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A methodology and guide to uncommon opportunities in near-term technology trends for investors and innovators
JONATHAN DEUTSCH SENIOR PRINCIPLE & CHIEF ARCHITECT CAPITAL D DESIGN HTTP://WWW.CAPITALDDESIGN.COM JON@CAPITALDDESIGN.COM
DEVELOPED AS PART OF GRADUATE STUDIES AT THE UNIVERSITY OF PENNSYLVANIA
When management guru Peter Drucker penned in 1985, “There is no doubt that high tech, whether in the form of computers or telecommunications, robots on the factory floor or office automation, biogenetics or bioengineering, is of immeasurable qualitative importance,”1, he could not have been more correct. The entrepreneurial energy focused on innovative technologies has been a principal reason the American economy has remained so vibrant and dynamic for the past 30 years. How vibrant? Nominal per capita GDP in the United States was $7.6 billion in 1975, and was nearly $40 billion in 2005.2 This is a tremendous growth rate, and while there is clearly no single reason for economic success stories such as this, it is difficult to refute the role technological advances have played in economic expansion, as well as social and political improvements. Whether it was Fredrick Smith who invented air delivery and global delivery logistics... or Bill Gates who dropped out of Harvard to create software for the then-nascent Personal Computer industry... or Marc Andreessen, who developed the first mainstream web browser and introduced the World Wide Web to the general public; these entrepreneurs created and popularized technologies that have fundamentally changed the world.
With so many transformational technologies already invented and massively deployed, it is often challenging to consider what is next. There are many “futurists” who predict technology trends decades into the future, and these predictions are typically vague, and therefore of limited value to the entrepreneur or investor who seek uncommon opportunities. This goal of this study is to identify the most promising opportunities in near-term technology trends. Investors and entrepreneurs can draw upon this study for information and analysis on the key technology sectors to invest in (or create companies around) within the next one to ten years.
From the book “Innovation and Entrepreneurship,” Peter Drucker, HarperBusiness Publishing, 1985 From “What was GDP then?” courtesy of Economic History Services [Source: http://eh.net/hmit/gdp/]
To reach the stated goal, this study is composed of three sections. First, a methodology has been devised to identify the characteristics of technologies that are likely to be revolutionary – that is, technologies that will have a disproportional impact, and therefore disproportionate economic opportunity3. Next, a list of near-term and widely recognized technology trends will be put through this specially-designed battery of tests in order to predict which technologies are most likely to become revolutionary. Finally, an executive overview, analysis and assessment will be provided on the trajectory of these predicted revolutionary technologies, from a social and economic value perspective.
The Methodology Devising and designing methods to identify characteristics of technologies that are likely to be revolutionary Technologies and Disruptive Technologies The Encyclopedia Britannica defines technology as the “application of knowledge to the practical aims of human life or to changing and manipulating the human environment. Technology includes the use of materials, tools, techniques, and sources of power to make life easier or more pleasant and work more productive.” 4 This definition helps set the context of what is considered to be a technology, and thus helps define the scope of what will be assessed in this study. Based on this definition, and for the purposes of this study, technology and innovation are closely related terms. Certain technologies and innovations are more than just additions to the business and social ecosystem – some are so compelling that they disrupt current standards, trends, or processes. Wikipedia defines a disruptive technology or disruptive innovation as “a technological innovation, product,
“Life changing technology will likely be the most profitable,” Technology, Media, Telecommunications (TMT) Trends – Predictions 2006, Deloitte Touche Tohmatsu 4 “Technology” entry; Encyclopedia Britannica Concise Edition
or service that eventually overturns the existing dominant technology or product in the market.”5 Disruptive technology (and later disruptive innovation) was a concept coined in Clayton Christiansen‟s 1997 book, The Innovator‟s Dilemma, which caught the interest of business leaders worldwide.
These definitions are important because, together, they at the same time increase and limit the scope of what should be focused on when assessing transformative technologies. For instance, it might not be obvious that Freud was an innovator in psychological technology, but according to the Britannica definition, his psychological innovations constitue a technology, as they are applications of knowledge that manipulate the human environment. On the other hand, the Apple iPod by itself cannot be considered disruptive because it did not overturn any existing technology or product. It carved out a new market. However, Apple‟s iTunes + iPod combination was disruptive because, combined, they have begun to overturn the existing compact disc infrastructure as the only viable mainstream medium for distributing music.
Beyond Disruptive: Revolutionary Technologies There are thousands of technological innovations in development worldwide, ranging from biotech to robotics and holographic storage to quantum computing. Of these, many will be disruptive. As there are far too many potentially disruptive technological innovations to review and assess effectively, the technologies identified in this study will need to reach a higher standard. Technologies in this study will have to go beyond being disruptive – they will need to be revolutionary. Revolutionary technologies are exceptional innovations that not only disrupt or create markets and processes, but they also create new environments from which third party innovations can evolve.
