Wednesday, January 16, 2008

Early Indications January 2008: Looking Ahead

At the start of a new year, we can assess a few areas of major uncertainty and activity. Somewhere in the next 12 to 18 months, I expect to see major news unfold in some combination of the following five domains.

1) The Fragility of Democracies

In the U.S. elections, electronic voting machines are being questioned more each year, and hopefully will not introduce uncertainty or unfairness into the November tallies. And even though the U.S. elections are getting front-page treatment, it's important to see the broader perspective, in which the global news is troubling. In Kenya and Pakistan, blood is being shed as elections are being contested. Russia and Venezuela, meanwhile, are rewriting the rules of competition, with predictable consequences for dissenters. China's emergence as a world power implies a balancing act between human rights and political order. The attention of the world's media on the Beijing Olympics this summer, combined with ongoing issues of Internet openness, could highlight bubbling issues related to democracy here as well. Finally, as to the question of whether democracy can be imported, the war in Iraq leaves it unanswered in at least one case, and it's hard to find any examples where democratic government has not had indigenous roots.

2) Life in the Food Chain

Food is very big news these days. Let's look at grain prices first. As developing nations increase their wealth, citizens often increase demand for meat, which is more resource-intensive to produce than grains: beef takes seven pounds of grain per pound of meat, chicken three. In addition, as market demand, incentives, subsidies, and tariffs interact in unanticipated ways, the drive toward corn-derived biofuels is increasing the price of both food corn and other grains when farmers gravitate toward corn. Beer is the latest casualty as hop prices have soared, but overall, U.S. food prices increased dramatically last year, and there's no reason to think the trend will reverse.

The production of protein at large scale also has unintended consequences. Whether it's the threat of avian flu from chickens in close captivity, "mad cow" disease in cattle, or escaping salmon weakening gene pools of sport fish, concentrating protein production carries risks, including the creation of large lagoons of manure that have the nasty habit of flooding, during hurricanes for example.

Given increasing consumer awareness (Michael Pollan, whose "The Omnivore's Dilemma" continues to sell well, was called a "cornographer" by his son) along with higher prices, we can expect to see new market dynamics, particularly in the "buy local" movement, which appears to be eclipsing some of the earlier fervor for organics, regardless of their carbon footprint. Certification of organic status is also far from standardized, with the machinations of a powerful food lobby still underway. Finally, many people would rather keep the relatively inefficient Farmer Smith down the road in business than pay FedEx a whole lot of money for the jet fuel embedded in that allegedly organic Chilean asparagus.

3) Cheap Computing

It's amazing to think about what one can do for free:

-obtain a legal supercomputer operating system

-plot a map from anywhere to anywhere, including the stars

-edit a video using tools that derive from studio-grade gear

-look up words, concepts, titles, stock price histories, genealogies

-create word processor documents and share them among a team

-and many, many more.

Hardware is also dropping in price. The recent dispute between the One Laptop Per Child organization and Intel is in part motivated by the enormous market opportunity at stake. In 1994, one could say, inaccurately but plausibly, that one out of two world citizens had not placed a phone call; later this year, one in two people on the planet will own a cell phone. There's a lot of buzz surrounding a startup called Chumby, a new breed of Internet appliance. The capabilities of an iPhone and its offspring (iPod Touches, LG Voyagers, Nokia N series) are phenomenal.

I have no idea how it will play out, but we will see some interesting (both scary and exciting) developments as a result of the increase in low-cost options. This is not to say that paid package software will disappear, but having a growing set of inexpensive options will certainly change the industry, and the market.

4) Organizing Augmentation

Every year we see more computing done outside "computers."

In medicine, radiologists are being outperformed by digital scanners for some classes of interpretations. The da Vinci surgical robot from Intuitive Surgical is bringing minimally invasive techniques to many types of procedures, and the company is growing explosively. In fitness, your bike plus your PC plus a magnetic trainer equals an interactive workout.

In your car, antilock brakes began a series of digital augmentations. High-end cars now include traction control, stability control, and electronic throttles. Lexus has a feature that automates parallel parking; Nissan just announced a sensor in the front bumper that automatically initiates braking if the car gets too close to the one in front.

Guitars can tune themselves automatically. Cameras correct picture quality for shaking hands. Software can enhance images and sounds to the point where the concept of "real" has become rather fuzzy, whether when we see a picture or hear a singer, not to mention experience "movie magic."

In the realm of decision making, CNN has popularized the Iowa political markets concept with a presidential prediction market, while the Hollywood Stock Exchange has in some years correctly predicted eight out of eight Oscar winners.

The point here is that just as there's a large category of enterprise software that we use to run other software, we'll soon need digital assistance to manage our digital assistance.

5) Consequences of Visible Social Networks

As more of us can see and organize who we know, and the people they know, expect to see some unexpected outcomes. Apart from valid concerns about new forms of stalking and identity theft, which absolutely must be addressed if the market is to retain confidence, we're already seeing changes in demographics. My students have a very different experience of interpersonal connectedness than did their predecessors of just a few years ago.

There's a buzzword I don't particularly like - "reality mining" - used most recently (but not originally) by MIT researcher Sandy Pentland. He's analyzing 350,000 hours of data collected from people's cell phones, including who they call, where they called from and to (geospatially), and the like. It's clear from this research and empirical evidence that we will learn to manage new types of relationships, and set priorities accordingly: it's a new phenomenon, for example, to see two students at lunch together both talking on mobile phones to other people. When I have a text message from my brother, and an email from my boss, and a Tweet from an old colleague, and a voicemail from my mother, it doesn't take long for some form of pecking order to emerge. In the presence of so many channels, what is meant by "real time"?

How my various networks are represented, and made secret or shared, and archived or destroyed, is in the process of being decided. Just like a medical record, I may have some form of ownership over the information elated to the sum of people I called or texted last month - but the phone companies have a claim on the data too. Who will benefit from selling some of that information to marketers, or insurers, or dating services? What happens if Google buys Twitter and maps yet another of my networks onto GIS, information, and communications landscapes? Who wins, who loses, who pays, who profits, who bears risk relative to who collects reward?

All told, we're in for an extremely important next few years as we address some of the most elemental of all issues: food, shelter (as mortgages and home prices correct), friendship and marriage, aging and dying, immigration, political expression, and others. Given how connected we've become, as the recent bestseller The Black Swan points out, the world have become more nonlinear: when weird things happen, they affect more people and move faster than such events in the past. In other words, as Digital's Jeff Harrow used to be fond of saying in his wonderful newsletters, Don't Blink!

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