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A Model for Determining Revolutionary Technologies
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Transcript of A Model for Determining Revolutionary Technologies
REVOLUTIONARY TECHNOLOGIES
A methodology and guide to uncommon opportunities in near-term technology trends
for investors and innovators
JONATHAN DEUTSCH
SENIOR PRINCIPLE & CHIEF ARCHITECT
CAPITAL D DESIGN
HTTP://WWW.CAPITALDDESIGN.COM
DEVELOPED AS PART OF GRADUATE STUDIES AT THE UNIVERSITY OF PENNSYLVANIA
1
When management guru Peter Drucker penned in 1985, “There is no doubt that high tech,
whether in the form of computers or telecommunications, robots on the factory floor or
office automation, biogenetics or bioengineering, is of immeasurable qualitative
importance,”1, he could not have been more correct. The entrepreneurial energy focused
on innovative technologies has been a principal reason the American economy has
remained so vibrant and dynamic for the past 30 years. How vibrant? Nominal per
capita GDP in the United States was $7.6 billion in 1975, and was nearly $40 billion in
2005.2 This is a tremendous growth rate, and while there is clearly no single reason for
economic success stories such as this, it is difficult to refute the role technological
advances have played in economic expansion, as well as social and political
improvements. Whether it was Fredrick Smith who invented air delivery and global
delivery logistics... or Bill Gates who dropped out of Harvard to create software for the
then-nascent Personal Computer industry... or Marc Andreessen, who developed the first
mainstream web browser and introduced the World Wide Web to the general public;
these entrepreneurs created and popularized technologies that have fundamentally
changed the world.
With so many transformational technologies already invented and massively deployed, it
is often challenging to consider what is next. There are many “futurists” who predict
technology trends decades into the future, and these predictions are typically vague, and
therefore of limited value to the entrepreneur or investor who seek uncommon
opportunities. This goal of this study is to identify the most promising opportunities in
near-term technology trends. Investors and entrepreneurs can draw upon this study for
information and analysis on the key technology sectors to invest in (or create companies
around) within the next one to ten years.
1 From the book “Innovation and Entrepreneurship,” Peter Drucker, HarperBusiness Publishing, 1985 2 From “What was GDP then?” courtesy of Economic History Services [Source: http://eh.net/hmit/gdp/]
2
To reach the stated goal, this study is composed of three sections. First, a methodology
has been devised to identify the characteristics of technologies that are likely to be
revolutionary – that is, technologies that will have a disproportional impact, and therefore
disproportionate economic opportunity3. Next, a list of near-term and widely recognized
technology trends will be put through this specially-designed battery of tests in order to
predict which technologies are most likely to become revolutionary. Finally, an
executive overview, analysis and assessment will be provided on the trajectory of these
predicted revolutionary technologies, from a social and economic value perspective.
The Methodology
Devising and designing methods to identify characteristics of technologies that are likely
to be revolutionary
Technologies and Disruptive Technologies
The Encyclopedia Britannica defines technology as the “application of knowledge to the
practical aims of human life or to changing and manipulating the human environment.
Technology includes the use of materials, tools, techniques, and sources of power to
make life easier or more pleasant and work more productive.”4 This definition helps set
the context of what is considered to be a technology, and thus helps define the scope of
what will be assessed in this study. Based on this definition, and for the purposes of this
study, technology and innovation are closely related terms. Certain technologies and
innovations are more than just additions to the business and social ecosystem – some are
so compelling that they disrupt current standards, trends, or processes. Wikipedia defines
a disruptive technology or disruptive innovation as “a technological innovation, product,
3 “Life changing technology will likely be the most profitable,” Technology, Media, Telecommunications
(TMT) Trends – Predictions 2006, Deloitte Touche Tohmatsu 4 “Technology” entry; Encyclopedia Britannica Concise Edition
3
or service that eventually overturns the existing dominant technology or product in the
market.”5 Disruptive technology (and later disruptive innovation) was a concept coined
in Clayton Christiansen‟s 1997 book, The Innovator‟s Dilemma, which caught the
interest of business leaders worldwide.