“Disruptive Technology” entry; Wikipedia, the Free Encyclopedia http://en.wikipedia.org/wiki/Disruptive_technology
To differentiate between innovative technologies that are revolutionary and those that are “merely” disruptive technologies, a methodology (or test) must be defined. For this reason, a revolutionary technology test – developed specifically for this study6 – has been designed to surface the uniquely compelling technological innovations that will not only disrupt, but also revolutionize industries and/or society in a meaningful manner.
This test is comprised of four components: Global Scope, Massively Deployable, Application Platform, and Non-Proprietary. For the purposes of this study, this battery of tests will be referred to as the GMAN test, and those disruptive technologies that pass the GMAN test will be considered revolutionary.
THE GMAN TEST
Global Scope The most influential technologies must have the potential to affect people, companies, systems, or processes worldwide. In today‟s global economy and market, technological innovations that only apply to specific regions or cultures are inherently limited in their social and market potential. And as the percent of share the US economy has in the world continues to shrink as other countries grow7, US-only innovations will have a proportionally smaller impact than they have had in the last one hundred years. Thus, the technologies selected in this study must have the potential to scale globally. For example, LED-based lights that plug into existing sockets can scale globally, but a technology to enhance the flavor and output of corn has limited regional appeal and application. Massively Deployable The technology should not have cost, size, or growth constraints that would limit its deployment to a niche industry or application. Technologies can only disrupt a specific sector or market and still be considered disruptive, but for this study, the technology must have broad application and have mass availability. For instance, while a new shatter-proof glass material has the potential to be deployed in a massive scale for various applications, a new type of automobile fuel would likely have prohibitive cost and logistical barriers to being massively deployed, based on the cost and scale of infrastructure upgrades.
The “GMAN” test, for assessing which disruptive technologies are technology platforms, was developed for this study by Jon Deutsch, Chief Innovator, MIDI Services 7 “Move Over, U.S.A.”, Jeremy Siegel, Ph.D., The Future for Investors; Sept 25, 2005
Application Platform A technology is an application platform when the technology is not only an end in and of itself, but also a launch pad to other innovations and applications. These types of technologies are flexible enough to evoke new applications that were not envisioned when the base technology was developed. This is not limited to “software” applications. Applications can be medical, physical, artistic, etc., and application platforms can be physical (i.e., national highway system), theoretical (i.e., quantum mechanics), and virtual (i.e., Microsoft Windows operating system). Conversely, technologies such as the iPod and the laptop PC are not application platforms, as they are specialized solutions that do not innately attract or support new, innovative applications that transcend the original device‟s design. Non-Proprietary It might seem counterintuitive that the largest commercial gains would come from investing in technologies that are non-proprietary in nature. After all, aren‟t proprietary solutions the most protected investments? Yes, and that is the very reason why these protected technologies will typically not be revolutionary – because they are protected and therefore are limited in their scope, reach, and application based on the prerogatives of the owner of said technology. It is the non-proprietary technology that launches several (or hundreds) of companies that are in business to extend, innovate, manage and exploit this technology. An example of the effect of being non-proprietary is the original IBM PC architecture, of which The Economist notes, “It is worth celebrating the innovation that has been unleashed by the PC. Its flexible, general-purpose architecture has made it the platform on which new technologies, from voice-overinternet calling to peer-to-peer file-sharing, have been incubated.”8
Technology innovations that pass the GMAN test are crucial for investors. They represent technologies that are not only nearly unconstrained in their potential, but due to their “application platform” nature, multiple levels of innovations are built upon these technologies. These unique attributes will help cement them into the value chain as economies and societies progress. To give the GMAN test additional context and relevancy, consider the following examples of technologies that pass -- and don‟t pass -the test:
“The dream of the personal computer,” The Economist, Jul 27, 2006 [http://www.economist.com/opinion/displaystory.cfm?story_id=E1_SNNQDQN]
The Personal Computer, the Internet, the mobile phone, Open Source 9, electronic storage, and electricity are all examples of technologies that pass the GMAN test: they have global scope, have been massively deployed, have proven to be application platforms, and are non-proprietary.
However, some otherwise quite “disruptive” (and commercially successful) technologies – such as landline phone, the power grid, and the train locomotive – do not pass the GMAN test due to the following factors:
Landline phone: expensive to massively deploy worldwide; only a few unintended applications have emerged (such as fax and data).
Power grid: expensive to massively deploy worldwide; not global in scope Locomotive train: expensive to massively deploy; few unintended applications have emerged; cannot span the globe – network must be fragmented.
Relevance While relevancy is not specifically in the definition of disruptive technology or called out in the GMAN test, it is crucial that any technology have some level of economic or social impact. Without impact, a technology risks being invented for technology‟s sake – with no meaningful application. In order for a technology to have an impact, it must be relevant to problems that need to be solved, or designed to seek out social and/or market opportunities that have not yet been addressed.
