predict the future by observing the past says game theorist

Addressing audiences in Citbank Shanghai March 20 Patrick outlined the scene for the EU to become an off-shore hub for RMB…Dubai has done so this week and he will be addressing audiences in Qatar and Dubai March 30 and 31st on the theme of China, RMB and the international economy.

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Mobile phones are ubiquitous. Mobile phone users are migrating to smart-phones and downloading thousands of Apps. Our App-ing Generation are so dependent on their Apps. Memory is out-sourced to Google and Facebook. The smart-phone has evolved into a necessity, bespoke in its design and color and ringtone. But there are dark forces at work – frozen markets – markets that emerge in time period t+1 from emerging technologies in time period t. They present new sources of revenue; and spherical competitors, that is, competitors who come from anywhere at any time in a market-as-a-game. The long awaited Verizon-Apple iPhone promised so much for Apple fans last year and we expect more from iPhone5 in June 2012; however, it signals a new convergence between telcos and smart-phone players who will be eager to exploit revenue opportunities in frozen markets. Verizon management had been lobbying the regulators in the US for the end of net neutrality to exact a fee on byte-hungry users of traffic. There really is no argument for single non-discriminatory fixed monthly fee for an App-user who, for the fixed fee, can either send 1Kb emails or watch a 30Gb video. Telco management realise this to be so; they already extract revenue from the economics of mobile phone usage with the ARPU bundling of minutes ……but Apps are a bit different!

Inevitably the telco providers will identify likely future revenue yields from a byte fee – that is, you pay for your downloads as you would your electricity or water charge. The smart-phone technology market is a market-as-a-game with a demand and supply wherein companies like Apple, Asus, Google, HTC, LG, MS/Nokia, Samsung, Google/Motorola are evolving as players in a game. They are listed here because they each had great ‘toys and gadgets’ and ‘bells and whistles’ at the annual CES shows. Promises of new toys and more gadgets – the physical feel of a prototype model, has created a ghost demand for devices and new Apps. We will be able to observe in 2012 how the players evolve, partly by company strategy and partly by the dynamics of the market.

For example you the consumer by demanding more communication devices and the integration of hardware software and services are challenging the players. Without a doubt the iPAD sans Flash has compressed our preferences and expectations into one hand-held touch screen device that can handle video, music and computing. As more tablets like iPAD crowd-out the legacy of the PC market share is a classic zero sum game. PC players will respond. They can play a waiting game as technology is on their side. MP4 video format may be cool but the App-ing Generation may prefer to run video format such as WMX and DIVX –but that requires a high CPU speed that is evolving in your tablet iPAD.

Furthermore, there is the upper constraint on App-ing due to the restriction of 3G bandwidth. And the telco players are either investing in more base stations or are considering a discriminating byte-fees with the inevitable end of net neutrality. There are emerging spherical competitors to Apple who come from anywhere at any time….Google and its Android partners, Microsoft/Nokia and LG are positioning themselves for the convergence of technology… Apple initiated the technology market-as-a-game with the launch of the iPhone in 2007..it would be foolish to make future predictions but there is one key point……the spherical competitors and the frozen markets will determine the final winners and Apple Inc should avoid the Brontosaurus paradox; the Brontosaurus took a long time to realize that it had been bitten on the tail! Let’s observe the game in 2012 and be prepared for a byte-fee in the interim.

Following the arguments in ‘dark strategy’ in Ch 7 of Game Embedded Strategy wherein one player in a game can influence the belief system of another player, we are now considering a ‘game vision’ for an action in a game. Every action leads to a reaction in a sequence of moves that represent a game. You are a player in a game. Your action may be personal or business. So localize your action in a game vision. On a piece of paper draw the word ‘action’ and directly opposite draw the word ‘reaction’. You act in time period t but only observe the consequences of your action at time period t+1. Visualize the outcome of your action in time period t+1.

At a meeting or at your desk do take time and drift into an image of the likely outcome. Identify that unique opponent in the game who will react first to your action. In your vision you are that opponent threatening to win the game. What do you do? Whatever it is, your unconscious action is the consequence of your action at time period t. You are your own irrepressible opponent. Do you agree with the unconscious action? Yes I do. Do you distance yourself from it? No. Do you concede defeat? If no then only proceed with your action at time period t once you have embedded your own irrepressible opponent into your action.

Identify a competitor to play a game. Visualize the irrepressible opponent to win the game. Who is Apple Inc’s irrepressible opponent in the vision game of tablets and communication devices? Who is Nokia’s irrepressible opponent in the vision game of advanced smart-phones and ecosystems? Who is Starbuck’s irrepressible opponent in the vision game of coffee houses?

Who is your irrepressible opponent in the vision game of the problem confronting you at this time? Close your eyes and think. Draw your action on a piece of paper. Side by side draw the likely reaction. a vision and identify that unique person, for example, with whom you disagree. It is you. Your unconscious self, you are your own irrepressible opponent. Visualize the irrepressible opponent to win the game. Additional (related) reading includes Dan Roam’s ‘The Back of the Napkin’; he is a visual thinking guru and also check out and google the Tale of the Unwitting Thief….often called UT or communal re-creation….or read Ian McEwan’s ‘Solar’ for an interesting take on UT.

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One likely scenario is the internationalization of the RMB by providing an off-shore hub for RMB in Frankfurt; such a solution must include fiscal union and the political will to march forward as a United States of Europe. It will be a long term objective. It could provide part of a solution to the EU debt crisis. Such a strategy would warrant the creation of an EU-China bond reversed engineered by China and thus outside the domain of the EU political hegemony.

It is the only rational institutional response within the democratic deficit of the European treaties is a response that provides for the EFSF ‘walking forward’ as a conduit bank for the ECB providing a package of catastrophic bonds to refinance defaulting sovereign states. Some of the arguments in ‘dark strategy’ – vide Chapter 7 of my book Game Embedded Strategy – wherein one player in a game influences the belief system of another player, EU policy-makers need to visualize today the outcome of their action tomorrow. To adapt Bob Dylan – so much older then (we should be) younger than that now’. This ‘thief of Nature’ strategy, providing an ‘off-shore’ hub for the RMB, should prevail because the time is now or never for EU as an economy, for Europeans and for the Euro as an international reserve currency in a global economy.