These definitions are important because, together, they at the same time increase and
limit the scope of what should be focused on when assessing transformative technologies.
For instance, it might not be obvious that Freud was an innovator in psychological
technology, but according to the Britannica definition, his psychological innovations
constitue a technology, as they are applications of knowledge that manipulate the human
environment. On the other hand, the Apple iPod by itself cannot be considered disruptive
because it did not overturn any existing technology or product. It carved out a new
market. However, Apple‟s iTunes + iPod combination was disruptive because,
combined, they have begun to overturn the existing compact disc infrastructure as the
only viable mainstream medium for distributing music.
Beyond Disruptive: Revolutionary Technologies
There are thousands of technological innovations in development worldwide, ranging
from biotech to robotics and holographic storage to quantum computing. Of these, many
will be disruptive. As there are far too many potentially disruptive technological
innovations to review and assess effectively, the technologies identified in this study will
need to reach a higher standard. Technologies in this study will have to go beyond being
disruptive – they will need to be revolutionary. Revolutionary technologies are
exceptional innovations that not only disrupt or create markets and processes, but they
also create new environments from which third party innovations can evolve.
5 “Disruptive Technology” entry; Wikipedia, the Free Encyclopedia
http://en.wikipedia.org/wiki/Disruptive_technology
4
To differentiate between innovative technologies that are revolutionary and those that are
“merely” disruptive technologies, a methodology (or test) must be defined. For this
reason, a revolutionary technology test – developed specifically for this study6 – has been
designed to surface the uniquely compelling technological innovations that will not only
disrupt, but also revolutionize industries and/or society in a meaningful manner.
This test is comprised of four components: Global Scope, Massively Deployable,
Application Platform, and Non-Proprietary. For the purposes of this study, this battery of
tests will be referred to as the GMAN test, and those disruptive technologies that pass the
GMAN test will be considered revolutionary.
THE GMAN TEST
Global Scope
The most influential technologies must have the potential to affect people, companies,
systems, or processes worldwide. In today‟s global economy and market, technological innovations that only apply to specific regions or cultures are inherently limited in their
social and market potential. And as the percent of share the US economy has in the
world continues to shrink as other countries grow7, US-only innovations will have a
proportionally smaller impact than they have had in the last one hundred years. Thus, the technologies selected in this study must have the potential to scale globally. For
example, LED-based lights that plug into existing sockets can scale globally, but a
technology to enhance the flavor and output of corn has limited regional appeal and application.
Massively Deployable
The technology should not have cost, size, or growth constraints that would limit its deployment to a niche industry or application. Technologies can only disrupt a specific
sector or market and still be considered disruptive, but for this study, the technology
must have broad application and have mass availability. For instance, while a new shatter-proof glass material has the potential to be deployed in a massive scale for
various applications, a new type of automobile fuel would likely have prohibitive cost
and logistical barriers to being massively deployed, based on the cost and scale of infrastructure upgrades.
6 The “GMAN” test, for assessing which disruptive technologies are technology platforms, was developed
for this study by Jon Deutsch, Chief Innovator, MIDI Services 7 “Move Over, U.S.A.”, Jeremy Siegel, Ph.D., The Future for Investors; Sept 25, 2005 [http://finance.yahoo.com/columnist/article/futureinvest/986]
5
Application Platform A technology is an application platform when the technology is not only an end in and
of itself, but also a launch pad to other innovations and applications. These types of
technologies are flexible enough to evoke new applications that were not envisioned
when the base technology was developed. This is not limited to “software” applications. Applications can be medical, physical, artistic, etc., and application
platforms can be physical (i.e., national highway system), theoretical (i.e., quantum
mechanics), and virtual (i.e., Microsoft Windows operating system). Conversely, technologies such as the iPod and the laptop PC are not application platforms, as they
are specialized solutions that do not innately attract or support new, innovative
applications that transcend the original device‟s design.