Open Source is a licensing technology and an innovation ethos. [source: http://opensource.org]
There are two types of relevance with regards to technology: business relevance and social relevance10. Business relevance is the impact a technology can have on a business process or business model to improve efficiency, bring new offerings to the market, or otherwise provide additional value within the business realm. In the 1980‟s, the local area network (LAN) was universally adopted because its high business relevance. Social relevance is the impact technology can have on societies. Social relevance differs from business relevance because the correlation between additional value and success is not linear. Social relevance comprises many “softer” attributes, including what is considered trendy, socially appropriate, stylish, and relevant to being a status symbol. An example of social relevance is the portable MP3 player: The Rio PMP300 was the first mainstream portable MP3 player, but the technology did not reach mainstream until Apple combined technology, elegance, style, and a marketing campaign that oozed “cool.” Adept at making technology socially relevant in the entertainment and computing space, Apple is an example of designing socially relevant technology in the non-business realm.
Methodology Overview The parameters have been defined, and tests have been designed to identify the unique characteristics of technologies that are likely to be revolutionary. The technologies being assessed will need to (as defined above): Be a technology Be a disruptive technology Pass the GMAN test Be projected to have either business or social relevance
Business and social relevance is shown to be tied to financial gain. From “Cashing In,” Articles on Innovation, Community Research and Development Information Service, European Union, 5/00
Revolutionary Technology Assessment Applying the above set of criteria to near-term and highly regarded technology trends Using research from respected sources in the technology futures space, including WIRED, The Economist, The Institute for Global Futures, and Deloitte's Technology Trends journal, the following likely candidates for revolutionary technologies have been assembled for consideration: Open Source Nano-technology Hydrogen fuel Wireless Biotechnology Artificial Intelligence Relevancy commerce Genomics Processing & Storage advancement Mobile information devices Water purification Collaboration
Note: While the Internet continues to be on the radar of several technology futurists in the industry, it will not be included it in the shortlist. The Internet has already transformed society and is in the process of transforming business. While the Internet has arguably been one of the most important revolutionary technologies the world has seen in the past hundred years, and will continue to power many future revolutionary technologies, the fundamental Internet technology itself (TCP/IP, HTTP, FTP, DNS, etc.) is highly entrenched and commoditized. Therefore while the existence and the idea of the Internet will continue to help spawn countless revolutionary technologies, it will not, in and of itself, evolve substantially at the network level and therefore has not be included in the selection process. Any one of these emerging and/or nascent technologies has the potential of being disruptive. But to be considered revolutionary, these candidates next need to pass the
GMAN test. Before reviewing the technologies that pass the test, a brief review of the technologies that did not pass, and the reasons why:
Nano-technology – potentially limited by proprietary evolution. Vast majority of implementations so far are proprietary and not open for outside innovation upon baseline technology. 11
Hydrogen fuel – multiple challenges to being mass-deployable. Fuel Cells have been in use since the 1960s, yet countervailing market forces reduces likelihood of being disruptive.12
Biotechnology – typically not an application platform. Most applications are custom solutions to specific medical issues. Artificial Intelligence – multiple challenges to being mass-deployable and proprietary evolution of technology. Genomics - typically not an application platform. Most applications are custom solutions to specific medical issues. Water purification – multiple challenges to being mass-deployable. Decades of research in this area and there is still no truly disruptive results.
Put through the GMAN test and assessed against business and/or social relevancy, the following technologies are deemed very likely to be revolutionary:
Open Source Wireless Technologies Processing & Storage Relevancy commerce Mobile information devices Collaboration
Most nanotech companies, understandably, protect their very valuable intellectual capital. A case in point is Applied Nanotech: “An important part of our strategy is to obtain protection for our proprietary technology.” [Source: Applied Nanotech Patents page on http://www.appliednanotech.net] 12 “Fact Sheet: Hydrogen Fuel: a Clean and Secure Energy Future,” The White House, US Government
These six technologies have successfully completed a systematic series of tests designed to highlight the very few that have – according to the methodology established for this study – a high likelihood of being revolutionary, and thus, a disproportionate economic impact for interested innovators, entrepreneurs, and investors.
Revolutionary Technology Analysis An executive overview, analysis and assessment of predicted revolutionary technologies Open Source The Open Source philosophy is a great example of a technology that is not comprised of machine parts, processors, engines, or other trappings of the physical manifestation of ideas. Open Source remains in the idea-state as an operating framework in which people work to innovate in ways that are, in fact, revolutionary.
How revolutionary? Consider this scenario: It‟s 1987, and you run a company that develops software and services for other large businesses. When you look to develop a new product, you have a few options: build the product from scratch, leverage the work already done in-house on other products, or buy other components from other vendors and re-sell them as a part of a larger solution. This has been a traditional management scenario for about as long as modern business has been around.
However, in the mid-1990‟s, a new movement coalesced that worked out a new, viable alternative that at first seems quite counter-intuitive: build software for free, and share it for free with the only provision that whatever modifications were made to it also be submitted back to the public domain. Building software for free doesn‟t immediately make economic sense, but it depends on how you look at it. There are essentially two ways to look at the Open Source dynamic: 10
1) The “Loss-leader” lens: Common services are built and distributed freely in order for companies to provide higher-order services more efficiently. The nonproprietary nature of Open Source software ensures that more companies have non-competitive access to the same set of basic services, enabling the entire sector to focus on higher value, higher margin offerings. 2) The “Social Equity” lens: Leveraging similar processes that exist throughout many professions, Open Source developers are able to develop relationships, credibility, value, and a bit of fame by providing impressive solutions that others can use, share, and appreciate. This is not unlike the publishing model in academia -- where being cited by others is a mark of personal and professional credibility, value and a bit of fame within a network of like-minded professionals.
