2013: just where is it all going?

For the past few years, I have done posts that have attempted to guess what 2013 is likely to bring, last year I did better than I deserved, so here is my best guess for the next 12 months or so.

It’s the economy stupid

The economy is probably one of the biggest factors affecting the technology sector over the next 12 months. In the developed world, the economies and social stability has been maintained on the back of credit, from probably back as far as the Reagan administration.

This is no longer a European or American condition but can be seen in the debt-laden economies of Korea and Japan as well. Even countries like Indonesia have shown a dramatic upturn in personal and commercial borrowing across Asia in 2012.

Recessions usually mark a point of restructuring in the economy. In the 1970s and 80s the US and many European countries moved to a more serviced-based model as Japanese and other Asian countries took on traditional industrial roles.  The lost decades for Japan has seen the country move away from primarily being a planned economy that makes things to a more  mixed economy similar to Germany.

The housing related bust of the past four years has seen the US and Europe deal with a broken financial services sector and try to find a new way forward in the face of globalisation and a lack of economic differentiation to the likes of China.

All of this is going to affect technology, what we adopt and how use it. My own move to Hong Kong has my parents using Skype and Facetime – the same is true in households all over Ireland as a large swathe of the population emigrated to work around the world.

There are also likely to be other impacts:

  • A large section of the web is ad-supported from Facebook to news sites, companies generally reduce advertising spend in straitened times. Yahoo! during the dot.com bust saw advertising revenue declne by a third, which gives an idea of what could be in the pipeline
  • The launch of Windows 8 has gotten off to a slower than expected start, part of the reason for this is that consumer PC purchasing cycles have been extended from four-to-five years. Now part of that could be because we don’t need to buy ever more powerful computers all the time if we are using them primarily for web-related tasks, but it could also be because incomes are tighter. Tablets like the Apple iPad could be what economists would call substitute products (like using margarine as a cheaper replacement for butter)
  • This is also likely to mean that new ways of selling us televisions like Sony’s innovations in creating 4K displays will have a slow adoption rate because we don’t want to buy films we have on DVDs and Blu-Ray yet again, so technological upgrades will starve media cash-cows
  • I would expect household discretionary media budgets to be squeezed which is probably why Sky has looked at a la carte online video models in the UK

One aspect of the technology sector that is ripe for a restructure in the current economy is venture capital firms as many of them who invest in ‘easy innovation’  have a raison d’être that looks increasingly uncertain. Web-based start-ups are increasingly been bootstrapped together by the technically savvy; Kickstarter allows for the trial of consumer hardware concepts.

3D-Printing is interesting, but isn’t the future of manufacturing as we know it

Tinkering, hardware hacking or DIY has had a makeover over the past few years as the creative classes discovered shop work, crochet and plastics and called it ‘making’. Three D printing has become a gradually more affordable technology that slotted neatly into the making meme. If you have a big enough printer and the appropriate format CAD file, any shape can be made. Anyone who spent a bit of time watching Star Trek: The Next Generation will have been immediately reminded of the replicator in the ships canteen which conjured up any dish the crew wanted.

What 3D printing can’t do is emulate many physical properties of materials. So despite what you may read on in the press, constructing a gun using 3D printing is harder than you’d think. Components from magazine springs to barrels have complex mechanical properties and the best lower receiver made so far by a group called Defense Distributed broke after a sixth test shot was put through it. All of this means that whilst 3D printing is interesting, it isn’t anywhere close to the Star Trek replicator that everyone seems to believe it is.

Anyone of a certain age who did shop work or used a forge at school knows how heat can dramatically change a metals property, any student of history knows how carbon changed the properties of iron into steel.

So you can forget about printing your own clutch for the car rather than paying Renault a fortune.

LTE is going to make more a of difference to your carrier than to you as a consumer, at least for now

Back in 2001 I was working with Capgemini promoting it’s telecoms practice. One of the vehicles used was a report that compiled the knowledge of senior executives from across the telecoms and media sectors.

One of the things that struck me about this process was how little the executives knew what would be likely reason why consumers would buy 3G and how they would make their licence fee investment back. In the end, this process took some ten years, and many of the promises that were trotted out for 3G during the late nineties and early noughties are kind of here now with the advent of 4G networks. Though in reality having tried Facetiming or using VoIP on 3G networks has been a failure for me.

But this process has made me a bit skeptical about the expectations being put on 4G in the west as a universal mobile elixir of goodness, with us all Facetiming and running successful internet businesses behind every hedge row.

I don’t think so.

Firstly in order to do those things the data caps would need to be raised substantially on LTE contracts for consumers.
Speed diagram
This diagram from Ericsson’s Mobility Report shows how speeds change over distance from the base station to the cell edge. The most interesting aspect of this diagram is the ‘norming effect’ that occurs in 50 per cent of the coverage area as download speeds converge. This also shows the flaw in expectations around rural broadband, since the kind of performance envisioned by policy makers would require a very dense cell network, which would probably be as expensive as its wired counterpart.

Despite living in the hyper-dense wireless lifestyle city of Hong Kong, I haven’t cut my wired connection and instead use a DSL connection at home

What LTE will probably will do is help your mobile phone company carry voice traffic more efficiently.

Small, but perfectly formed web businesses

One of my favourite sites this year has been Newsblur. Alongside pinboard.in it is one of a few web properties I rely on. Both Newsblur and pinboard.in are more akin to an artisan operation than a large corporate. Both sites provide a niche offering that fills a real need: pinboard.in fills the gap in social bookmarking that delicious left and Newsblur provides a better RSS reader.

Both of which are offerings that major web companies have largely abandoned or stopped innovating. In the case of Newsblur: Google Reader, FastLadder and Bloglines to name but three RSS readers that have disappeared or stagnated.

Facebook’s biggest enemies will be agencies

Facebook has managed to infuriate with agencies and clients and everything has developed an escalating price tag. Firstly there is inventory inflation – you could charitably argue that this is purely market forces. However I believe that it was no coincidence that General Motors announced pulling back their spend on Facebook with a timing designed to sour the companies IPO last spring.

Given that things have only been exasperated since then as Facebook has effectively forced brands to use advertising support for their pages in order to now engage with existing fans as well as acquire new ones.  Agencies will start actively looking at alternatives to Facebook including branded communities  and other advertising platforms to provide better solutions for clients. During the autumn Becky and I ran an advertising campaign to promote awareness of meningitis amongst parents; in the online part of the media buy, we went with Unruly Media’s video network instead of Facebook because the numbers worked out better. Neither of us were professional media buyers, but the math was obvious and that compelling it didn’t matter.

Consumers will likely be using Facebook for years to come and advertisers will not ignore this, in the same way that they still use the Yahoo! Network. And media buyers will still provide counsel but do what their clients want. The needle will move slowly against them to a less pre-eminent position once this knowledge permeates through agency and client circles.