Non-Proprietary
It might seem counterintuitive that the largest commercial gains would come from
investing in technologies that are non-proprietary in nature. After all, aren‟t proprietary solutions the most protected investments? Yes, and that is the very reason why these
protected technologies will typically not be revolutionary – because they are protected
and therefore are limited in their scope, reach, and application based on the prerogatives of the owner of said technology. It is the non-proprietary technology that launches
several (or hundreds) of companies that are in business to extend, innovate, manage and
exploit this technology. An example of the effect of being non-proprietary is the original IBM PC architecture, of which The Economist notes, “It is worth celebrating
the innovation that has been unleashed by the PC. Its flexible, general-purpose
architecture has made it the platform on which new technologies, from voice-over-
internet calling to peer-to-peer file-sharing, have been incubated.”8
Technology innovations that pass the GMAN test are crucial for investors. They
represent technologies that are not only nearly unconstrained in their potential, but due to
their “application platform” nature, multiple levels of innovations are built upon these
technologies. These unique attributes will help cement them into the value chain as
economies and societies progress. To give the GMAN test additional context and
relevancy, consider the following examples of technologies that pass -- and don‟t pass --
the test:
8 “The dream of the personal computer,” The Economist, Jul 27, 2006
[http://www.economist.com/opinion/displaystory.cfm?story_id=E1_SNNQDQN]
6
The Personal Computer, the Internet, the mobile phone, Open Source9, electronic storage,
and electricity are all examples of technologies that pass the GMAN test: they have
global scope, have been massively deployed, have proven to be application platforms,
and are non-proprietary.
However, some otherwise quite “disruptive” (and commercially successful) technologies
– such as landline phone, the power grid, and the train locomotive – do not pass the
GMAN test due to the following factors:
Landline phone: expensive to massively deploy worldwide; only a few unintended
applications have emerged (such as fax and data).
Power grid: expensive to massively deploy worldwide; not global in scope
Locomotive train: expensive to massively deploy; few unintended applications have
emerged; cannot span the globe – network must be fragmented.
Relevance
While relevancy is not specifically in the definition of disruptive technology or called out
in the GMAN test, it is crucial that any technology have some level of economic or social
impact. Without impact, a technology risks being invented for technology‟s sake – with
no meaningful application. In order for a technology to have an impact, it must be
relevant to problems that need to be solved, or designed to seek out social and/or market
opportunities that have not yet been addressed.
9 Open Source is a licensing technology and an innovation ethos. [source: http://opensource.org]
7
There are two types of relevance with regards to technology: business relevance and
social relevance10
. Business relevance is the impact a technology can have on a business
process or business model to improve efficiency, bring new offerings to the market, or
otherwise provide additional value within the business realm. In the 1980‟s, the local
area network (LAN) was universally adopted because its high business relevance. Social
relevance is the impact technology can have on societies. Social relevance differs from
business relevance because the correlation between additional value and success is not
linear. Social relevance comprises many “softer” attributes, including what is considered
trendy, socially appropriate, stylish, and relevant to being a status symbol. An example
of social relevance is the portable MP3 player: The Rio PMP300 was the first
mainstream portable MP3 player, but the technology did not reach mainstream until
Apple combined technology, elegance, style, and a marketing campaign that oozed
“cool.” Adept at making technology socially relevant in the entertainment and
computing space, Apple is an example of designing socially relevant technology in the
non-business realm.
Methodology Overview
The parameters have been defined, and tests have been designed to identify the unique
characteristics of technologies that are likely to be revolutionary. The technologies being
assessed will need to (as defined above):
Be a technology
Be a disruptive technology
Pass the GMAN test
Be projected to have either business or social relevance
10 Business and social relevance is shown to be tied to financial gain. From “Cashing In,” Articles on
Innovation, Community Research and Development Information Service, European Union, 5/00
[http://cordis.europa.eu/aoi/article.cfm?article=881]
8
Revolutionary Technology Assessment
Applying the above set of criteria to near-term and highly regarded technology trends
Using research from respected sources in the technology futures space, including
WIRED, The Economist, The Institute for Global Futures, and Deloitte's Technology
Trends journal, the following likely candidates for revolutionary technologies have been
assembled for consideration:
Open Source
Nano-technology
Hydrogen fuel
Wireless
Biotechnology
Artificial Intelligence
Relevancy commerce
Genomics
Processing & Storage advancement
Mobile information devices
Water purification
Collaboration
Note: While the Internet continues to be on the radar of several technology futurists in
the industry, it will not be included it in the shortlist. The Internet has already
transformed society and is in the process of transforming business. While the Internet
has arguably been one of the most important revolutionary technologies the world has
seen in the past hundred years, and will continue to power many future revolutionary
technologies, the fundamental Internet technology itself (TCP/IP, HTTP, FTP, DNS, etc.)