Going back to the scenario above, consider the same situation, but move the date up to the year 2007: Your business now has a new option: leverage freely usable resources on which to build. This enables the business to quickly build products without the added expense of building the baseline framework – you can now focus more of your company‟s resources on the specific problem you are aiming to solve. Ultimately, this is a more efficient business model, which gives you the ability to increase margins and/or lowers prices.
The Open Source philosophy is also revolutionary in how it operates: massively distributed contribution, organization, and support. This introduces otherwise costprohibitive redundancy in brainpower, globalization compliance, and resilience. If every company that needed to build out a global, massively collaborative workforce to develop common services, this would be a colossal waste of business resources and human capital. Open Source allows the efficient development of common services, and frees up organizations to focus on value-added services. A macro-economic dream come true.
And new applications for Open Source are emerging. The Open Source philosophy is now being attempted in car manufacturing 13. If this evolution is successful, Open Source‟s potential to transform business will increase dramatically. Deloitte‟s Technology Predictions 2006 report states, “the open source community should start to broaden its reach. There remains a considerable opportunity to take open source code into new areas, including mobile smart phones, PDAs, and even set-top boxes. As more and more devices become intelligent, the opportunity for the open source model will likely grow accordingly.”14
One potential limit to Open Source, however, is that its scope is currently limited primarily to software development. While Open Source will continue to impact business dramatically, the investor or entrepreneur does not have many places to invest specifically in this technology. Instead, the investor and entrepreneur are advised to fully understand the trajectory of Open Source and take the time to understand its potential, in order to fully leverage it for economic gain and business competitiveness.
Wireless Technologies Wireless communication technologies provide information and access to information well beyond what was traditionally considered economically feasible. With wireless technologies, poor, remote, and challenging locations can inexpensively be “plugged in” to the global information network. From a social perspective, this revolutionary technology has – and will – fundamentally shift global conversations and transactions from the wealthy regions of the world toward a more statistically normalized population.
The Open Source Car Project (OScar) is the Open Source‟s first attempt of applying the Open Source philosophy to the physical world. Source:http://www.theoscarproject.org/ 14 “Open Source Moves Toward Center Stage”; Delotte‟s TMT Technology - Predictions 2006
However, a more accessible poorer population doesn‟t necessarily have the immediate economic impact that most investors are looking for. In the future, it will likely be a huge global economic boost. But in near-term, wireless‟s impact will be more evolutionary than revolutionary.
Wireless communications technologies are a solid application platform, in that they enable a host of different devices, ranging from mobile phones to computers, satellite radios to television, and various proprietary information devices for vertical industries. For this reason, companies that innovate in the wireless communications space are uniquely positioned to be the delivery backbone for increasingly crucial, business-critical, and sometime life-critical information. While communications technologies do quickly become commoditized, an innovative wireless communications firm will continually invent new, value-added ways and means to move information from where it is to where it needs to go.
There is a reason why it is referred to as “wireless technology” here instead of wireless communications: there are new applications of wireless technology that also have substantial room for economic impact. One new potential is wireless power. Using specially tuned resonance waves, one object can coerce another object to resonate on a similar frequency (similar to how musical instruments will “play notes” without being touched by responding to the same frequencies being generated by another nearby instrument).15
Why is wireless power a potential revolutionary technology? Today, there are two realities about power and portability:
“Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006
1) People‟s behaviors are subtly shifted by the limits of power available to their portable devices. Because people know that a cell phone only have 3-4 hours of talk time, they intuitively understand that they need to moderate mobile phone usage throughout the day. Similarly, laptop PC users must also moderate their usage on long trips without power, reducing potential productivity. And with the complete overhaul of the camera industry, the majority of people now rely on digital cameras for their photos. And while these digital cameras no longer rely on the limited supply of film one can carry in a day, the user trades off this limitation with the limitation of the built-in battery of the digital camera. 2) Designer‟s, when devising a portable device, build and skip features based on energy utilization estimates. A mobile phone manufacturer will not build in a feature if it is energy hungry, and laptop PCs are designed to reduce their CPU speeds dramatically when on batteries in order to conserve power.
The promise of wireless power will alter both of the above dynamics, and could once again revolutionize what services mobile devices can provide. For instance, a mobile phone with virtually unlimited available power could actively track, record, and monitor bodily life signs, provide proactive “heads up” alerts based on where you are and what you are doing, or even record every thing you see and hear throughout the day for archival or evidentiary services. Privacy issues notwithstanding, these would be revolutionary services for a mobile phones.
However, wireless power is still just a promise, not a reality. In addition, if it does become a reality, it will (at least initially) have substantial limitations, including a 16-foot range. 16
“Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006
In the wireless technology space, investors and entrepreneurs should focus on the opportunities to provide new levels of service that have broad appeal. There are a lot of commodity wireless offerings available today, which are of limited interest to investors and entrepreneurs. But look at the “line extension” possibilities in each commodity service to unearth new value from existing infrastructure. And, like in the case of wireless power, keep your mind and wallet open to imaginative applications for wireless technology. Ask yourself “If I could alter the rules of physics, what would I want delivered wirelessly tomorrow that seems impossible today?”
