UK: Technology Predictions TMT Trends 2009 - Part Two

Last Updated: 23 January 2009
Article by Deloitte Technology, Media & Telecommunications Industry Group

Most Read Contributor in UK, August 2017

To read Part One of this article please Click Here.

Generic becomes the 'it' brand

In recent years, brand has been all-important for both enterprise and consumer technology62. Few companies have dared risk experimenting with lesser known, untested suppliers.

Consumers, spurred by billions of dollars of advertising, have sought out and paid premiums for the best brands, even if these may not have offered the best products.

In 2009, companies and consumers may actively seek out unbranded or relatively unknown technology brands on the basis that they are good enough and, more importantly, significantly cheaper63. Similar to supermarkets' shift in focus to own-label value products, retailers and manufacturers are likely to adjust their product lines to be aligned with new economic realities.

For enterprise software and technology, companies are likely to become more willing to try out cheaper alternatives to their current suppliers. This reaction is similar to that of many companies' annual reversion to generic stationery at the end of a financial year. Linux, software-asservice (SaaS) and cloud-based storage may all get greater consideration than in previous years on the basis of their lower prices64.

As for communications technology, employees may find themselves issued with standard voice phones given that the majority of business usage is for voice calls. Voice-centered phones can cost as little as tens of dollars. This compares with hundreds of dollars for smart phones. Small and medium-sized companies may consider consumer variants of VoIP more carefully in order to minimize their phone bills65.

In good times, great gadgets, replete with functionality of questionable business benefit, may have been part of the package required to attract the best talent into a company. In not so good times, the best talent is likely to be quite willing to remain attractive to their employers, even if this means using basic devices. Some companies may ultimately regret changing suppliers, but for others the shift will be permanent. The immediate, quantifiable, cost savings from changing suppliers may be outweighed by the harderto- measure costs of adjusting to the new technology.

Bottom line

Technology device manufacturers must consider how the impact of branding is going to change in the face of a downturn. A brand that once stood for quality, reliability and even desirability may come to represent extravagance.

As enterprises and consumers aim for frugality, a formerly attractive brand may become a liability. Device manufacturers may have to consider creating low-cost or generic brands, a strategy that has worked well in other sectors. But for premium brands, the optimal approach may simply be to suffer a near-term slump in sales. Dropping prices may increase sales in the shortterm, but might cheapen a brand's image in the long term.

Enterprises considering changing suppliers should consider the longer term view and undertake a medium-term cost benefit analysis that factors in all possible costs. Some companies may find that while open source software may appear cheaper, in some cases it may be harder to attain redress in the case of problems. If a supplier's reputation is based on price, not quality, it will have less incentive to resolve issues.

Using alternative suppliers is also likely to require users to become familiar with a new interface, causing a drag on productivity. Enterprises should look at approaches of minimizing this disruption, for example through the use of digital skins that mimic interfaces and appearances that users are more familiar with.

The digital ambulance chaser gets supercharged

Digital litigation may prove recession proof, or even counter-cyclical, in 2009.

Citizens are likely to be asked if personal information, from pictures of them on photo-sharing websites, to details of charitable donations they have made, has been used without permission66. Citizens may also be asked if personal data is being stored in countries whose legislation allows governments to read it67.

Consumers may be asked if a digital product or service delivered on the advertised promise. Was it as fast, as economical, as long-lasting as claimed68? Workers might be asked if their ill-health was caused or exacerbated by any technological device69. The growing range of mobile data devices, keyboard and touch-screen based, may lead to new types of repetitive strain injury.

Software companies may be asked to review whether their intellectual property has popped up in anyone else's product. This kind of claim has already generated billions of dollars in settlements70, and given the increasingly frenetic pace of product development, the chances of patents being infringed inadvertently may rise.

Lack of clarity over ownership of digital rights by country and by industry71, is likely to make the volume of digital ambulance-chasing cases greater than ever.

The economic outlook may make companies in general more aggressive in their search for sources of revenue. Identifying potential copyright breaches may be one income stream that some companies start to target72.

In 2009, there may be hundreds of class action suits – claims of billions of dollars for copyright abuse – for media, software and other forms of content.

Bottom line

All companies involved with digital products and services should be wary of unwittingly being caught out by legislation related to digital infractions, whether committed against a consumer, an employee, an acquisition, a partner or another business.

A company that wants to undertake a swift launch of a product or is considering the deployment of a new digital application to increase worker productivity should consider whether any element of the product or application could lead to litigation. While companies should be dynamic, they also need to be cautious, to avoid ending up on the wrong end of a lawsuit. Dealing with litigation can also be a major distraction for senior management, as well as being highly costly, in terms of legal fees and possible fines.

