UK: Eye To The future - How TMT Advances Could Change The Way We Live In 2010 - Part 1

Foreword

The technology, media and telecommunications (TMT) innovations that are able fundamentally to enhance our lives are also those most likely to become the most significant contributors to the overall size of the TMT sector. The Internet and mobile telephony are two strong, recent examples of this.

Accordingly, Eye to the future: How TMT advances could change the way we live in 2010 has been written from the perspective of how TMT innovations could impact daily life: how we travel, work, communicate, are educated, and are entertained.

Providing a view on the future is possible but requires a wide spectrum of inputs. Consequently, the Deloitte Touche Tohmatsu (DTT) TMT group, made up of the TMT practices of DTT’s member firms, has based this report on comprehensive research around the world, the principal elements of which include:

• interviews with DTT member firms’ 5,000 TMT partners, directors and senior managers around the world;

• a global survey of past, present and future TMT usage;

• conversations with DTT member firms’ TMT clients; and

• dialog with leading industry and financial experts.

Each set of predictions includes DTT TMT’s bottom line – suggestions to companies in the sector on how best to exploit the opportunities and avoid the pitfalls of the next five years.

DTT TMT does not claim to be able to see the future, but trusts that this provides a useful guide to how the world might look, given TMT’s potential evolution, in 2010.

On behalf of DTT, and the TMT practices of its member firms, may I take this opportunity to wish you all the best for the future.

A typical day in 2010 is unlikely to feel much different to today. We will probably not be teleporting breakfast or using quantum computers, nor will we be watching holographic TV or traveling to work in flying cars¹. A lucky few may likely be flying to the edge of space but for the rest of us, change will probably be more subtle, with TMT advances pervading ever more deeply into our daily lives.

Indeed the greater ubiquity of TMT – from the car to the classroom, the living room to the office and essentially everywhere in between is likely to be the most noticeable change. According to a DTT TMT survey undertaken for this report, people around the world will probably use a growing number of TMT products and services more often, in more locations, and for more purposes (see Figure 1).

Established technologies – from mobile phones to desktop computers – will still dominate, but they will increasingly be supplemented by a growing range of auxiliary devices. And with connectivity becoming ever more widespread, and content increasingly digital, it should be possible to access and consume services and content almost anywhere, whether we are stationary or mobile.

That growing ubiquity of TMT is also likely to blur boundaries in the workplace – both geographic and social. The virtual team, be this in the form of teleworkers or offshored staff, is likely to become much more common. Better technology and faster connectivity are the enablers that are expected to catalyze this trend. However, the division between work and private time will probably become yet more opaque, as the ability to connect and communicate becomes increasingly pervasive. By 2010, there may be few places to hide from either the phone call or email. At the same time, the growing range of web-based leisure applications may redress the balance for the worker, providing a growing opportunity for shopping and entertainment on company time.

One common, but negative consequence of the greater pervasiveness of technology is likely to be the deepening threat posed by viruses, worms and other malicious code. As our daily lives increasingly revolve around and rely on connectivity and computers, the potential for disruption will grow proportionately. With everything from classrooms to cars becoming connected, TMT companies should be ready to protect and patch an ever growing number of devices and systems.

There should be a steady growth in the number and diversity of technologies, devices, services and content. However, while consumer choice is generally positive, it may become apparent that too much choice can overwhelm some consumers. This is particularly the case with content. For example, though a small minority may find the ability to define their own schedule appealing, most consumers may prefer to default to what is offered from and scheduled by trusted broadcast brands, and may only occasionally use on-demand services.

The same is true for communications. Though options are likely to proliferate, consumers will probably settle on a preferred set of communications tools, which serves their particular needs best. Email will probably continue growing in popularity and usage, but voice will likely still be the dominant revenue-generating application in the communications world. Mobile voice is likely to dominate – taking a growing share of total voice volumes, while fixed networks suffer declining customer numbers, and Voice-over-Internet Protocol (VoIP) makes steady, but relatively modest, inroads (see Figure 2).

Broadband networks, both fixed and wireless, should continue to grow their footprint; but growth in coverage and customers may not be matched by revenue growth.

The trade off between price and performance may become increasingly important. Though companies will likely compete with each other on the basis of bandwidth, features and functions, some consumers may decide to ignore the best available technology as it far exceeds their needs.

By 2010, education will likely have undertaken rapid – and occasionally controversial – adoption of TMT innovations. Digital whiteboards and parental intranets are likely to have become commonplace by 2010.

