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The “Four Ds”: pillars of the digital revolution

Tue 16 Feb 2016

Over the last decade we have seen a convergence of GPS-enabled smartphones and banalized IT infrastructure driven by the web giants. The economy is undergoing a decisive transformation imposed by the “four Ds”.

The first “D” is “Digitization”

Everything that can be digitized in our everyday lives will be. If a process or service can be modeled and represented digitally, it can then be sent over a network, stored and processed. These digital representations of real things can then be reproduced, shared and enriched by others. Combined with smartphones, tablets and electronic sensors in homes and enterprises, digitization will engender more and more information.

The second “D” is “Demonetization”

This occurs when digital inventions become ubiquitous, thanks to the immense market reachable via the Internet and cellphones. Their usage becomes massive and revenues come from advertising (when the service is free) or in some form of hybrid free-paid mode. Digital facilitates the creation of new activities because of the low-cost Internet entry ticket. 

In this respect, another “D” (“Disintermediation”) also makes its appearance on the road to demonetization: digital platforms eliminate or weaken intermediaries by encouraging the participation of individuals as new contributors. Notable examples include e-commerce, taxi fleet management, holiday rentals and peer-to-peer lending.

The third “D” is “Dematerialization”

This refers to the replacement of mono-task devices such as the still camera by software functions. Smartphone mass production has enabled them to be equipped with multiple features such as the video camera, GPS receiver, answering machine, dictaphone, barcode reader, compass, flashlight, MP3 player, games console and video player. 

Software substitution for hardware is seen at large scale in the giant datacenters built by big web players: formerly hardwired functions are being migrated to programmable software. We are seeing a shift of the IT center of gravity towards technologies developed by startups for cellphones.

The fourth “D” is digital “Disruption”

New digital services perturb the business of existing players and can even replace or destroy their traditional operation modes. Its exposes them to new threats, yet also opens up opportunities. The digital wave has attracted new and unexpected players, more agile than their older rivals. They change the rule of the game and make life difficult for traditional providers who are repeatedly obliged to reconcile their business with new ecosystems. 

We see that the “four Ds” fragilize established positions but create new markets, first and foremost for new entrants. For legacy operators the order of the day is now “change fast or be changed”. 

The “D”ice are cast…

Orange Institute
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