UK: Technology Predictions - TMT Trends 2007 - Part Two

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Offering services for free has become a mainstay of the technology industry, and a marketing tool of choice for growing market share. But free offers may become increasingly costly, both to suppliers and consumers, during the course of 2007.

Free services and applications already have a great deal to answer for. Spam is expected to represent over 95 percent of all emails sent in 2006⁵⁵ – over 60 billion messages each day⁵⁶. For many, Spam not only represents a painful nuisance, but may also ultimately represent the death of email as we know it if the volume of Spam becomes untenable⁵⁷. Free email also allows viruses, worms, spyware and other malicious code to be carried gratis to millions of unwitting recipients. Free though the service may be, it is estimated to have cost consumers some $7.8 billion to repair or replace infected PCs during 2005 and 2006⁵⁸. By contrast, paid-for SMS services, on which consumers spent over $185 billion in 2006 alone⁵⁹, were relatively junk-free, most likely because the economics of Spam simply do not work in such a highly commercial setting.

IM has suffered a similar fate. Spam via IM platforms, sometimes referred to as Spim, is growing in line with the increasing popularity of IM generally. There are now over 80 million users of free IM platforms on the Web⁶⁰, and between them, they endured over 1.2 billion Spim messages in 2006⁶¹. The average IM user can expect to be interrupted with instant junk messages about five times a day, and those interruptions are likely to grow to 27 times a day by 2008⁶². Between five and eight percent of the messages received by corporate IM users, who are growing rapidly in number, are classified as Spim. This disrupts work, reduces productivity and increases the risk of infection from viruses, which can also be carried via IM⁶³.

The cost of free Internet VoIP services is also rising. Not only are consumers increasingly aware that free VoIP is only as free as the cost of a broadband connection and the termination charges associated with off-net calls, but also, they are becoming increasingly annoyed by the voice version of Spam and Spim, charmingly referred to as Spit. With Spit, spammers turn to VoIP systems to send thousands of voice messages, selling the usual raft of questionable products and services, to unsuspecting users⁶⁴.

Similarly, Open Source software is perceived to be free. But when the cost of installation, maintenance and customization are factored in, the total cost of ownership can in fact be substantial. And if something goes wrong with an Open Source solution that is based upon the contributions of many small companies, the collective suppliers may have too little capital to be able either to engineer their way out of the problem, or to pay compensation.

2007, therefore, is likely to see growing skepticism with regard to the ‘free’ offer. And perhaps more importantly, the year may also see consumers and enterprise customers expressing a growing willingness to pay for services, in return for solutions that insulate them from the perils of the free-technology world. Rising to this challenge could become a key focus for technology companies in the coming year.

Tax leakage is a problem for every exchequer. But Europe’s tax losses from carousel fraud are so vast (as much as $66.6 billion a year), that its ramifications in 2007 are likely to be global⁶⁶. Every technology company operating within or selling into the European community may have to alter its supply chain, adjust transportation logistics and review delivery methodologies in response to new legislation introduced by state governments within the European Union to suppress carousel fraud.

Carousel fraud – or MTIC – is based around the theft of VAT payments claimed from national governments. It exists in the European Union as exporters are able to claim VAT refunds while importers are responsible for collecting VAT from their customers and passing this on to the tax authority. Fraudsters collect refunds while holding onto VAT owed to the government.

This is known as carousel fraud as the same goods are often repeatedly exported, sometimes circling between the same two countries. Technological products such as semiconductors and mobile phones are the favored goods in carousel fraud due to their high value. A vanload can be worth hundreds of thousands of dollars. At a national level, the impact of carousel fraud has been immense. It is estimated to represent 10 percent of the United Kingdom’s exports and as much as $9.8 billion in tax losses⁶⁷; it also represents two percent of Germany’s VAT⁶⁸.

The 25 member states of the European Union are expected to introduce country-specific legislation designed to counter carousel fraud in 2007. This follows the introduction of new laws in one or two European nations in 2006.

These measures are likely to present several challenges for technology companies. The laws may not be uniform. The scope of goods affected by legislation could vary by country. For example, Latvia’s derogation was requested only for timber. Other countries may not follow suit. The taxable status of goods may vary according to the type of sale. Business-to-business transactions may be free of VAT; whereas the same product would probably be sold to a consumer with VAT added on.

