Wednesday, December 23, 2009

Early Indications December 2009: Yet Another Predictions Issue

In this last week of 2009, it's scary to think that it was a full ten years ago that the IT profession was holding its collective breath as midnight January 1, 2000 approached. Apart from spooking us with memories of how fast the decade sped by, the Y2K issue stands as a cautionary tale for any technology prediction.

Duly chastened, I remain intrepid, with 24 questions for the coming decade. The alphabetical mnemonic I last used in 2005 cues up a question for each letter, minus the usual suspects.

Having brilliantly migrated from computers to MPs players to mobile data devices, what will Apple do for its next adjacent market? Tablet rumors surface almost weekly, Apple TV has yet to fulfill its promise, and such areas as health (iDoc?) are huge in potential. In any case, it's difficult to see Apple hitting its revenue growth numbers without an addition to the product portfolio at some point.

In case you missed it, DARPA conducted a brilliant experiment last month. Ten red weather balloons were tethered in plain sight at various locations around the country, and teams competed to supply the latitude and longitude of each one using social networking technologies. MIT won in nine hours, an amazing accomplishment considering a) the continental U.S. presents a surface area of over 3,000,000 square miles and b) teams worked to spoof each other. In the end, MIT's clever compensation model to attract the widest interest group of observers helped secure the win. In light of that experiment and its many findings, the B is for business models, specifically for the plethora of social media tools that are exploding in popularity. Not to put too fine a point on the matter, but this past year Facebook alone grew at a pace of 770,000 new users -- a day.

Here are some surprising numbers: Brazil's GDP per capita income, in constant dollars, has risen 52% in the last ten years. Singapore's is up 79%. Chile has gone up 59%. These numbers, chosen at random, illustrate the emergence of a global middle class (the C). Such groups are historically important, typically signaling political stability, economic growth, and increased presence in international trade markets. Who else will join these countries, Korea, and other fast-growing economies? How will the world change with these new entries into the economic and cultural mainstream? (For contrast, U.S. GDP per capita in 2005 dollars rose only 17% between 1998 and 2008, and class-related tensions could be big news going forward, whether in regard to labor unions, health care, the 2012 election, or unemployment.)

The D question relates to design. As the documentary of the same name makes clear, the "modern" presence of the Helvetica typeface (or its Ariel cousin-once-removed) is now more than 50 years old, yet it remains ubiquitous. Apple has of course capitalized on great design, and the slowdown in consumer spending in the U.S. in particular may be an indication that people are buying from a less disposable mindset. If people buy less, they may follow a generally European pattern and buy better designed items. For all of these reasons and others, the time is ripe for a design renaissance on par with streamlined toasters, or the neo-Bauhaus movement that poured so much concrete in the 1960s.

Drugs also merit mention. Marijuana is simultaneously a) being legalized under medical provisions in 13 states and counting, b) being decriminalized in some states, and c) contributing to political destabilization on both sides of the Mexican border. As states battle increasing social welfare and other costs in a time of declining revenues, taxing pot holds at least some appeal. In addition, mandatory sentencing laws are crowding prisons and generating hardened gang members at a staggering expense that many states simply may not be able to afford: $24,000 per year per inmate, not counting potential foregone wages and other indirect expenses. If, as The Onion memorably put it, "Drugs Win Drug War," what alternative strategies might be pursued instead?

As more of the world's citizens want automobiles, and electric lighting, and central heating, and meat in their diets (see C), the demand and competition for energy sources will intensify. That energy, usually provided by burning something, will in turn play into the global climate debate. Whether in oil prices, coal emissions debates, or nuclear power lobbying efforts, competition for energy will have geopolitical consequences, potentially including more armed ones.

Football (world football, not the U.S. version) will be huge news in 2010 as the World Cup is contested in South Africa. Apart from the intense fan interest in both powerhouses and upstarts, the role of mobile and new media will bear watching. Far more people own cell phones than own televisions, so the deluge of texts, Tweets, and web-hosted highlight clips could be a global coming-out party for social media, just as the 1958 NFL championship game or the JFK assassination were for television.

It's difficult to think of a G bigger than Google. The question before us relates to the company's many efforts to expand its presence (and eventually its revenue base) beyond the lucrative search franchise. Will the Android mobile, or the location-based ad service, or the office applications, or some new innovation break through to profitability? How will copyright-holders react to potentially universal access to their work?

H is for housing. The economic impact of the shelter industry is of course considerable, and everybody is watching home prices for both personal and analytical reasons. Beyond sales figures, however, some larger forces are coming into play. Demographically, the baby boomers now entering retirement (or an approximation thereof) want and need different things from real estate, and it will be a while until a later wave has enough children, income, and interest to buy up the empty-nesters' housing stock. In addition, as U.S. income stagnates, the average house size will likely retreat from its high point of circa 2005.

