Deloitte's top 10 tech predictions for '09

BANGALORE, INDIA: Deloitte has come out with its global TMT (Technology, Media and Telecommunications) predictions for 2009, which provides an in-depth look at the emerging issues that will impact the TMT sectors this year.

“These predictions revolve around cost savings in the current times of economic downturn. The trends mainly talk about the various changes that would revolutionize the TMT space in 2009,” said V. Srikumar, Partner, Deloitte Haskins & Sells, who shared the predictions with CIOL.

“One key observation from these predictions has been that brands are not relevant any more. Non-branded things will gain momentum. The focus is more on costs,” he added.

We will take you through these predictions in a three-part series.

Technology predictions:

1. Making every electron count: rise of SmartGrid

In 2009, electricity is expected to account for over 16 per cent of all energy used. However, the average efficiency of the world’s legacy electricity grids is around 33 per cent only. SmartGrid companies add computer intelligence and networking to existing electrical grids, yielding a consumption savings of up to 30 per cent.

SmartGrid companies may generate $25 billion in revenues in 2009. Major manufacturers and utilities may even want to explore partnerships with or acquisition of smart energy companies, says Deloitte.

SmartGrid technologies have the potential to reduce up to 30 per cent of electricity consumption and dramatically reduce the need to construct new power plants or operate environmentally harmful sources of generation.

It also states that in 2009, more than half of all electrical equipment, both SmartGrid and older technologies, is expected to be purchased by consumers and enterprises. SmartGrid also allows for more efficient use of the existing infrastructure.

This is a relevant predictions as far as India is concerned, Srikumar adds.

2. Gadgets for free (subject to contract)

With plummeting consumer spending on high ticket-price goods, bundling products and services together for such devices as televisions and computers may prove essential in 2009 to stimulate an otherwise nervous, stalled market.

According to Deloitte, this approach may well become pervasive in 2009, and likely be extended to a wide range of devices, including television (bundled with subscriptions), music equipment (bundled with music), and high-end computers (bundled with everything - from technical support to remote back-up services). However, companies should note that bundles may not suit every customer's needs.

3. Disrupting the PC: rise of netbook

Netbook is likely to be the fastest growing PC segment in 2009. Netbooks are expected to affect computer industry revenues materially and adversely, due to their low average selling price, which could fall below $250 in 2009.

Although netbooks have the potential to threaten PC and other sub-sectors’ margins, careful market development and expanded applications offer significant opportunities as well.

According to Deloitte, the appeal of netbooks has been categorized as making 'great second computers for normal people, third computers for techies, and the first computer for children.' Even carriers should consider adding netbook subsidies into their current cash-flow estimates. They should also analyze the impact of wireless data usage on their networks - driven by netbooks.

“There is a lot of investment happening in developing the processors. But we are not sure if it will make an impact in India this year,” notes Srikumar.

4. Moore's Law and risk

In 2009, over a billion items of personal data may be lost or stolen due to the proliferation of memory sticks, MP3 players, and the disposal of equipment with valuable information.

A corollary to the famous Moore's law is applied to the falling prices for digital storage and the rise in the types and speeds of communication networks. Deloitte says these trends may have caused a corresponding growth in the risk associated with information leakage and data theft.

5. Common sense of green and lean IT

In 2009, the outlook for energy remains uncertain and organizations should consider as many options as possible for reducing consumption. One source of ready savings is data centers. If housed in facilities originally designed for humans, data centers should be reconfigured to reflect the needs of machines.

Deloitte predicts that in 2009, the aggregate volume of the world's data centres is likely to continue to grow, albeit possibly at a slower pace than in previous years. The efficiency of data centers is, however, likely to vary considerably.

The latest, purpose-built data-centers should attain a power-unit effectiveness (PUE) rating of 1.2 or better. A typical enterprise data-center is likely to achieve a PUE of 2.0 or worse.

The optimal approach, the study says, may well be to change the underlying ethos of data centres, capping their size rather than assuming their inexorable expansion.

6. Downsizing digital attic

The falling price of digital storage has caused file management to become reckless at many enterprises.

The danger of digital storage is the fact that users continue to assume that storage space is infinite thus exhausting all the available space. In 2009, companies may halve what they spend on physical storage. Spending on new servers may increase by just four per cent to $58 billion. The cost of keeping servers powered-up and cooled is forecast to increase by over 15 per cent, to $35 billion.

In this situation, Deloitte says companies should assess whether their total cost of storage is growing faster than revenues, and if so, whether this is beneficial to them and enterprises should review all aspects of digital data use and management.

An option could be off-site storage. However, companies would also need to monitor both costs and regulatory implications.

7. Generic becomes the 'IT' brand

In today’s uncertain economy, a brand that once stood for quality, reliability, and even desirability may now only represent an extravagance. Brand has become all-important for both enterprise and consumer technology.

In 2009, companies and consumers may actively seek out unbranded or relatively unknown technology brands on the basis that they are good enough and, more importantly, significantly cheaper.

For the established brands, dropping prices may increase sales in the short-term, but might cheapen a brand’s image in the long term. Deloitte feels that enterprises changing suppliers should take a long-term view and undertake a cost-benefit analysis that factors in all possible costs.

Using alternative suppliers is likely to require users to become familiar with a new interface, perhaps causing a drag on productivity. Enterprises should look at approaches of minimizing this disruption, for example, through the use of digital skins that mimic interfaces and appearances that users are more familiar with.

8. Digital ambulance chaser gets supercharged

According to Deloitte, digital litigation may prove recession proof, or even counter-cyclical, in 2009. The economic outlook may make companies and individuals especially aggressive in their pursuit of such issues as copyright infringement, digital ownership rights by country and industry, as well as worker health and consumer satisfaction.

All companies involved with digital products and services should be wary of unwittingly being caught out by the legislation related to digital infractions - whether committed against a consumer, an employee, an acquisition, a partner or another business.

Even technology companies should constantly monitor how consumers actually use their digital products and services and whether this may create legal issues, advises Deloitte.

If any company wants to undertaking a swift launch of a product or a new digital application, companies should ensure that no element could lead to litigation.

And any organizations considering M&A or joint ventures in 2009 should consider whether their target might become subject to digital litigation. Technology companies should also monitor how consumers actually use their products and services and the potential for legal issues; actual use can often differ considerably.

9. Social networks in enterprise: Facebook for Fortune 500

Talking of social networks, Deloitte says, it seems as though 2009 could be the breakout year for social networks in the enterprise. Internal and external spending on social networking solutions from IT providers and carriers may approach $500 million.

Social networks are likely to be considered an inexpensive solution in what is likely to be a financially constrained IT spending environment.

Social networks look to be a powerful tool and a way of tapping into 'the wisdom of crowds'. But the enterprise version of these solutions are still being refined.

Telecom operators and IT solutions providers also need to invest in ESN and develop the expertise and credibility to deploy these solutions if or when they become more broadly adopted, and start becoming a more significant source of revenues.

10. Sinners become saints

Two technological innovations – nuclear power and genetically modified (GM) food – have been regarded as evils may be recast, more than ever in a positive light in 2009. “If sinners are likely to be regarded more positively in 2009, will some 'saintly' approaches become tainted?”

The need to feed people, coupled with the need to conserve water, is likely to prompt a re-evaluation of GM foods. Nevertheless, it advises that governments should take a lead on investigating, understanding and communicating the various solutions available for addressing the world’s key sustainability challenges.

Deloitte says that, in 2009, it may even be considered virtuous to create dishes comprising GM ingredients, packaged in plastic, in kitchens powered by nuclear fuel.