Deloitte & Touche's Technology Predictions for 2007 - Page 1

Dec 29, 2006

Allen Bernard

Over the past year or so, the partners, researchers and senior managers in Deloitte & Touche's Technology, Media & Telecommunications (TMT) practice have been brainstorming about 2007 and beyond.

They've come up with an exhaustive list of the trends they see either emerging, expanding, declining or continuing unabated from 2006 and before. Many of their predictions do not effect IT directly but most businesses will be impacted by a few.

Eric Openshaw, principal and leader of Deloitte's America's TMT practice, shared his top three most sweeping trends to be aware of with CIO Update just before the New Year's break. His top three are listed in order of import with the remaining Deloitte predictions referenced in no particular order.

Openshaw's Top 3 Technology Predictions

Digital Storage Expansion: Heeding the hidden costs of storage

The steadily falling price of digital storage is one of the key drivers of change and growth in the TMT sectors. However in 2007, consumers and businesses may start to worry about some of the direct and indirect costs of digital storage, rather than just celebrating its seemingly endless price deflation.

As reliance on digital storage grows, price competition may be usurped by competition based on quality, robustness and longevity. Technology companies may well find that a buoyant market for long-term and guaranteed digital storage starts to emerge during the year.

"One of the most important things coming is the whole issue of the decreasing cost of storage because the implications for business is enormous," said Openshaw. "Because the cost of the devices is becoming minuscule, but the cost to maintain the security, the access, the control points, replication, upgrades—labor costs associated with that is growing and growing."

Also the new Federal Rules of Civil Procedure, which dictate for how long and what types of electronic media need to be stored for litigation purposes, will complicate record keeping and potentially make it much more costly to not have access to data.

"It's not necessarily about the absolute mandate but this stuff just keeps piling on, and piling on and piling on," he said.

Internet Capacity Woes: Reaching the limits of cyberspace

The unrelenting growth in Internet traffic in 2007 may overwhelm the Internet's backbone; the terabit-cable pipes connecting continents will reach capacity and ISPs will not be prepared to pay for extra bandwidth because consumers will be unwilling to pay increased costs.

The threat to available capacity will be driven by the number of Internet users continuing to grow, and the exponential increase in the transmission of video files. This threat could raise questions about the long-term commercial viability of broadband provision, unless a satisfactory solution can be found to the issues of monetizing the growing usage to fund future growth, without disenfranchising customers.

While this is probably not going to come to a head in 2007, these issues loom on the horizon because the investment in core infrastructure is not keeping pace with the usage and demand, said Openshaw. The growth in demand for video delivered over the Internet in particular, one of Deloitte's other predictions, as well as IPTV, will be a major contributor to excess capacity being absorbed.

"At the rate of growth of consumption at some point in time in the not too distant future, maybe it's not this year, but it's not in the too distant future, the excess capacity is gone," said Openshaw. "So somebody's got to step up and decide who is going to make the investments and who is going to pay for them."

Technology Goes Green. Social costs could be large

As consumers, businesses and governments around the world become increasingly aware of and concerned about the state of the environment, there may well be an escalation in the search for both genuine causes and scapegoats for climate change.

While the energy, transport and industrial sectors have borne the brunt of criticism to date, the finger of blame may increasingly be pointed at the technology sector.

"It's a huge underlying social cost now," said Openshaw. "Something like the majority of every battery consumed ends up in a land fill and the average life expectancy of a cell phone is six months … so we would argue from a social point of view as consumers become more aware and public in general becomes more aware of the environmental implications, it won't just be economic pressure that comes to bear (on technology manufacturers) … there will also be a social pressure associated with (the way technology companies operate)."

Technology companies will likely need to respond, both by building the case for technology’s positive contribution to the global environment (which is likely to be considerable) and by designing products and services that are environmentally friendly. Is this happening now?

For example, portable power needs will explode with solutions including power-scavenging technologies that draw energy from around them, from body heat, ambient light, vibrations or movement to provide supplementary battery charge.

"The rub is technology is also best capable of solving these issues as well both for itself and for other industries and services," said Openshaw.

All The Rest

Social Networking Evolves: Technology’s social network dividend

Social networking is clever reinvention of the Internet bulletin board, a previously unfashionable form of Web-based communication much loved by the technology and scientific communities. Now, everybody seems to love it.

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