Identity is increasingly something people actively manage. What's your relationship status? How are you feeling today? What do you think about sports, politics, other people, your possessions? At the same time, lightweight and incredibly powerful tools lower the barriers to association. Whatever one's interests, whether obscure, weird, or outright criminal, finding like-minded individuals is now possible in ways that were simply inconceivable in physical space. As more people grow up breathing the oxygen of online, all-the-time social broadcasting, what will be the unintended consequences, the business opportunities, and the backlash?

Building on the July letter, jobs remain at center stage. How much will this recession prove to be an interruption in the way things were, and how much will it prove to mark a shift in underlying forces of globalization, the balance of product- and services-based work, or long-term costs and benefits of modes of agriculture, consumption habits, and population pyramids? What are the odds that GM, Citibank, or Sears -- and the industries they represent -- will return to their positions of past dominance? More likely, but similarly daunting, is the question as to how entrepreneurs could possibly generate tens of millions of new jobs, on any continent.

Kindlemania is in full flower, driving the publishing industry to confront some long-held assumptions. Back in May, CEO Jeff Bezos announced that Kindle sales had hit 35% of book sales when Kindle editions are available for a given title. In a matter of months, Amazon has disrupted 500 years of relatively stable technology that dated to Gutenberg. The implications will be all around us. At Princeton, for example, a trial using Kindles for textbooks was problematic insofar as page numbers (and footnotes to page numbers) needed to be rethought. Searching a textbook is useful; not being able to use sticky notes requires getting used to.

Long tails make the list -- no surprise, in the age of YouTube and eBay. What's interesting is the Economist's assertion that fat tails (hit movies or blockbuster drugs) are remaining as vital as ever. The surprising conclusion appears to be that the middle market could turn out to be no-mans-land, as the Harry Potters and Transformers movies (the latest of which merely grossed over $400 million) dominate the mass market while endless, hard-to-serve niches proliferate elsewhere.

In the developing world and the OECD countries alike, mobility is not only redefining the telecom sector, as major as that may be. In addition, the notion of always being reachable, or becoming accustomed to connecting to people rather than fixed locations, is becoming commonplace so fast that we may not realize all that is happening. Worldwide, the number of cellphone subscriptions per 100 people has soared from just over five in 1998 to nearly 60 in 2008. In the midst of it, this change can be lost in fashion wars (RAZR vs. iPhone vs. Blackberry Pearl, or whatever), but eventually, in hindsight, we will see the magnitude of what we lived through.

News is moving in new ways to new people. The broadcast model is augmented (not replaced) by millions of electronic conversations. The utility of owning a big antenna, a printing press, or a television studio has dropped precipitously as lightweight digital equivalents proliferate. Even though free societies need reliable news, at a time when such countries confront complex debates over everything from immigration to climate to aging to employment, the business model for news is highly unsettled. The conundrum of the need for news and the problem of organizations' being able to afford to report and provide it must be resolved, and such efforts as Google's Living Stories experiment with the NY Times and Washington Post will, I hope, spawn still more innovation.

O is for open book, shorthand for the myriad of issues relating to privacy and scrutiny. Open records, or open meetings, laws were never intended to broadcast local, paper-based information to the entire planet. At the same time, "sunshine is the best disinfectant," as Louis Brandeis so aptly put it. How and where will different people and groups trade off voluntary and involuntary exposure of private information for what perceived benefits? How will generationality play out, especially as data turned loose in one's early years may be uncomfortably or even dangerously revealing later, with different attitudes, tools, and agendas in play 10 or 20 years from now?

Given the speed and magnitude of the changes afoot, and given the essential characteristics of "being digital" as Nicholas Negroponte titled it, competition is playing out not just between products (Dell's PCs versus HP's or Lenovo's), it is also evolving to situate competing platforms (the P word). The choice between Nintendo Wii and Playstation 3, between an iPhone and a Nokia, or between a Chevy Volt and a Toyota Prius are more complicated than merely deciding on features and price. What are the two ecosystems -- of accessory makers, of software developers, or of product owners (and so of a current or future secondary market)? How will future innovations be incorporated into today's purchase? Will Google establish a beachhead in the browser as a quasi-operating system, on the mobile device, or in mapping? Where is Microsoft (see S)? Will still more industries begin to exhibit platform dynamics?

While the phrase "real time" is not new, the advent of people-powered notification means that rather than coming from capital-intensive air-traffic control, equities trading, or medical monitoring systems, real-time data is now the product of real people. Whether in natural disasters, social movements, or just a dozen families attending an out-of-town soccer tournament, the spread of lightweight, mobile coordination mechanisms will soon make many of us wonder how we ever got along without them.