Processing & Storage The ultimate “application platform” technologies, processing and storage combined are the closest we currently have to mimicking the primary functions of the mind: the ability to process information combined with the memory to store this information. As processing and storage continue through the Moore‟s Law 17 and Kryder‟s Law18 continuums, respectfully, they will increasingly provide societies and businesses with higher-level services to analyze information, automate processes, and solve complex problems.
Like most platform technologies, there is a high degree of commoditization at the mainstream technology level. But as future processing and storage technologies that provide breakthrough price/performance solutions emerge, they will enable new, disruptive, and even revolutionary technologies and applications. For instance, a minimum price/performance ratio is required for massive storage and processing to
Moore's Law is the empirical observation made in 1965 that the number of transistors on an integrated circuit for minimum component cost doubles every 24 months. It is attributed to Gordon E. Moore, a cofounder of Intel.; From Moore‟s Law entry; Wikipedia, the free encyclopedia
Kryder's law states that hard drives (HD) are benefiting from an exponential increase in the density (bits per unit area) of information they are able to store. Source: ”Kryder‟s Law,” Scientific American, August, 2005
enable Google to operate profitably enough to sustain its business model. If the current price/performance mark in processing and storage was where it was in 1985, it is unlikely that the very idea of a global search engine that required over a petabyte (1,000 terabytes) of storage19 would even be considered.
There is a high likelihood that there will be points throughout these technologies‟ evolution where the price/performance ratio will suddenly spark revolutionary applications throughout the foreseeable future. And as the industry continues to innovate around new and novel ways to store and process information (through holographic computing and storage, 3D optical storage, biocomputing, micro-electronic mechanical systems [MEMS], advanced magnetic storage, probe storage), new applications will be invented to fully utilize the availability of a hyperbolic leap in available, affordable processing and storage technology. Importantly, for each application that requires the next generation of processing and storage technology, this new processing and storage technology is all but required to fuel the growth and expansion of these new applications. As a result, the creativity around applications reinforces the investment and growth of the base processing and storage technologies, even as the price declines (see chart to observe how revenues increase even
Size of Google database assembled by Ionut Alex. Chitu, on the Googe Operating System Blog; 9/10/06
as price per megabyte decreases20).
One potentially disruptive application that is highly reliant on revolutionary processing and storage technology advancements is artificial intelligence (AI). This processingintensive application has the potential to provide completely new levels of service to people. However, the potential of AI has been stymied by the relatively inadequacy of current processing technologies, rendering AI as an interesting research area instead of a generally available service. AI is merely one example that will demand revolutionary processing and storage power that is not yet available. The drive for these applications will drive the need for revolutionary change in processing and storage technologies.
Predicting which technology (revolutionary or evolutionary) will create the next critical nexus of price/performance will be challenging for investors and entrepreneurs. In addition, the recent consolidation and rapid commoditization of current storage technologies (hard drive and flash RAM) provides a challenge for an industry that has rested on mainstream approaches to magnetic storage for decades. Yet, with governments and businesses alike set to track more activity, consumers eager to record and play back high-quality digital audio and video, and data warehousing driving the growth of a multi-billion dollar market research industry, the future of processing and storage technologies looks bright.
Relevancy Commerce Invented by the newspaper industry, relevancy commerce was advanced by radio and television program directors, and recently revolutionized by Google. Relevancy commerce (also referred to as advertising-subsidized content) provides advertisers access
Next Generation storage technologies and chart from “The Future of Data Storage Technologies,” World Technology (WTEC) Division; International Technology Research Center
to their targeted audiences to promote their services. It allows for more valuable and meaningful advertising to reach consumers through the art and science of demographic analysis. Relevancy commerce is what allows the New York Times be sold at newsstands for a fraction of its production costs. While most other technology assessments consider this area “search technology,” this study asserts that search is merely an application that enables relevancy commerce to exist. In fact, the top Internet search engine, Google, makes the vast majority of its revenue in relevancy commerce, not search.
When Google invented their AdWords and AdSense programs, they completely transformed what relevancy commerce could do to for businesses and consumers. Google‟s “relevancy engine” automatically “senses” (through Google AdSense) the content on almost any page on the web, and then places “best match” advertisements along the side of this content. As a result, advertisers are able to reach audiences worldwide, on almost any website, based on the relevancy of the content that the consumer is reading. Conversely, web site visitors receive targeted advertisements based on the topic of – or references on – web page they are visiting. The breadth and depth of these programs is just starting to be understood by marketers. It is likely that this approach to advertising will spread further within the web, and beyond the web as well.
The impact of this technology might sound evolutionary at first, but consider the implications as relevancy commerce continues its ascendance: Goods and services that many people now have to pay for might very well become “free” in exchange for being a willing customer for eager companies vying for your attention. In essence, relevancy commerce converts consumer attention into currency. This evolution could revolutionize at least two sectors: information devices and information services.