is highly entrenched and commoditized. Therefore while the existence and the idea of the
Internet will continue to help spawn countless revolutionary technologies, it will not, in
and of itself, evolve substantially at the network level and therefore has not be included in
the selection process.
Any one of these emerging and/or nascent technologies has the potential of being
disruptive. But to be considered revolutionary, these candidates next need to pass the
9
GMAN test. Before reviewing the technologies that pass the test, a brief review of the
technologies that did not pass, and the reasons why:
Nano-technology – potentially limited by proprietary evolution. Vast majority of
implementations so far are proprietary and not open for outside innovation upon
baseline technology.11
Hydrogen fuel – multiple challenges to being mass-deployable. Fuel Cells have
been in use since the 1960s, yet countervailing market forces reduces likelihood
of being disruptive.12
Biotechnology – typically not an application platform. Most applications are
custom solutions to specific medical issues.
Artificial Intelligence – multiple challenges to being mass-deployable and
proprietary evolution of technology.
Genomics - typically not an application platform. Most applications are custom
solutions to specific medical issues.
Water purification – multiple challenges to being mass-deployable. Decades of
research in this area and there is still no truly disruptive results.
Put through the GMAN test and assessed against business and/or social relevancy, the
following technologies are deemed very likely to be revolutionary:
Open Source
Wireless Technologies
Processing & Storage
Relevancy commerce
Mobile information devices
Collaboration
11 Most nanotech companies, understandably, protect their very valuable intellectual capital. A case in
point is Applied Nanotech: “An important part of our strategy is to obtain protection for our proprietary
technology.” [Source: Applied Nanotech Patents page on http://www.appliednanotech.net] 12 “Fact Sheet: Hydrogen Fuel: a Clean and Secure Energy Future,” The White House, US Government [http://www.whitehouse.gov/news/releases/2003/02/20030206-2.html]
10
These six technologies have successfully completed a systematic series of tests designed
to highlight the very few that have – according to the methodology established for this
study – a high likelihood of being revolutionary, and thus, a disproportionate economic
impact for interested innovators, entrepreneurs, and investors.
Revolutionary Technology Analysis
An executive overview, analysis and assessment of predicted revolutionary technologies
Open Source
The Open Source philosophy is a great example of a technology that is not comprised of
machine parts, processors, engines, or other trappings of the physical manifestation of
ideas. Open Source remains in the idea-state as an operating framework in which people
work to innovate in ways that are, in fact, revolutionary.
How revolutionary? Consider this scenario: It‟s 1987, and you run a company that
develops software and services for other large businesses. When you look to develop a
new product, you have a few options: build the product from scratch, leverage the work
already done in-house on other products, or buy other components from other vendors
and re-sell them as a part of a larger solution. This has been a traditional management
scenario for about as long as modern business has been around.
However, in the mid-1990‟s, a new movement coalesced that worked out a new, viable
alternative that at first seems quite counter-intuitive: build software for free, and share it
for free with the only provision that whatever modifications were made to it also be
submitted back to the public domain. Building software for free doesn‟t immediately
make economic sense, but it depends on how you look at it. There are essentially two
ways to look at the Open Source dynamic:
11
1) The “Loss-leader” lens: Common services are built and distributed freely in order
for companies to provide higher-order services more efficiently. The non-
proprietary nature of Open Source software ensures that more companies have
non-competitive access to the same set of basic services, enabling the entire sector
to focus on higher value, higher margin offerings.