This year, as in most years past, many companies will invest considerable time and money seeking out the next hot technology. The reality, however, is that the technologies that are likely to grab tomorrow’s headlines may well already exist today. Indeed these technologies may have existed, albeit in a less mature format, for many years.

In general, technology changes little within a year. But cumulative changes over the course of a few years can be fundamental. The majority of today’s most significant technologies, from wireless networking to solid-state storage, have been evolving for a decade, at the very least.

For example, the first recorded wireless transmission, by Nikola Tesla⁶⁹, took place at the end of the 19th Century. At the start of the 21st Century, wireless technologies are still evolving and are likely to continue so for many years to come. The same can be said of packet transmission, the foundation of the Internet; and processors, the engines of technology.

Importantly, some of the most fundamental innovations in technology may have little to do with the technology itself. Combinations of technologies are often more powerful than single technologies and innovations on their own. The MP3 player is the combination of compression technology, digital memory, and processors. Each of these has existed independently for decades; however it was not until a few years ago that the maturity of each represented a persuasive combination that was ripe for commercialization.

Similarly, technological context will likely play an important role. 2007 may see the emergence of apparently brand new technologybased products and services, when all that has changed, in fact, is their technical setting and perhaps branding. Social networking, one of the most talked about new media phenomena of 2006, has been going on for many years, ever since the Internet existed. Social networking evolved from Internet-based communities of interest called Usenets⁷⁰ and was originally dominated by technology aficionados, a group that would generally be regarded as being on the wrong side of fashionable. But with the growth in broadband penetration, as well as digital cameras and higher performance processors, Usenets have evolved into social networking, a massmarket, leisure and entertainment activity.

Social networks are a reinvented form of the bulletin board, a previously unfashionable form of Web-based communication much loved by the technology and scientific communities. The original bulletin boards served as a means for professionals and enthusiasts to exchange ideas and request help on projects. Though their use was niche, the impact of bulletin boards was significant. Much of today’s software is founded on the ideas and exchanges posted on bulletin boards.

But the bulletin board was not designed as a commercial endeavor. So it is perhaps ironic that 2007 should see the youth-oriented, headline-hogging, rebranded bulletin board offer a significant commercial opportunity to the technology sector, under the guise of social networking.

Social networking has been a major success. It has generated hundreds of millions of dollars in both realized⁷¹ and perceived value⁷². In 2007, its value may be measurable in billions of dollars. But such success creates challenges, which technology companies should be well positioned to address through 2007 and beyond. One of the most significant challenges awaiting media companies is dealing appropriately with the posting of copyright-protected material on social networking sites. Unfortunately a proportion of content posted on these sites has effectively been stolen from media companies. Until now, media companies have tended not to litigate against social networking sites for infringement as in many cases there was too little capital for which to sue⁷³. However in 2007 the rising value of social networking companies, or the substantial capital of the parent corporations that own them, may make social networks worth pursuing⁷⁴. Technological solutions may provide the answer to this problem. Technology that can search through all uploaded content, including the copyrighted music that accompanies user-generated video, is perhaps the only solution for reducing the risk of litigation through searching, identifying and removing copyright material⁷⁵.

Doing so may also help social-networking companies preserve the integrity of their business models. Advertisers, likely to be one of the main components of the social networking business model, are unlikely to want their advertisement placed next to stolen content.

Technology companies may also be able to address another challenge of social networks’ success: the vast, rapidly growing quantity of content posted. Unlike the text-centered bulletin boards of yesterday, successful components of today’s social networks include the ability to post content quickly, a means of fast and broad distribution, to perhaps millions of users simultaneously, effective search tools and a simple and elegant user interface. All these challenges are likely to be compounded in 2007, as the volume of users and content continues to grow. All the uploaded content requires storage. While this is getting cheaper, there are multiple costs associated with digital storage: commissioning, maintaining, partitioning and housing. The accountants also need to be kept happy.

Social networking has enjoyed a rapid period of unrestricted growth, which is likely to continue into 2007. But the focus on coping with expansion has caused some social networks to overlook the need for efficiency, robustness and compliance. In 2007 social networks are likely to have to address these issues.

One glance at any large city street, teeming with people ranging from college students to business professionals, explains why the volume of portable electronic devices in use in the world is increasing exponentially. But all devices, whether mobile phones, laptop computers or remote sensors, have one common, fundamental Achilles’ heel: their portable power supplies. Over $31 billion is spent every year on disposable dry-cell batteries⁷⁶; $6 billion is spent on spare, rechargeable batteries; and over a billion rechargeable batteries are included with the sale of off-theshelf electronic devices.

