Deloitte digests tech sector trends

15-01-2007

by Maxim Kelly

'Greener' computing, safeguarding consumers and demands for instant media will influence future technology trends, analysts have predicted.

Ecological concerns and privacy issues are two main societal themes expected to impact on the media, telecommunications and technology (TMT) industries this year, according to market watchers at consulting giant Deloitte.

A TMT study based on 36 interviews and extensive industry analysis across the three sectors expects not only environmental issues to affect the conceptions, marketing and distribution of technology products and services -- alongside concerns about data privacy -- but also demand for technology to instantly deliver complex digital media services and products.

One overlapping technical and environmental issue to address is how next-generation mobile devices are powered, says Deloitte.

Current lithium ion battery technology is reaching its limits and new portable power sources must be developed to replace the energy cells people spend USD37 billion on per year. More than USD6 billion of this annual spend goes on rechargeable batteries sold with electronic devices like phones and laptops. More than USD31 billion goes on disposable dry-cell batteries. Deloitte's TMT practice expects "scavenging solutions" that draw energy from the immediate environment of mobile devices such as body heat, ambient light and vibration to interest technology investors.

As these digital devices interconnect, internet usage will soar -- particularly as the necessity of using a PC to utilise broadband access connections decreases. Presumably 3G phones and e-ready gaming consoles will drive this.

Initiatives to allay privacy concerns will also help drive online activity, and Deloitte predicts this will open up the growing social networking phenomenon to a broader demograph than typically younger users.

As overall activity increases, the issue of regulation and ownership of the internet will return to the fore in 2007. Telecoms operators and Internet Service Providers (ISPs) must walk a fine line before the eyes of e-savvy consumers when seeking new revenue opportunities from the economics of internet access. The net neutrality debate will continue as industry looks to develop communications infrastructure to facilitate faster, advanced internet access. One major concern is that this will lead to a 'two-tiered internet', whereby users who consume more bandwidth pay more.

Cash will, however, change hands for online consumption of video-on-demand services. VoD's market allure is that "it has the potential to exploit the 21st Century consumer's passion for instant gratification," states the Deloitte forecast. Nonetheless, massive movie files may still take hours to download at current broadband speeds, so Deloitte has not foretold the imminent demise of the high-street video shop.

Similarly, Deloitte expects no immediate threat to the traditionally profitable services supplied by the telecommunications sector.

Small files such as SMS text messages and ringtones will still provide the best margins for operators, along with narrowband services like voice calls. High-bandwidth services, including IPTV and mobile music downloads, will remain a focus for the telcos, but Deloitte expects "kilobyte applications" encompassing e-mail, instant messaging, calendaring, and online chat all migrating to mobile devices as the new "centre of gravity" for all forms of communication.

Tom Cassin, head of the Deloitte's TMT Group in Ireland, said that "2007 is certainly a year in which technologies are moving to the next stage... of the internet where a PC is no longer needed, and the next stage of social networking where older generations are participating. That said, it is important the companies within the sector realise where their key revenues will be coming from and do not overlook the mass-market, simple, product offerings such as text messaging that have proved so successful in the past."