Any organizations considering M&A or joint ventures in 2009 should consider as part of their due diligence process whether their target company or proposed partner might become subject to digital litigation, for example through using intellectual property that had not been properly acquired73. Among the things companies should look out for are a change in control clauses in licenses that could prompt renegotiations of royalties on a transaction.

Enterprises should also be aware of the implications of joint and several liability74. This may affect companies with only minimal involvement in the design, manufacture or hosting of a contentious product or service. Technology companies should constantly monitor how consumers actually use their digital products and services and whether this may create legal issues. Actual use may differ quite considerably from expected use. Text messaging was originally designed as a means for mobile phone engineers to communicate with each other. But now, for example, motorists illegally send and read messages while they are driving75.

Social networks in the enterprise: Facebook for the Fortune 500

It looks as though 2009 is likely to be the breakout year for social networks in the enterprise. Internal and external spending on social networking solutions from IT providers and carriers may approach $500 million. Social networks are likely to be considered an inexpensive solution in what is likely to be a financially constrained IT spending environment76.

Globally, social networks have enjoyed a 25 percent growth in unique visitors in the last year. Some sites have doubled their user base77. And their demographic profiles now include users over 35. Social networking is no longer a tool just for high school and college students. On some networks, around 40 percent of users are over 3578.

While questions grow about consumer social networks' varying ability to monetize their hundreds of millions of users79, enterprises are looking at how they can harness the hierarchy-flattening, information-sharing, teambuilding power of social networks.

Large IT companies are planning on spending significant research and development (R&D) dollars in 2009 on social network applications and building new research centers that focus exclusively on enterprise social networks80.

Enterprise Social Networking (ESN) goes well beyond the consumer experience of social networking. It can include social discovery, social search, microblogging, visualization and new scalable architectures for social software, such as cloud computing. Enterprises are also experimenting with other ESN or Web2.0 applications, include wikis81, mash-ups82, online meetings, and syndicated feeds. And of course toolmakers are supporting ESN with their latest generation of content management tools83

Some major telecommunications companies are already deploying social networking solutions internally. They are also including that technology as a solution, as part of their global service offerings, with plans to increase their efforts greatly in 200984. As providers of bandwidth and solutions they are keen on any application that requires more bits to be transmitted over their networks, and are heavily promoting ESN to their customers85. Wireless carriers and original equipment manufacturers (OEM) also see a strong future for ESN tools as mobile workers need to be part of the social network too86.

In 2009, governments are likely to implement top-down directives for their administrations to deploy ESN tools, both internally and as a method of interacting with their constituents87. Governments are obvious potential users of ESN: they tend to be large, distributed and focused on information sharing – the ideal environment for social networking solutions88. There are even public health applications for ESN tools89. Until now, government IT departments have been inherently conservative. However, as a new generation of politicians (who have used social networking tools to campaign successfully) move into office, adoption may become mandatory in certain departments.

While 2009 should see a growth in ESN, it will probably only be in a minority of leading-edge firms. During the year, the exact extent of adoption may still be unclear. Some commentators claim enterprises are generally not yet deploying social networks; various Fortune500 CEOs believe the opposite90.

While the dollar value may still be small, 2009 should see an explosion in ESN tools, trials and in-house deployment at industry-leading firms, with government as an early but influential adopter. ESNs are already being used in government departments in several of the G20 nations.

Bottom line

Social networks look to be a powerful tool and a way of tapping into the 'wisdom of crowds.' But the enterprise versions of these solutions are still being refined. IT departments need to develop the tools in such a way that they engender productivity. Measuring returns on investment for ESN will be challenging, as will balancing an enterprise's need to control a social network with its employees' desire for privacy.

On the other hand, most early versions of ESN look to be inexpensive, easy to roll out and require little employee training. Cashconstrained companies should look at ESN as a way of capturing value that already exists within an enterprise at a relatively low cost.

Telecommunications operators and IT solutions providers need to invest in ESN so they have the expertise and credibility to deploy these solutions if or when they become more broadly adopted, and start becoming a more significant source of revenues.

Sinners become saints

The world's inconstancy and unpredictability has been demonstrated by the volatility that characterized the global economy in 2008.

That volatility also applies to commonly held public truths. What was considered good, may in future be considered evil and what was once regarded as harmful may be reappraised as benign.

Two technological innovations that had been regarded as evils may be recast, more than ever, in a positive light in 2009.

