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2003 Speeches
Scott Carson

Scott C. Carson

President

Connexion by Boeing

Senior Vice President

The Boeing Company

"The No. 1 Challenge Facing the Future of Wireless Connectivity (Hint: It's Not Technology)"

International Wireless Symposium 2003

San Diego, Calif.

September 23, 2003

Good morning. It is certainly an honor to be able to speak with you today at the International Wireless Symposium about this revolutionary means of connectivity that is so central to your business and to mine.

I suspect I am speaking before you because my enterprise - Connexion by Boeing - is in the business of creating broadband wireless hotspots that can fly across oceans and continents. That's not an easy task, but this year we demonstrated that very capability and other potential benefits of in-flight broadband connectivity, letting passengers on international flights across the Atlantic try out the service for three months, so that we could get real-life customer input about its usability, utility and value. Lufthansa German Airlines and British Airways were great partners in the service demonstrations, each of them dedicating a Boeing 747 full-time, conducting passenger tests twice a day.

Because of the success of those demonstrations, we will launch our commercial service with Lufthansa on March 17, and they will soon by joined by SAS and others.

From that day forward, passengers will have real-time access to broadband Internet and data services in flight?and the era in which elevation always meant forced isolation will come to a close.

Just as the Internet changed everything, wireless connectivity is changing everything as well.

For example: In the past, I could get some sense as to whether I was engaging an audience by noting whether their eyes were focused on me. Now I'm not so sure.

Recently I listened to a speech by Homeland Security Secretary Tom Ridge. As I looked around the audience, I found quite a few sets of eyes cast downward, focused intently on their PDAs as they captured highlights of his remarks.

So I suspect that in the very near future, when speaking before an audience, you're going to have to get used to a new key indicator of success -- how many people in the audience appear to be ignoring you completely! (LAUGHTER)

Kind of like dealing with your teenage children, isn't it? (LAUGHTER)

The theme of this address is the evolution of the hot spot, so I'll speak a little about why in-flight wireless broadband is important both to travelers and to airlines.

I'd also like to talk to you today about what I believe is the key challenge that we as an industry must face if we are to realize our vision of a future defined by wireless connectivity.

I have two sets of customers - airplane operators, such as airlines - and their customers - passengers.

Both need wireless in their future. So let's talk about passengers first. The good news today is that today's modern jetliners can fly you non-stop to almost any place on earth. The bad news today is exactly the same. If you've got business in Guangzhou next week, you can fly non-stop each way. And by the time you get home, you will have spent 30 hours - almost four working days - out of touch with your world. So we can guess pretty easily how you'll be spending your weekend when you get back - catching up on work.

So connectivity in the air improves your ability to manage your life on the ground.

So now let's think of wireless from an airline perspective. On a plane, weight is bad. More weight means more fuel burned, or shorter range. If you can remove weight you save fuel or can fly farther. Wires add weight - a lot more than you would think. Seatback displays add weight. Electronic boxes add weight.

On some airplanes, you need 1,800 electronic boxes for the in-flight entertainment system alone.

So if you could distribute entertainment wirelessly, you could save a LOT of weight. You also would simplify the airplane. Today, if you change that airplane and put it on a different route, and the new route is in a market that needs three more rows of business class and five fewer of economy, guess what? You get to re-wire the plane, because there are in-flight entertainment wires going to every one of those seats.

Are airlines excited about wireless? You bet they are. In an industry where three passengers per flight mark the difference between wild success and bankruptcy, anything that reduces cost and complexity is good.

So let's turn to the challenge we face. The challenge is not technological. It is what we at Boeing refer to as "detailed customer knowledge and focus."

Detailed customer knowledge and focus is a process that is designed to take you, first, to a clear understanding of who your real customer is; and, secondly to a clear understanding of what your customer really needs. If you can master that - especially during the developmental phase - you bring to market a product or service that is, by definition, the one preferred by customers.

I'm reminded of a company that had a great idea for a new product. Their market research indicated that American consumers were becoming increasingly concerned about proper care and feeding of their dogs.

So their idea was this - The company would hire the best veterinary nutritionists to create the healthiest, most nutritious dog food money could buy. They would hire the world's leading designers to design an award-winning label that would grab shoppers' attention from the shelf. They would support it with a multi-million dollar ad campaign.

So it came as a bit of a shock a month later when the Chief Financial Officer brought him the papers to sign for Chapter 11.

"I don't understand," the CEO said. "We did everything right! What happened?"

The CFO put a consoling hand on his shoulder and said, "Dogs didn't like it."

So Lesson # 1: Don't just focus on your customer ? but on your customer's customer too. That's Detailed Customer Knowledge and Focus.

Let me give you a real-life example: Did you ever notice that when you fly on a Boeing 777 that:

That's what happens when you let flight attendants and frequent fliers help design your airplanes. We also gave mechanics, and ramp attendants and cleaning crews and pilots seats at the design table.

That's what Detailed Customer Knowledge and Focus looks like if you're designing and building airplanes. The 777 was the last of three competing models to enter service, but almost instantly became the best-selling and preferred airplane in its class.

The key lesson here: The marketplace rewards Detailed Customer Knowledge and Focus.

Detailed Customer Knowledge and Focus is hard work. It's a lot easier to focus on what WE think the customer needs and wants. The telecommunications and dot-com landscapes are littered with the remains of Internet start-ups who had it backwards. They sincerely - and naively - believed "If we build it, they will come."

Remember Iridium? Teledesic? HomeGrocer.com? The growth of Information Technology networks led to an explosion in new business ventures, yet look around today and most of these businesses are no longer in existence or morphed into something else. Why? A failure to understand its customers, their needs, and buying habits.

At Connexion by Boeing, it cost a lot of capital to acquire a commercial jetliner and convert it to a full-time flying laboratory so that we could develop and validate the technology. It was inconvenient to co-design our service with 15 of the world's leading airlines. It was not cheap to run two overlapping passenger-service demonstrations across The Atlantic for three months earlier this year.

But our best minds couldn't think of a better way of understanding what our airline customers needed - and just as importantly - what their customers needed.

Here's what we learned:

We also learned that airlines are as excited - or even more excited - about how they can use our broadband capability to improve operational efficiency. That leaves us reasonably confident that we've developed the service and done so in the right way and at the right time. Detailed customer knowledge and focus lowers your risk and increases the value to your customer.

That's an important lesson. Because many of us in the wireless industry tend to get caught up in our own hype, believing, like those who came before us, "If we build it, they will come."

There is no doubt that there will be a wireless future, but it will belong to those who are focused on the real needs of real customers and not necessarily to those who created the best and coolest technology.

CUSTOMERS adopt technology, not the other way around. And what they buy depends on the value THEY - not we - assign to it. Most of our customers couldn't tell you the distinction between wireless and cellular. They don't want to have to choose among a host of standards. They want their IM system to work with your IM system.

The service we are selling is not technology. We are selling connectivity, and the connectivity we're selling had better be seamless because if you are truly focused on what your customers need, you know that seamlessness is No. 1. That means we're going to be sharing a lot of customers with each other and the billing architecture - while invisible to the customer - is going to seem awfully complicated to a lot of us.

That is why the efforts such as the Wi-Fi Alliance, are so critical to creating a wireless future, because their efforts represent an approach that is "customer out" rather than "technology out".

The efforts of the Wi-Fi Alliance to develop standards and applications are a tremendous step in that direction, and others need to follow that example. Everyone in the industry should look to that effort as a best practice, because it's a path that will take us forward into a successful, unwired, future - whether your hot spot of choice is on the ground - or in the air, powered by Connexion by Boeing.

I'd be happy to take your questions.