2) The “Social Equity” lens: Leveraging similar processes that exist throughout
many professions, Open Source developers are able to develop relationships,
credibility, value, and a bit of fame by providing impressive solutions that others
can use, share, and appreciate. This is not unlike the publishing model in
academia -- where being cited by others is a mark of personal and professional
credibility, value and a bit of fame within a network of like-minded professionals.
Going back to the scenario above, consider the same situation, but move the date up to
the year 2007: Your business now has a new option: leverage freely usable resources on
which to build. This enables the business to quickly build products without the added
expense of building the baseline framework – you can now focus more of your
company‟s resources on the specific problem you are aiming to solve. Ultimately, this is
a more efficient business model, which gives you the ability to increase margins and/or
lowers prices.
The Open Source philosophy is also revolutionary in how it operates: massively
distributed contribution, organization, and support. This introduces otherwise cost-
prohibitive redundancy in brainpower, globalization compliance, and resilience. If every
company that needed to build out a global, massively collaborative workforce to develop
common services, this would be a colossal waste of business resources and human
capital. Open Source allows the efficient development of common services, and frees up
organizations to focus on value-added services. A macro-economic dream come true.
12
And new applications for Open Source are emerging. The Open Source philosophy is
now being attempted in car manufacturing13
. If this evolution is successful, Open
Source‟s potential to transform business will increase dramatically. Deloitte‟s
Technology Predictions 2006 report states, “the open source community should start to
broaden its reach. There remains a considerable opportunity to take open source code
into new areas, including mobile smart phones, PDAs, and even set-top boxes. As more
and more devices become intelligent, the opportunity for the open source model will
likely grow accordingly.”14
One potential limit to Open Source, however, is that its scope is currently limited
primarily to software development. While Open Source will continue to impact business
dramatically, the investor or entrepreneur does not have many places to invest
specifically in this technology. Instead, the investor and entrepreneur are advised to fully
understand the trajectory of Open Source and take the time to understand its potential, in
order to fully leverage it for economic gain and business competitiveness.
Wireless Technologies
Wireless communication technologies provide information and access to information
well beyond what was traditionally considered economically feasible. With wireless
technologies, poor, remote, and challenging locations can inexpensively be “plugged in”
to the global information network. From a social perspective, this revolutionary
technology has – and will – fundamentally shift global conversations and transactions
from the wealthy regions of the world toward a more statistically normalized population.
13 The Open Source Car Project (OScar) is the Open Source‟s first attempt of applying the Open Source
philosophy to the physical world. Source:http://www.theoscarproject.org/ 14 “Open Source Moves Toward Center Stage”; Delotte‟s TMT Technology - Predictions 2006 [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf]
13
However, a more accessible poorer population doesn‟t necessarily have the immediate
economic impact that most investors are looking for. In the future, it will likely be a
huge global economic boost. But in near-term, wireless‟s impact will be more
evolutionary than revolutionary.
Wireless communications technologies are a solid application platform, in that they
enable a host of different devices, ranging from mobile phones to computers, satellite
radios to television, and various proprietary information devices for vertical industries.
For this reason, companies that innovate in the wireless communications space are
uniquely positioned to be the delivery backbone for increasingly crucial, business-critical,
and sometime life-critical information. While communications technologies do quickly
become commoditized, an innovative wireless communications firm will continually
invent new, value-added ways and means to move information from where it is to where
it needs to go.
There is a reason why it is referred to as “wireless technology” here instead of wireless
communications: there are new applications of wireless technology that also have
substantial room for economic impact. One new potential is wireless power. Using
specially tuned resonance waves, one object can coerce another object to resonate on a
similar frequency (similar to how musical instruments will “play notes” without being
touched by responding to the same frequencies being generated by another nearby
instrument).15
Why is wireless power a potential revolutionary technology? Today, there are two
realities about power and portability:
15 “Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006 [http://news.bbc.co.uk/2/hi/technology/6129460.stm]
14
1) People‟s behaviors are subtly shifted by the limits of power available to their
portable devices. Because people know that a cell phone only have 3-4 hours of
talk time, they intuitively understand that they need to moderate mobile phone
usage throughout the day. Similarly, laptop PC users must also moderate their
usage on long trips without power, reducing potential productivity. And with the
complete overhaul of the camera industry, the majority of people now rely on
digital cameras for their photos. And while these digital cameras no longer rely
on the limited supply of film one can carry in a day, the user trades off this
limitation with the limitation of the built-in battery of the digital camera.
