I promised you the findings on our most recent public war game, and here they are:
Four top business schools predicted in the March 4th war game (“The Battle for the Wireless Internet”) that the FCC 700MHz wireless spectrum auction will produce deal-making with lots of cash changing hands but only small near-term tech advances as far as the consumer is concerned. This first-of-its kind war game championship among the USA’s leading business schools, organized by Fuld & Company and taking place in Cambridge, Massachusetts, featured students from the Chicago Graduate School of Business, Harvard Business School, MIT’s Sloan School of Management, and Northwestern’s Kellogg School of Management.
The business school teams assumed the identify of four companies in the much heralded wireless Internet space, catalyzed by the FCC auction expected to end within a week. AT&T Mobility (Harvard), Google (Chicago), Intel (Kellogg), and Vulcan Capital (MIT), a venture capital fund with cable TV interests run by Microsoft co-founder Paul Allen.
All teams worked to predict the company strategies that may follow the FCC auction. The B-school teams showed much initiative and innovative thinking but proved to themselves that the companies they represented may all have a difficult time rolling out a true wireless Internet offering within the next two years.
Even if all the auction-participating companies represented in the game – that includes AT&T, Google, and Vulcan – won 700MHz licenses at auction, the companies themselves may be hard pressed to build out the infrastructure fully within the next two to three years.
During the course of the game, each team “stress-tested” opponents’ strategies. By the game’s conclusion both judges and student teams served up a number of predictions for the upcoming year, post-auction:
• Intel, nearly a non-participant in the mobile phone market, will likely enter the mobile phone space through the PC backdoor by helping PC makers – a market Intel dominates – get into the handset business. Rather than try to push an equivalent Intel Inside® theme to the handset companies – an action that will likely be resisted because of the “chip tax” these companies would absorb, Intel will work their way into the WiMax space through the PC world. This seemed appealing to the Intel team particularly as it began to see the worlds of the PC and handheld mobile devices converging.
• Google will do “a little evil” and partner with AT&T (or possibly one of the other one of the phone carriers not represented in the game; Verizon is a second likely choice) by forming an exclusive but time-limited agreement, similar to the AT&T-iPhone deal. For the period of that agreement, AT&T will open its network to other handheld devices and applications, at least for the time being breaking down the “walled garden” that the major carriers currently have in place. In exchange, the student team suggested that Google will share 20% of its advertising revenue with the carrier.
• Adult content may become the “killer app” for launching the wireless Internet. As suggested by one of the judges in response to team discussions on applications, adult content is already a significant presence on the Internet and will likely have the same effect on the wireless Internet when launched.
• Google’s roll-out of Android will run into stiff resistance on the part of mobile phone manufacturers because Google and handset producers have opposing views of the wireless future. Traditional handset manufacturers, led by companies such as Nokia and chip companies, such as Intel, will resist Google’s cloud computing march towards open-source and open development based on its Android platform. Intel and mobile phone manufactures believe that they can only make money by selling a feature rich, memory rich set of phones. Simple phones are commodities. Google’s Android and its cloud computing concept moves data and operating software away from the devices and into the network (closer, of course, to Google’s ad-serving machine).
Following an initial round, Fuld introduced a disruptive scenario. The future scenario, dated May 6, 2008 post-auction, involved Sprint Nextel teaming up with DirectTV owner and former cable TV wheeler and dealer, John Malone, WiMax company Clearwire, and the newly minted Microsoft-Yahoo! to form the first truly wireless Internet joint venture. The pressure of imminent competition from this fictional scenario forced all four teams to grapple with both their limitations and the reality of their vision for the future.
Kellogg’s team, representing Intel, won the war game contest based on four criteria: its strategic insight, accuracy in presenting Intel’s strategy, creative ways it expressed Intel’s vision in the wireless Internet space, and, finally, its ability to project its strategic vision into the future.