The software industry is at a crossroads: enterprise vendors still work on adjusting the mix between license and maintenance revenue, between hosted and premise-resident installations, and between consumer, middle-market, and large enterprise sectors. Software as a Service sounds great in theory, but Salesforce still has bugs to work out (regarding scale, for one thing), and the industry is still in search of other viable exemplars. In consumer markets, meanwhile, the days of CompUSA or Computer City being the dominant channels for distribution of diskettes or CDs are over: Apple's app store model has redefined developer programs and consumer software distribution essentially overnight. Open- and closed-source models are still being sorted out. With so many dimensions of the business up for grabs, who will emerge in the coming years? Who will be left behind? What further surprises still await?

T is for thermostats, a proxy for an entire class of inanimate objects and devices that are increasing the reach and complexity of the global network. Whether implemented for energy savings, human comfort and well-being, or security reasons, building automation joins health monitoring, security cameras, and a vast number of other devices in a quietly but rapidly growing "Internet of things." While this domain frequently lacks glamour, the possibilities for drone vehicles, for dramatic cost and energy savings, and for increased human welfare (via care-giving robots for instance) verge on the realm of science fiction.

Whether in the U.S. or elsewhere, the place of universities is being questioned. While California's 32% tuition increase grabbed headlines and motivated nearly nostalgic building takeovers, the fact is that California education remains underpriced. The University of Texas, by comparison, has raised fees 60% in the past five years whereas California has a cumulative increase of only 20%. Such numbers appear to be unsustainable, raising the question of what will be cut when dramatic spending decisions will have to be made in the coming decade. One-time budget relief from the stimulus package is similarly unsustainable, while long-term curriculum directions scream out for reassessment. As desirable as it might be to add labor relations, African-American studies, or forensic science to the course catalog, how can universities simultaneously a) steer resources toward the future, b) respect their role as custodians of the past, and c) keep expenses under control? Classics is a frequent target for programmatic termination, but what about sociology, recreation management, or broadcast journalism? Does the U.S. need more than 200 law schools? Who decides? How? At both public and private institutions, the next decade will force tough decisions to be made.

While virtualization is a widely used term of art among computer architects, my sense here is broader: Webster's Second defines virtual as "being in essence or effect, but not in fact." Not only are computing resources not resident at the point of use, neither are people for more and more tasks. Very few people could work by telephone from their homes, yet today one's physical presence and one's "essence or effect" can be many miles and time zones apart. Whether in dating, or education, or telecommuting, or elder care, we are seeing the start of a particular kind of disembodiment: just as Descartes split mind and body for the individual, will some latter-day philosopher distinguish physically co-located groups and digitally "present" assemblages?

Whereas in M we discussed what it means for people to be mobile, the W refers to the coming demand for wireless bandwidth. On every populated continent, we're seeing dramatic increases in mobile data and telephony. AT&T is confronting the problem of the iPhone's success as its data networks are at times showing signs of overload. Countries from Pakistan to Estonia are leapfrogging wireline infrastructure, at which they never reached mass-market penetration, and getting the majority of these country's households connected via wireless in less than a decade. By contrast, it took nearly 100 years to bring 100 million wired phones into service in the U.S., at the time a nation of 200 million. As usual, there is no free lunch, and we will be seeing radio spectrum continue to be a political hot potato. Whether in regard to suspicions (not yet confirmed) about heath issues, to spectrum auction formats, to "interference" with other activities on other frequencies, wireless demand is driving a shortage that is invisible and intangible - until the call drops or the application crashes.

What is an electronic game? Despite the success of Modern Warfare ($550 million in sales in five days), console platforms such as the X-box find themselves in competition not only with each other but with unlikely channels: Electronic Arts (maker of Madden and other category-leading titles) laid off 1,500 people in November, while web-hosted low-resolution, lightweight games (often running in Flash) can command vast audiences. The Scrabble knock-off Scrabulous help drive Facebook's early growth, while more recently Farmville counts 73 million players per month. Put another way, Farmville grew to 11 million daily users in two months; World of Warcraft took four years to hit the same figure. Just as MP3 files convinced listeners to trade convenience for fidelity, perhaps the game industry will see further segmentation between low-resolution (but heavily social) Flash games and high-fidelity, computationally-intensive titles.

There you have it, minus entries for Q, Y, and Z (Scrabble value: 24). Additional questions of course remain, particularly in the areas of nutrition (water is a likely battleground), health (obesity, medical education, step-function gains in bureaucratic efficiency, and pharmaceutical risk/reward allocation), and aging: the time is due for an honest debate about age-65 retirement, and the role of families, villages, and societies in the care of elders.

Before any of these issues unfold further, I send my personal best wishes for a peaceful holiday and a prosperous new year. The community of readers has become virtual (see V) family over the years, and I take it as a solemn responsibility that so many of you keep reading and commenting. Thank you, and blessed holidays.