However technology is still likely to support, rather than replace the teacher of 2010. No commercially feasible technology is likely to have become capable of emulating the varied skills of a good teacher by 2010. What technological advances may encourage, however, is cheating. Wireless technologies may facilitate communication between students taking exams; improvements in search engines might catalyze plagiarism. Furthermore, where podcasts, online notes and other electronic aids are provided to supplement classroom teaching, some students may choose to use these as a substitute for attendance.

Education may also be provided on emerging devices, particularly Digital Video Recorders (DVRs), in the home. The video game sector may broaden its appeal – and also its reputation among parents – by launching games with a specific educational intent.

Despite the growing range of alternative distractions, television will likely continue to dominate our entertainment, locking-in our attention by offering high definition content delivered to ever larger, flat-panel screens. On-demand television and video will likely grow in popularity, and will likely be selected and delivered using a variety of technologies and transports. Indeed for some, DVDs delivered by post may still be the preferred means of obtaining the widest selection of high definition movies in 2010.

The Internet is likely to make strong gains in popularity, and in some markets may even displace television as the most popular form of entertainment. According to DTT TMT’s survey, its power as a distribution medium for a huge and growing variety of content and services should be consolidated by 2010 (see Figure 3).

Another key focus for the TMT sector is likely to be safety, particularly within the context of transport. Robotic systems will increasingly support drivers, alerting them to hazards and even taking over steering and braking when circumstances require. Head up displays (HUDs) will present critical information on the windshield – allowing the drivers to keep their eyes on the road. Haptic systems will use drivers’ sense of touch to issue warnings, and even wake up drowsy drivers. Drivers will increasingly use speech recognition to control satellite navigation systems and text to speech to listen to email messages.

Overall, therefore, the years to 2010 will likely witness a quiet revolution. New users, new uses and more frequent use of TMT innovations are likely to see the combined TMT sector grow in breadth and depth, creating value across a wider range of products, services, segments and geographic markets.

DTT TMT believes that the world of travel holds much potential for TMT companies through 2010. With connectivity becoming widespread and content increasingly digital, it is now possible to access and consume services and content almost anywhere – including while in transit. As a result, the car may start to resemble an entertainment hub in its own right, giving passengers the opportunity to play games, watch television and even access the Internet.

Increasingly, in-car technology will likely be used to promote driver safety and the car may well come to resemble a robot. Robotic systems will likely steadily expand the range of tasks delivered, from the mundane (controlling wipers) to the critical (keeping the vehicle within lane). Wherever HUDs are deployed, they will present critical information on the windshield – allowing the drivers to keep their eyes on the road. Haptic systems, – a set of technologies from the aerospace industry that add a sense of touch to the man-machine interface – will likely provide another means of warning drivers, in addition to visual displays. Advances in speech recognition will likely allow drivers to interact verbally with satellite navigation and other functionality.

However, the impact of TMT innovations and connectivity in vehicles may not all be positive. Hackers may well see the connected car as a prime target for malicious code.

Workers will probably increasingly be expected to be as productive while travelling as they are in the office, as the last few places of refuge from phone calls and emails disappear. ‘I was on a plane’ may no longer be a valid reason for not returning an email or taking a call.

Indeed the only refuge from work may be a spacecraft, which should have entered into scheduled service by 2010.

Many vehicles will likely incorporate a significant degree of automated control, with the driver’s role becoming increasingly minor. By 2010, a car’s on-board computer will likely be undertaking a growing array of functional tasks.

It is likely to assist the driver by undertaking such tasks as: giving directions, controlling headlamps and windshield wipers, muting audio systems when a phone call is received and guiding parking.

However it may also be undertaking more critical activities such as: regulating distance from the car in front, steering the car when it drifts out of lane and moderating speed when approaching an accident black spot.

But this may not necessarily mean that road travel will be safer. Safety innovations can give rise to a false sense of security, and may lead drivers to take greater risks². Furthermore, the growing number of warnings and alerts issued by these systems may well create additional driver distractions³.

Systems such as on-board computers, in-car entertainment, mobile car-phones and satellite navigation systems may be increasingly speech-driven – and the computerized voice of the car will likely be much more realistic. Using speech instead of buttons, dials or touchscreens is likely to be seen as a major safety innovation – allowing drivers to keep their hands on the steering wheel and their eyes on the road. By 2010, more than 11 million automotive voice-recognition systems are forecast to be sold in the United States alone⁴.

Drivers may also be able to give more vague verbal instructions to their in-car systems. By 2010, saying ‘find a gas station’ may be enough to prompt the Global Positioning System (GPS) to give precise directions to the nearest source of fuel. And with useful personal locations stored in the memory of the device, the driver need only say ‘take me home’ or ‘back to the office’.

