablet Computer
Source: PhoCusWright Inc.
Broadcast TV
Smartphones
Cable TV
Wireless Phones
Set-Top Boxes
Standards
IPTV
Location Awareness
Entertainment on Demand
Integration with the Internet
Applications
Book
Market Penetration
& Coverage
TV as an
integrated
Entertainment
Platform
Apple TV
Google TV
Roku Box
Boxee
The Social Web
Touchscreen
2012
Smartphones
GUIs
Desktop and Mobile
Computing System
Semantic
Search
The Social Web
Semantic Web
Internet
2012
TABLET
Advanced UIs
XML
HTML
Browser
HTML5
Flash
Personalization
Location-Based Services
E-Commerce
Online
Search
F-Commerce
Search
Web Services
Content
Networking
The Social Web
Personal
Computer
Handheld Devices
Integration with
Mobile Devices
GPS
Laptop
Automobile Devices
Internet
Location
Figure 9: The Tablet can do it all
Desire/
Be Inspired
Learn
Shop
Book
Experience
Tablet computers
Fully Supports
Partially Supports
Source: PhoCusWright Inc.
©2012 PhoCusWright Inc. All Rights Reserved.
Page 10
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February 2012
Figure 10: AINOVO $89 Tablet
Source: ainovo.com
Conclusion
Technology refresh continues, with the introduction of
new platforms and capabilities that quickly make their
legacy forebearers obsolete. Many of these new platforms
and capabilities support the convergence of features and
functionality so that, ideally, users would need fewer
devices to navigate the Travel Distribution Value Chain
(TDVC). However, much of this new capability is
©2012 PhoCusWright Inc. All Rights Reserved.
limited in that it only addresses one or two aspects of
the TDVC. The only converged capability that spans all
aspects of the TDVT is the tablet computer, with has
become increasingly affordable at the entry level.
Will these factors drive travelers to converge their
TDVC activities around a single device? Not likely,
since it remains easier to change technology than to
change personal usage and preferences.
Page 11