One is nuclear power, which many countries had aimed to ban in the 1980s91. But in 2009 it is likely to consolidate its position and perception as a required source of power in a growing number of developed countries92. The volatility in the price and supply of oil, gas and coal may be a key reason for the growing supply of nuclear power, whose global generating capacity is forecast to grow by 1.3 percent in 2009 and could double by 203093.

Another technology that had been regarded as evil is genetically modified (GM) food, which remains banned in many countries, including the entire European Union94. However, the global scarcity of water afflicting a growing number of countries has made governments around the world look for ways of maintaining, or even boosting, agricultural yields while dramatically reining back water consumption95.

GM is one way of delivering this96. The need to feed people, coupled with the need to conserve water, is likely to prompt a re-evaluation of GM97. In 2009 a growing number of countries may, on environmental grounds, rescind regulation prohibiting the use of GM98. A growing number of countries are likely to undertake GM trials. Lobby groups that had been opposed to GM may decide the technology is positive for the environment, rather than malign.

Many cities, from Chicago to Auckland, have for years prided themselves on their status as nuclear-free zones99. Throughout most of this decade, food suppliers have trumpeted the lack of GM in their food100. In future, these positions may get turned on their head.

If sinners are likely to be regarded more positively in 2009, conversely some once 'saintly' approaches and products may develop tainted reputations. Free-range farming may be criticized for the amount of land it requires. Glass, once morally sound for the ease with which it can be recycled, may become criticized for its weight relative to plastic when used for containers101.

In 2009 it may even be considered virtuous to create dishes comprising GM ingredients, packaged in plastic, in kitchens powered by nuclear fuel.

Bottom line

Governments should take a lead on investigating, understanding and communicating the various solutions available for addressing the world's key sustainability challenges. Some of the potential conclusions reached may not appear politically expedient in the short term. But an autonomous government's legacy often requires making policies that are initially unpopular.

The balance between the short and long term can be challenging, and it may never be possible to prove what the right approach should be. Nuclear power may help cut carbon emissions in the short term, but may lead to waste-storage challenges that cost billions to address in the future102. GM crops may increase yields and cut water consumption only to have a downstream impact on the balance of whole ecosystems103.

Any company involved in a technology perceived as unpopular needs to be able to take a long-term approach. Deployment of technologies like GM and nuclear have suffered setbacks and will likely continue to, which could derail progress by years. A single scare story could reverse this improved perception.

Companies involved with newly favored technologies should also evaluate the skills base. Countries where nuclear has fallen out of favor may find that indigenous talent has diminished due to lack of activity and skills may thus need to be sourced from other countries104.

Finally, the industry should encourage the public to take a balanced, longterm view. The public should be urged to consider the case for and against, rather than being directed by the emotion of headlines.

Footnotes

62 Over one-third of the Top 50 Best Global Brands, ranked by Interbrand, are those of technology companies. See: http://www.interbrand.com/best_global_brands.aspx/. Also see: Best Global Brands, Business Week, 18 September 2008.

63 For example, supermarket chain Tesco now sells own-label, generic software in stores and online. See: http://www.tescosoftware.com/.

64 Gartner sees great SaaS enterprise application growth despite downturn, eWeek, 24 October 2008.

65 Telecom market heading for healthy growth, TIA projects, Search Telecom, 26 February 2008.

66 For example, see: Lawsuit over Virgin Mobile's use of Flickr girl blames Creative Commons, Out-Law.com, 25 September 2007.

67 According to IBM, there are over 20,000 regulations worldwide affecting data storage. See: http://www.redbooks.ibm.com/redpapers/pdfs/redp4284.pdf

68 For example, see: Apple hit with 3G iPhone lawsuit, ABC News, 20 August 2008.

69 Repetitive strain injury costs business £300m in lost working hours, Personnel Today, 4 June 2008. The article refers to the cost of mobile work related injuries, such as thumb strain resulting from the use of click wheels.

70 For example, see: BlackBerry maker, NTP ink $612 million settlement, CNN, 3 March 2006.

71 Clarity needed for digital copyright law, Computing, 8 April 2008.

72 For example, see: YouTube faces $1 billion lawsuit for alleged breach of copyright, The Guardian, 14 March 2007.

73 The IP Factor In M&A Deals, Howard and Howard, 10 July 2008.

74 In common law systems, the concept of joint and several liability usually means that any defendant in a legal action (assuming there are more than one) may be found responsible for the entire amount of damages being pursued by the plaintiff, regardless of the individual share of damages actually caused by each defendant. Under joint and several liability, if one defendant is not able to pay, the other defendants can be liable for the entire sum of damages. Critics of joint and several liability refer to it as the 'deep pocket' rule because of the potential to turn a lawsuit into a search for the wealthiest defendant.