By 2010, our capacity to read maps and navigate streets may have been diminished by the growing use – and growing dependence on – satellite navigation systems. Integrated navigation computers and portable GPS devices will likely become far more widespread than today, with rapidly falling prices making satellite navigation a common feature even within mobile phones. By 2010, it is forecast that annual sales of integrated GPS equipment for cars will have risen to 12 million units (compared to just six million today)⁵. Handheld units are expected to sell in similar volume⁶, and with PDAs and even laptop computers more frequently incorporating GPS technology, there will be fewer and fewer reasons to get lost.

In many respects, by 2010 we are likely to expect cars to be an extension of the living room. Passengers (and to a lesser extent drivers) may enjoy a far wider range of in-car entertainment features. In the developed world, listening to the radio and playing CDs will no longer suffice – passengers may increasingly expect to be able to watch television and DVDs, select from thousands of MP3 tracks, play video games, connect to the Internet and even send messages to passengers in neighboring vehicles.

Though this new functionality will likely be integrated into many new vehicles, the majority of consumers may prefer their car to be able to connect to a broader range of existing portable devices, such as games consoles, media players and mobile phones. As a result, it is likely that Bluetooth may become the wireless standard of choice for intra-device networking within the car, since its bandwidth and range are ideal, its power requirements are minimal, the cost of chipsets is relatively low, and Bluetooth is already standard in hundreds of millions of mobile devices. As a result, the market for Bluetooth equipped vehicles is forecast to grow at a compound annual growth rate of 27 percent by 2010⁷.

Media companies may well start to produce content specifically for viewing in moving vehicles as they recognize people’s growing desire for in-car entertainment. Games and video content are likely to be amongst the most popular, with new types of product developed to suit the dynamics of the car journey – relatively short, episodic games and video programs that do not require long periods of concentration or interaction.

By 2010, workers may select their car partly on the basis of the range of work tools provided. Desired features may include technology that can: read out incoming emails to the driver; allow the driver to dictate responses; permit the driver to set up meetings, update ‘to-do’ lists and write short memos. But safety concerns may dampen demand. Already studies have shown that the use of hands-free telephones is no safer than using a regular mobile while driving⁸, and concern is likely to grow about the safety of drivers that try and multitask.

Drivers’ sense of touch may be used as an increasingly important means of communication. Haptics will likely become increasingly popular. Car makers may use haptic systems to warn of dangerous conditions or even wake up drowsy drivers, by vibrating the steering wheel or activating actuators in the driver’s seat⁹.

For other drivers, the growing amount of information collected by in-car systems – on road conditions and weather, through to engine performance and emissions – is increasingly likely to be presented on HUDs. Another innovation from the aerospace arena, the HUD allows large amounts of information to be displayed on the windshield, within the driver’s field of view, but without obstructing the view of the road. As a result, the market for HUDs is forecast to grow from just 100,000 units last year to over four million units by 2010¹⁰.

By 2010, it is forecast that over 30 percent of drivers will regularly connect their car’s systems to some form of external wireless network¹¹, by 2020 as many as nine million new cars may be sold with broadband access to the Internet¹². And as connectivity becomes more common in cars, there is a strong likelihood that people will have to deal with some of its more unpleasant drawbacks.

By 2010, it is possible that viruses and worms will have been written and launched with the specific aim of disabling electronic systems in connected cars. Already, car enthusiasts are able to control engine configuration and boost performance using a wireless games console as a controller; a malicious hacker could easily use the same access to disable a car.¹³

The exposure to digital sabotage could have a significant impact: electronic components may represent nearly 40 percent of a car’s total value by the end of the decade¹⁴.

Other forms of transport – from buses, trains, trams and underground systems through to commercial aircraft – will likely offer passengers a growing number of connectivity, communications and entertainment options. Wireless connectivity – most particularly WiFi – will likely provide access to the Internet and send emails whilst on the move. Cellular mobile technology may also proliferate, even in aircraft¹⁵. But social norms, as well as excessive background noise, may dissuade most people from making phone calls in crowded planes, buses and underground trains. However, messaging services – from SMS to email – are likely to become increasingly popular as a means of staying in touch with the outside world. Nonetheless, for many, the almost universal ability to be in contact – even at 35,000 feet in the air or 200 feet underground – may represent an uncomfortable intrusion, prompting them to reach for the off switch.