1) Information devices -- with a fully developed, mature and massively-deployed relevancy commerce model, most any device designed to convey content (including televisions, radios, computers, mobile phones, etc.) would not have any hard currency cost, but would rather be an exchange for your attention to relevant advertisements. 2) Information services – Many companies providing information services that currently sell this intellectual property to clients would likely shift to a barter agreement of exchanging services for attention. Here is an example to illustrate: Picture two hypothetical information services companies, called SMI and CDN – both whom provide pharmaceutical intelligence to the world‟s pharmaceutical companies. In today‟s economy, both of these companies sell their data, analytics and information to pharmaceutical companies to help their clients operate more efficiently. This information is quite valuable, and is worth hundreds of millions of dollars in revenue each year. One day, the CEO at CDN (a smaller and more nimble firm than SMI) conducts a study and finds out that the value and quality of his clients‟ attention is worth more to hundreds of potential advertisers than what he is currently charging his clients. Based on the results of this study, he conducts another study to see if his clients will be willing to save $50 million each year in exchange for their employees receiving targeted ads from a set of pre-approved sponsors. At first, this prospect is awkward, and is rebuked by CDN‟s clients. But, after a few years of being offered “free” services instead of a $50 million annual bill, eventually the client gives in to economic and shareholder pressures and pilots a test with CDN. In another year, the tests show that the information is the same as it ever was, and the pharmaceutical company now has an additional $50 million dollars in its annual budget as barter for its employees‟ attention. As a result, the CEO of CDN changes the entire business model of CDN and becomes a content provider to the pharmaceutical industry that streams relevant advertisements to
their client‟s employees, providing a new custom channel for advertisers, who will pay top-dollar for such a targeted, wealthy demographic.
The account managers at competitor SMI are now bidding against a vendor that is in a barter agreement with pharmaceutical companies. How can SMI compete with their traditional “pay for information” model? They can‟t. They must adapt and provide a better, more advantageous barter agreement for the client if they are to compete with CDN.
This hypothetical example sheds some light on how revolutionary relevancy commerce could be. And it appears that things are heading in that general direction. The Financial Times just reported that Google has inked a deal with BskyB (a British satellite television company) to replace traditional ads with Google‟s AdSense targeted ads. Says the Financial Times about the deal, “If the companies manage to do that successfully, they could well transform the TV advertising industry.” 21
The outstanding question around all of this is one of social relevance. Many beneficial and astounding technologies never fully reach their potential due to a lack of compatibility with basic human nature. Like the videophone that never reached its potential due to lack of consumer acceptance, despite the fact that it represents a superior technology to the traditional voice phone, relevancy commerce might suffer a backlash if people value their attention more than their hard currency.
Relevancy commerce offers entrepreneurs and investors an opportunity to support or envision new ways of conducting commerce, and new ways of valuating people‟s attention as a source of currency. Finding the right “connections” where people are
“BSkyB in Google link-up”, Andrew Edgecliffe-Johnson, Financial Times, Dec 6, 2006
willing to sell their attention for value-added services could produce new economies that do not exist today.
Mobile Information Devices In the post-industrial age, information is power, and time is money. Mobile information devices afford an unprecedented number of people around the world 22 flexible and ready access to information, at just about any time. The convergence of these three axes around a single class of device will likely ensure that mobile information devices become one of the most revolutionary technologies since the advent of the Internet.
Mobile information devices vary in shape, size, function, and ability. Popular variants include mobile phones, PDAs (personal digital assistant), the iPod, UMPCs (Ultra Mobile Personal Computers), Smart Phones, and the Blackberry. As each generation of these devices come to market (and new generations are launched annually), connectivity, interactivity, and multifunctional capabilities are all improved upon.
Unlike the Internet, where the baseline technology exploded and then steadied, mobile devices continue to evolve at a rapid pace, and have a great deal of potential to further revolutionize society and business. In conjunction with wireless communications technology, mobile devices can become “portable portals” into information networks such as the Internet, which potentially extends the Internet‟s potential reach by almost 500% as compared to traditional internet access points, personal computers 23.
Around 80% of world's population has mobile phone coverage as of 2006. This figure is expected to increase to 90% by the year 2010; AFP News Service reporting on Singapore Telecom study; 11/06 23 Current internet population is approx 1 billion, or 16.6% of the population. A 482% increase matches the total mobile phone coverage. While not all current mobile phones have internet access, it is trending toward this reality.
When 80% of the world‟s population is able to communicate with one another – independent of location, socio-economic status, or other traditional barriers – new relationships and economies emerge. For instance, eBay is a fantastically successful online venture, but its current business model is not centered around the 3 billion people in Africa and Asia that don‟t have PCs, but who will soon be able to buy and sell things on eBay from remote locations in the world. What happens when a craftsperson from a tribe in central Africa is able to sell their custom-made tiger tooth necklaces? In their tribe, a necklace might be worth, say, three months of food as barter. But on eBay, what if the same necklace commands $1500? This potential dynamic has the potential to revolutionize commerce and cultures, as well as further integrate the world‟s economies.