75 Text messaging while driving: a growing national concern, Associated Content, 8 May 2007.

76 Enterprise 2.0, the market of vendors that sell technologies such as blogs, wikis and social networking applications to companies, is likely to become more competitive as IT budgets get trimmed. See: http://www.itworld.com/internet/57620/recession-upside-enterprise-20-upstarts

77 Social networking explodes worldwide as sites increase their focus on cultural relevance, comScore, 12 August 2008. See: http://www.comscore.com/press/release.asp?press=2396

78 See: http://www.businessweek.com/magazine/content/07_34/b4047050.htm

79 Advertisers' preferred social media spend: None, Silicon Alley Insider, 10 November 2008. See: http://www.alleyinsider.com/2008/11/advertisers-preferredsocial- media-spend-none

80 IBM gets serious about social networking with new research center, TechNewsWorld, 17 September 2008. See: http://www.technewsworld.com/story/64534.html?wlc=1226433686

81 See: http://greateribm.wikia.com/wiki/Main_Page

82 See: http://www-01.ibm.com/software/lotus/category/network/

83 Open Text Releases Next Generation Web Solutions, Market Watch, 29 October 2008. See: http://www.marketwatch.com/news/story/Open-Text-Releases-Next- Generation/story.aspx?guid=%7B5A9D92E4-F5D7-43FC-B875-BDDD29FD20FC%7D

84 Bosses 'should embrace Facebook', BBC, 29 October 2008. See: http://news.bbc.co.uk/2/hi/business/7695716.stm

85 AT&T claim social network improves efficiency in the workplace, Social Media Portal, 11 November 2008. See: http://www.socialmediaportal.com/News/2008/11/AT-T-say-social-networks-make-employers-more-efficient.aspx

86 RIM: BlackBerry's future lies in social networking, ZDNet, 14 February 2008. See: http://news.zdnet.com/2100-1035_22-188347.html

87 How Obama tapped into social networks' power, The New York Times, 9 November 2008. See: http://www.nytimes.com/2008/11/10/business/media/10carr.html

88 Government creates own version of Wikipedia, The Ottawa Citizen, 29 October 2008. See: http://www.canada.com/ottawacitizen/news/story.html?id=3fcb24f9- 22c9-4e91-8656-2a252c1e8cd4

89 Google uses searches to track flu's spread, The New York Times, 11 November 2008. See: http://www.nytimes.com/2008/11/12/technology/internet/12flu.html?8au&emc=au

90 Intel CEO touts collaboration, mobile translation device at Web 2.0 Show, eWeek.com, 6 November 2008. See: http://www.eweek.com/c/a/Messaging-and- Collaboration/Intel-CEO-Touts-Collaboration-Mobile-Translation-Device-at-Web-20-Show/

91 Opportunities and challenges for world nuclear industry in 21st Century, International Atomic Energy Agency, 9 June 2008.

92 For some of the discussion on nuclear energy, see: The Power to Deliver, Deloitte Touche Tohmatsu 2006.

93 Agency predicts nuclear power capacity growth, Associated Press, 16 October 2008.

94 EU faces deadline on GM food ban, BBC News, 11 January 2008.

95 Summary document of the FAO email conference: "Coping with water scarcity in developing countries: What role for agricultural biotechnologies?", Food and Agriculture Organization of the United Nations, 19 December 2007. See: http://www.fao.org/BIOTECH/logs/C14/summary.htm

96 Drought resistant GM crops ready in four years, The Guardian, 8 October 2008.

97 Is water the new oil?, The Guardian, 1 November 2008.

98 GM Crops needed in Britain, says Minister, The Independent, 19 June 2008.

99 For more information, see: http://www.nzhistory.net.nz/politics/nuclear-free-new-zealand/nuclear-free-zone

100 For example, see: Marks & Spencer continues its assault on additives, Marks & Spencer, 15 May 2007. See: http://www.marksandspencer.com/gp/node/n/56259031

101 Plastic: the elephant in the room, Financial Times, 25 April 2008.

102 Nuclear power rebirth revives waste debate, Reuters, 22 January 2008.

103 Could new GM crops please the greens, New Scientist, 5 January 2008.

104 The balance of power: How can UK manufacturers control energy costs and remain competitive?, Deloitte LLP, November 2008.

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