One of the most breathtaking changes to come in the travel industry through 2010 will likely only be accessible to wealthy elite. Scheduled journeys to the edge of space – on privately built, suborbital vehicles – will likely have become a practical reality by 2010¹⁶.

By 2010, the influence of the TMT sector on travel and transport will likely be felt more strongly than ever. And there will likely be a growing number of opportunities for TMT firms to generate value – bringing communications, information, entertainment and greater safety to travelers.

To maximize the opportunity, companies should work to establish standards quickly. Today, in spite of the huge variety of cars on sale, any qualified driver is able to get into almost any car and know exactly where all of the functions are. This degree of standardization and familiarity should also apply to TMT systems that are integrated into vehicles, from entertainment to navigation.

Where TMT equipment is integrated into a vehicle, new design considerations should be factored in. Devices and services for use within moving vehicles should be easy to use, with large buttons and bright displays and able to cope with variable ambient light and high levels of background noise. They should also be readily upgradeable, as consumers are likely to expect future-proofing to be built in by 2010. Other devices, from mobile phones to games consoles are increasingly supporting the capability for software based upgrades and fixes.

Furthermore TMT vendors and car manufacturers need to protect their customers’ vehicles from the emerging threat from viruses and hackers. Malicious code can be more than just an inconvenience, it has the potential to endanger life.

TMT innovations in vehicles should also be designed so as to minimize driver distraction. Carmakers already use cognitive scientists and other specialists to ensure that in-car innovations do not distract drivers. The same consideration should apply to any TMT functionality being integrated into vehicles.

TMT innovations in general, and advances in technology and telecommunications in particular, will likely add new dimensions of efficiency, productivity and flexibility to the world of work. Offshoring, virtual teams and remote working should all become much more widespread, as technology allows firms to bring together the best people for any given task, no matter where they are in the world.

The PC is likely to remain the most commonly used device in the workplace. Its supremacy in the workplace may even rise as it takes on new functions such as voice and video communications.

The growing trend to create material in digital format, as well as the digitization of existing analog data, will likely make search an increasingly important influence on a company’s overall productivity and even competitive advantage.

In parallel, however, the pervasive power of TMT innovations may serve to put less technologically literate employees at a disadvantage. Indeed it may also make work life – and even home life – more difficult and complex for managers and employees alike, blurring the division between work and private time. Employees may well redress the balance, by shopping, surfing and even consuming content on company time.

And the perennial problem of hackers, viruses and worms is likely to pose an ever greater threat, as the potential for infection spreads way beyond the PC.

Advances across TMT are likely to cause the work/life balance to continue blurring through 2010.

Employers may gain, for example, through equipping a growing proportion of staff with ubiquitous access to email. The number of employees with always-on, mobile email access is forecast to rise from the current millions to at least tens of millions (if not more) by 2010¹⁷.

Thus email, as well as other remotely accessible office resources such as intranets, will extend outside the office building, and outside office hours, into weekends, public holidays and increasingly into vacations.

However, employees may be able to redress this balance by accessing a growing range of non-work related, web-based applications during working hours¹⁸. The increasing availability of downloadable movies, television and radio, and the proliferation of e-commerce, combined with ever faster corporate IT networks is likely to lead to an increase in their consumption in the work place¹⁹. Indeed some media companies may deliberately target office workers as their audience.

Thanks to TMT advances, and spurred by changes in work practices, the office team is likely to disaggregate yet further through 2010, providing greater flexibility to both employers and employees.

Advances in broadband penetration, network security, IP communications and other tools will likely allow a greater proportion of workers to choose to work from home, for at least some of the working week. It is forecast that by 2008, 41 million corporate employees globally may spend at least one day a week teleworking, and 100 million will work from home at least one day a month²⁰. Better technology and connectivity may also allow employers to make more use of contract workers. Companies should find it easier to engage securely, on an as-needed basis, self-employed workers located anywhere in the world.

By 2010, offshoring – another key manifestation of the disaggregation of the office team – may well have evolved into a common practice across all industry sectors, bringing together teams across continents and time-zones.

Offshoring is widely used among financial services companies as a means of reducing overall cost²¹. But by 2010 employers are also likely to use offshoring to gain access to the most qualified, talented workers – wherever they are on the planet – and may use IP communications, online collaboration suites and other tools to stitch teams together.

The quality of a company’s search engine will likely have an increasing bearing on employees’ efficiency, the value of intellectual property and overall company productivity.

As the proportion of information created in digital format grows²², encouraged by the steadily falling price in digital storage, the ability to search rapidly and efficiently across a range of file types is likely to become a fundamental challenge.