This represents both a significant financial cost as well as a major environmental impact. A large proportion of the batteries used in consumer electronics products end up in landfill sites⁷⁷, in spite of the fact that in many countries they are classified as hazardous waste. The trickle-charger supplied with most consumer electronics devices may seem innocuous: a mobile-phone charger consumes three watts, a fraction of the power consumption of a light bulb. But considering there are some two billion mobile phones in use and that a mains connected charger consumes power regardless of whether a device is connected or not, the full environmental impact of the trickle charger becomes apparent⁷⁸.

While both disposable and rechargeable battery technologies have improved significantly in recent years, they have not kept up with Moore’s Law⁷⁹, and progress in battery technology has steadily fallen behind the growing power and falling cost of processors. With the promise of the fuel cell still some way off, as well as the growing clamor for reductions in carbon footprints, technology companies may well start exploring alternative means of keeping devices powered.

One of the most interesting techniques likely to find favor in 2007 is power-scavenging. This involves devices that are able to generate energy from a variety of sources in their immediate environment including, sunlight, changes in temperature, vibration, motion, sounds and pressure. Power-scavenging technologies could transform the way we use consumer electronic devices. It could also make billions of remotely located, independently powered, telematic and sensing devices feasible, with a knock-on impact on the supply chain and other key processes.

Power-scavenging technologies are most actively being used at present in RFID tags and remote sensing technologies, as these small-scale devices have limited and often temporary⁸⁰ power requirements. Parasitic power can make some applications feasible, such as remote temperature monitoring in forested regions, as it removes the need to replace batteries. Other applications that could be enabled via power-scavenging technology in 2007 include: supply-chain automation and monitoring, transportation and logistics management, military and civil surveillance, pipeline monitoring, healthcare and patient monitoring, as well as environment and wildlife tracking, among others.

In 2007 power-scavenging technologies may also start to find their way into consumer products. This would benefit both consumers, who should be able to make more extended use of their devices, and the environment.

While remaining primarily dependent on a regular rechargeable battery, a mobile phone incorporating power-scavenging technology could potentially last for much longer without a recharge, simply by accumulating battery charge as it is being carried around. Wristwatches already use the body’s kinetic energy to top up integrated batteries⁸¹. Ambient light could be used as another supplementary energy source.

Given consumers’ growing concerns about the environment, as well as their constant frustration with the battery-life of the products they use, power-scavenging could become an important new ingredient in the consumer electronics sector.

Technology has had a fundamental influence on the human condition ever since our ancestors sharpened their first flints. Today technology remains at the forefront of the evolution of human existence.

In 2007, combinations of humans and technology are likely to be taken to new levels, addressing a widening range of applications, tasks and challenges. One of the most interesting applications of technology in 2007 may be the increasing enhancement of the human body using technology.

To an extent, this already happens, chiefly for medical purposes, with technology replacing failed or deficient body parts, such as hips or hearts.

But technology, enabled by many streams of research and development, may increasingly be used to improve upon the default body. For example, artificial exoskeletons could be used to provide super-human walking ability, with enhanced range, superior strength, or both⁸³. Advances in materials, storage, energy technology and processing power are all key enablers of such an enhancement.

Technology is also likely to continue blurring the line between disabled and able-bodied athletes. 2007 could be the year in which disabled athletes, using prosthetics, are able to qualify for worldclass, athletics events, which have historically consisted solely of able-bodied athletes. Advances in human-neural interfaces and the availability of electronic knees, guided by microprocessors generating 1000 recalibrations a second, are allowing disabled athletes to approach record speeds⁸⁴. In 2004, the best disabled athlete was only 2.5 seconds off what was then the world record speed of 19.32 seconds for the 200-meter sprint⁸⁵.

Technology can also improve one of the body’s fundamentals – blood. Artificial red blood cells have already been designed; white blood cells are being developed. Artificial red blood cells, based on nanotechnology, could be up to 200 times more efficient than human blood cells at their core function: storing and releasing oxygen⁸⁶. Indeed these may be so efficient that replacing just 10 percent of all red blood cells could allow people to hold their breath for hours⁸⁷.

So in 2007, the erstwhile science fiction of the bionic man or woman may now become reality, although the underlying R&D may ultimately cost a little more than six million dollars.