Another revolutionary trend enabled by mobile information devices is giving a voice to the politically voiceless. SMS – or short messaging service – is a common service on mobile phone services worldwide. SMS messages (or “text messages”) are just starting to be used to organize disparate groups of people across towns, regions, and countries. The impact of this capability could be observed during the “Danish Prophet Muhammad Cartoon Crisis” where Danish Muslims sent SMS messages to friends and family in the Arab region, reportedly misconstruing the facts on the ground in Denmark. But the text messages came through, and were forwarded to tens of thousands more across the region, and the misconstrued facts spread like wildfire, inciting riots in Syria, Jordan, Egypt and Iran.
Mobile information devices also represent a new opportunity for “convergence” – where multiple applications that generally require distinct devices come together into a single user experience. As applications begin to converge on the mobile device, we will start seeing rich mobile application platforms to provide new, innovative services to people worldwide. An example of convergence can be seen with Apple‟s iPhone product. The
iPhone looks like a mobile phone or a PDA, but integrates an astounding amount of services in a device that is only 11.6mm thick and easily fits in a pocket:24
Apple iPhone Application Convergence Mobile phone features (contact lists, speed dialing, voice dialing, conference calling, integrated speakerphone) Messaging features (SMS text messaging, video, image, audio messaging) Video features (including dedicated video camera and instant uploads to on-line services such as YouTube) Personal information management features (calendar, to-dos, email, syncs wirelessly with Microsoft Outlook) Digital camera features (3 megapixel camera) Video camera features (DVD-quality recording quality) Digital music player (MP3s, streaming audio) Digital audio recorder (built-in microphone) GPS features (built-in GPS receiver with turn-by-turn directions, text-to-speech translation, 40 million points of interest database available via cell network) Tens of thousands of applications written for the iPhone by a development community
Apple iPhone Hardware Convergence
Data services: Hi-speed data transfer over the global GSM cell phone network Connectivity: Able to connect in most countries around the world, as well as connecting to any WiFi wireless computer network. Computing platform: Hi resolution, hi color LCD, OSX application platform, up to 32GB RAM A “physics engine” user interface that makes it respond as if the controls were real-life objects Full mobile gaming platform
Nokia N95 device information available at http://www.apple.com/iphone/
With this much flexibility and power in a device that fits in your pocket and goes everywhere you go, revolutionary innovations, solutions, and services previously considered implausible will now not only be viable, but will be globally extensible and mass-deployable. This applies to consumer needs as well as the needs of business. If this device becomes a blueprint of the future mobile information device, the ideas of “telecommuting” and “global outsourcing” might very well evolve to human capital being completely mobile and even more dispersed (and traceable). “Working from home” evolves to “working from anywhere”; “Office hours” evolves into “on-demand resources”; “Outsourcing” evolves from thinking of India and China to thinking of any country where talent or expertise resides. As “outsourcing evolves from option to obligation”25, the most effectively organizations outsource becomes a critical success factor.
There are countless other innovative applications for the mobile device. The Economist provides some additional examples of how mobile phones are transforming traditional processes worldwide: “Merchants in Zambia use mobile phones for banking; farmers in Senegal use them to monitor prices; health workers in South Africa use them to update records while visiting patients. All kinds of firms, from giants such as Google to start-ups such as CellBazaar, are working to bring the full benefits of the web to mobile phones. There is no question that the PC has democratised computing and unleashed innovation; but it is the mobile phone that now seems most likely to carry the dream of the „personal computer‟ to its conclusion.”26
The title of a chapter in Deloitte‟s TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu “The dream of the personal computer”, The Economist; Jul 27, 2006
Mobile information devices tend to be more social devices than other information devices.27 Because these mobile information devices are the interface between the information and the person, they serve an important and very personal role in a person‟s life. Because of this, social relevance plays a large role in mobile device success or failures. This means that less tangible factors (as described earlier) such as style, usability, form factor, and “cool factor” matter just as much as functionality in this type of technology.
Investors and entrepreneurs can approach the mobile information device sector from multiple perspectives and expect to see a wealth of opportunities. Demographically, there is the potential to attract previously unreachable audiences. Commercially, there is potential to develop new premium services that are attractive and useful to users in wealthy nations, as well as new, inexpensive basic services to the less wealthy but more populous customer base in Asia and Africa. Politically, there are a bevy of opportunities to integrate mobile information devices to help manage, coordinate, and enable grassroots political movements or campaigns. From the business efficiency perspective, most any company currently providing services that involve information delivery (even customer service) should extend its delivery platform and user experience to the mobile information device.
To summarize, mobile information devices promise an unprecedented opportunity to create new business opportunities, enable social and political change, and enhance the efficiency of current business processes.
Phones, like cars, are fashion items. Both are social technologies. Source: “Phones are the new cars,” Technology Trends, The Economist; Nov 30, 2006
Collaboration Like Open Source, collaboration is not a traditional “technology” per se, but it does fit within the definition of technology referred to earlier in this study. In fact, the definition of technology specifically includes the “application of knowledge,” and collaboration is a methodology of applying knowledge to solve problems.
