Technology, media and telecommunications (TMT) industry convergence has received a lot of hype in recent years, but increasingly substance is displacing the hype. Indeed, it is becoming the basis of competitive advantage in the TMT sector. A wealth of convergence products and services is emerging, from online music to Internet Protocol (IP) appliances. Each of these offerings satisfies a real customer need — and most are already generating real revenue and earnings.

TMT businesses have the potential to benefit greatly from convergence. It is expected to create new product categories, new markets, and in some cases even change the structure of existing industries — shifting the balance of power and altering the basis of competition. Some companies will win; some will lose; and some will stand idle as the best opportunities pass them by. But between now and the end of the decade, more than one trillion U.S. dollars could be generated by emerging convergence products and services, based on analysis by Deloitte Touche Tohmatsu (DTT) and the TMT industry practices of its member firms.

Convergence is being driven by three underlying trends. The first is proliferation of digital data, which provides a common base for handling diverse types of information — numbers, words, music, pictures, video — using the same devices, processing techniques and media. The second is widespread connectivity, which helps bring diverse information together, and extends the value and capabilities of a device beyond its out-of-the-box functionality. The third is continuous advances in technology, from battery life to processor speed.

This report contains seven key principles for successful convergence. Each principle has been developed by DTT and the TMT practices of its member firms around the world based upon extensive internal debate, discussions with senior industry executives and interviews with journalists.