Today the majority of text-based information is already created in a digital format. By 2010, audio and video will likely increasingly be created and stored entirely digitally, with perhaps the biggest impact coming from growing recording of VoIP phone calls. Companies may decide to record a growing volume of calls, partly because it is relatively easy and cheap to do, but also partly for legislative and governance reasons.

By the end of the decade, workers may search through stored phone conversations, video discussions and images, as well as text-based information.

As working life increasingly depends on technology, there are likely to be concomitant increases in the risk associated with viruses, worms and other malicious code.²³

Through 2010 that risk is likely to extend beyond the computer and the server into the myriad devices that are becoming computerized and connected, and the ever greater volumes of data that are being stored. The impact of a virus today can be cripplingly expensive – up to several hundred dollars per event, per PC²⁴.

By 2010, when malicious code has the potential to take down not only IT networks, but also telephone exchanges, mobile devices, point-of-sale systems and even whole production lines, the impact and cost may be considerably higher²⁵.

Additionally, with employees carrying a wider array of portable devices, capable of storing ever larger amounts of data²⁶, there are likely to be far more opportunities for hackers and other criminals to steal passwords and other sensitive data²⁷. As soon as devices, data and digital keys leave company premises, the risk of theft rises, and with it the risk of digital crime.

In spite of the emergence of new devices and systems, the PC is likely to remain the dominant device in the office. By 2010, the PC is forecast to be more ubiquitous than today: the relatively mature markets of the United States, Europe and Asia-Pacific are expected to add 150 million new PCs, while developing economies are expected to add 566 million new computers²⁸. Overall, there may be some 1.3 billion PCs worldwide²⁹.

Some companies may try to reduce software licensing costs by using PCs as thin clients (with software stored centrally on a server, rather than on each PC). But they may find that the potential cost savings are offset by reliability and speed issues – particularly when workers use their PC outside the office. As a result, a number of firms might turn to open source software. Some companies may consider open source to be both cheaper and more robust for horizontal functions such as server operating systems, productivity tools and communications.

Ability to use technology will likely have become an increasingly common requirement, even among blue-collar workers.

All workers, based in the office, factory or in the field, are likely to use an increasing array of applications, from online collaboration suites to video conferencing. Production line workers may be expected to use computers to control processes and ensure efficiency. For service industry workers, the ability to use a PC will likely have become a basic entry requirement. More and more, the ability to get things done is expected to depend on the ability to understand and use increasingly complex technology³⁰ – and those with a greater degree of technological literacy may find themselves moving up the corporate hierarchy more quickly than those without.

Automation will likely play a larger role in our working lives than at present. This may reduce some of the tedium in the working day, raise productivity and even allow customer service to be improved³¹.

Communication with customers is likely to become more frequent and overall more useful as a result of automation. Electronic messaging, over a range of devices and networks may well be used to communicate with clients. Automatically generated messages will provide a blend of alerts and information, from estimated delivery times to near real-time pricing changes. Currently much of this information may already be generated, but is typically not communicated.

Speech recognition may also undertake some of the more mundane call handling currently undertaken by employees. Advances in processor speeds coupled with declines in the cost of digital storage may make this automation feasible for a growing number of voice-driven applications³².

The way we work is constantly being reshaped by TMT advances. Over the past decade the Internet, email, messaging, computerized process automation, mobile telephony and a whole host of other developments have collectively transformed our working lives. And that transformation is likely to continue through 2010 as businesses around the world seek to improve their competitiveness.

This is an encouraging outlook for those supplying business: but there is no scope for complacency. Technology is not a panacea – and should not be sold as such. Rather technology should be positioned – from concept to deployment – as a set of specific tools that can be used to address fundamental business challenges, from having the most efficient supply chain to maximizing the value of a company’s intellectual capital. Most employers are likely to prefer measurable metrics to magic wands.

Employers should also bear in mind that efficacious use of new technology and connectivity requires skilled staff to deploy and implement. Yet many nations may be facing an employment crisis by 2010, with the most acute shortages being in IT workers³³. Companies, governments and employment authorities should consider acting sooner rather than later to ensure that investments in technology are matched by investments in skills, training and broader education.

Management may also have to adapt, particularly if growing numbers of employees work remotely. Management of remote teams may be distinct from supervising staff face-to-face. Communication skills need to be developed such that there is a healthy flow of communication with staff in all locations. While email may be a tempting, quick approach to communicating with a widely dispersed team, unfortunately it may not be efficacious in the long term, as key messages may be lost among the hundreds of emails received. Some employees already spend almost nine hours each week reading email.³⁴