What enables collaboration (which has existed in some form since the first intelligent organisms on earth interacted and evolved) to be a revolutionary technology is how the possibilities of collaboration have recently exploded thanks to the convergence of other revolutionary technologies like the Internet, World Wide Web, the personal computer, and mobile information devices. These convergent technologies together enable new forms of collaboration that remove the traditional constraints of space, time, and circumstance.
Collaboration is an activity that most every organization -- ranging in size as small and diverse as local support groups or municipal governments to as large as national governments or international movements -- is involved in. Collaboration regularly occurs within organizations to assemble deliverables, and collaboration commonly occurs between vendors and customers. Through this lens, it is straightforward to see the diversity, quantity, and scope of collaboration occurring around the world.
As technologies that enable new ways to communicate continue to evolve, the opportunities to enable new, revolutionary forms of collaboration atop these technologies make themselves available. One of the more prominent innovations currently underway is a concept called “Web 2.0” – where entrepreneurs are leveraging the latest web technologies to transform traditional websites (that are viewed) into collaborative portals
(that are used and viewed). Web 2.0 concepts enable what this study refers to as mass collaboration – collaboration that extends beyond a typical, structured team or organization and enters into the realm of a new type of collaboration where the general public is invited to participate in content development.
Web 2.0 innovations that enable mass collaboration include wikis such as Wikipedia.org (a mass collaborative encyclopedia that is so effective that it has been utilized for some of the research for this study), Flickr (a mass collaboration photo sharing and identification service), YouTube (a mass collaborative video sharing and categorization service), Facebook (a massive social network), Blogs (a hybrid of traditional publishing and masscollaborative discussion), and Twitter (an instant-message service by and for the masses).
Tremendous economic value has already been realized by the Web 2.0 revolution (Flickr, YouTube, and Blogger were purchased for billions of dollars in the past few years), but this is just the first phase of utilizing the Web and the growing global information network to enable new forms of collaboration. Mobile devices (such as the Apple iPhone, among others) will provide new platforms for collaborative applications, linking in the mobile and distant contributors to what is now currently a PC-based collaborative ecosystem.
In support of this outlook, Deloitte‟s Technology Trends report predicts that collaboration plays an increasingly strategic role in the innovation process. 28 Specifically, the Deloitte study focuses on collaboration‟s role in the R&D process for global organizations that are now distributing R&D activities around the world. In addition, Deloitte predicts that companies will use evolving collaboration technology to better co-operate with
“Innovation becomes collaborative,” TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu
government and academic research institutions to access leading edge thinking at the non-commercial level. This is yet another example of how new technologies enable not
just improved collaboration, but new collaborative networks.
Investors and entrepreneurs have immediate and future opportunities to fund and imagine new, revolutionary collaborative technologies that have a high likelihood of creating substantial economic value by improving upon one of the most fundamental work processes that exists in our society.
Summary The global economy is currently reaping the benefits of revolutionary technologies invented over the recent decades. Thanks in part to innovations that converge into a larger, more strategic whole, people are working, playing, and navigating their lives in vastly different ways than just thirty years ago.
But these technologies are still relatively young, with much more growth potential in store. It is in this context that this study focused on near-term, next generation technologies that leverage and could significantly enhance innovations and services available today. The guidance presented here is distinct from other studies, yet has many common links. It is worth noting that none of the studies researched published a methodology to assess which technologies made the cut. There very well may be sophisticated methodologies behind the scenes, but the reader is only exposed to the results.
It has been the goal of this study to help guide investors and entrepreneurs toward the more influential and rewarding areas in which to invest their time and money. New
energy directed towards these predicted revolutionary technologies will only help ensure that they do become revolutionary. Creative thinking and problem solving, a focus on growth and prosperity, and an eye toward social factors like usability and design are the disciplines needed to take the human condition to the next level.
We have already decided as a society to embrace technologies that enhance our lives and improve our productivity. However, as with all first generation technologies, there have been some compromises made for these gains. The next generation of revolutionary technological innovations promises to make this embrace less of a compromise and more of an unfettered step forward.
BIBLIOGRAPHY / SOURCES
AFP News Service, on Singapore Telecom study; 11/06 Applied Nanotech Corporation Website, patents page [http://www.appliednanotech.net] BBC News, “Physics promises wireless power,” Jonathan Fields; Nov. 15, 2006
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Financial Times, “BSkyB in Google link-up”, Andrew Edgecliffe-Johnson, , Dec 6, 2006
The Future for Investors, “Move Over, U.S.A.”, Jeremy Siegel, Ph.D.,; Sept 25, 2005
“The GMAN test,” Jon Deutsch, MIDI Services Googe Operating System Blog,” Size of Google database,” Ionut Alex. Chitu, 9/10/06
Innovation and Entrepreneurship, Peter Drucker, HarperBusiness Publishing, 1985 The Institute for Global Futures Technlogy, Media and Telecommunications Trends - Predictions 2006, Deloitte Touche Tohmatsu Consultancy “Open Source Moves Toward Center Stage,”
“Innovation becomes collaborative”
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