2) Designer‟s, when devising a portable device, build and skip features based on
energy utilization estimates. A mobile phone manufacturer will not build in a
feature if it is energy hungry, and laptop PCs are designed to reduce their CPU
speeds dramatically when on batteries in order to conserve power.
The promise of wireless power will alter both of the above dynamics, and could once
again revolutionize what services mobile devices can provide. For instance, a mobile
phone with virtually unlimited available power could actively track, record, and monitor
bodily life signs, provide proactive “heads up” alerts based on where you are and what
you are doing, or even record every thing you see and hear throughout the day for
archival or evidentiary services. Privacy issues notwithstanding, these would be
revolutionary services for a mobile phones.
However, wireless power is still just a promise, not a reality. In addition, if it does
become a reality, it will (at least initially) have substantial limitations, including a 16-foot
range.16
16 “Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006 [http://news.bbc.co.uk/2/hi/technology/6129460.stm]
15
In the wireless technology space, investors and entrepreneurs should focus on the
opportunities to provide new levels of service that have broad appeal. There are a lot of
commodity wireless offerings available today, which are of limited interest to investors
and entrepreneurs. But look at the “line extension” possibilities in each commodity
service to unearth new value from existing infrastructure. And, like in the case of
wireless power, keep your mind and wallet open to imaginative applications for wireless
technology. Ask yourself “If I could alter the rules of physics, what would I want
delivered wirelessly tomorrow that seems impossible today?”
Processing & Storage
The ultimate “application platform” technologies, processing and storage combined are
the closest we currently have to mimicking the primary functions of the mind: the ability
to process information combined with the memory to store this information. As
processing and storage continue through the Moore‟s Law17
and Kryder‟s Law18
continuums, respectfully, they will increasingly provide societies and businesses with
higher-level services to analyze information, automate processes, and solve complex
problems.
Like most platform technologies, there is a high degree of commoditization at the
mainstream technology level. But as future processing and storage technologies that
provide breakthrough price/performance solutions emerge, they will enable new,
disruptive, and even revolutionary technologies and applications. For instance, a
minimum price/performance ratio is required for massive storage and processing to
17 Moore's Law is the empirical observation made in 1965 that the number of transistors on an integrated
circuit for minimum component cost doubles every 24 months. It is attributed to Gordon E. Moore, a co-
founder of Intel.; From Moore‟s Law entry; Wikipedia, the free encyclopedia [http://en.wikipedia.org/wiki/Moore's_law] 18 Kryder's law states that hard drives (HD) are benefiting from an exponential increase in the density (bits
per unit area) of information they are able to store. Source: ”Kryder‟s Law,” Scientific American, August,
2005
16
enable Google to operate profitably enough to sustain its business model. If the current
price/performance mark in processing and storage was where it was in 1985, it is unlikely
that the very idea of a global search engine that required over a petabyte (1,000 terabytes)
of storage19
would even be considered.
There is a high likelihood that there will be points throughout these technologies‟
evolution where the price/performance ratio will suddenly spark revolutionary
applications throughout the foreseeable future. And as the industry continues to innovate
around new and novel ways to store and process information (through holographic
computing and storage, 3D optical storage, biocomputing, micro-electronic mechanical
systems [MEMS], advanced magnetic storage, probe storage), new applications will be
invented to fully utilize the availability of a hyperbolic leap in available, affordable
processing and storage technology. Importantly, for each application that requires the
next generation of processing and storage technology, this new processing and storage
technology is all but required to fuel the growth and expansion of these new applications.
As a result, the
creativity around
applications reinforces
the investment and
growth of the base
processing and storage
technologies, even as
the price declines (see
chart to observe how
revenues increase even
19 Size of Google database assembled by Ionut Alex. Chitu, on the Googe Operating System Blog; 9/10/06 [http://googlesystem.blogspot.com/2006/09/how-much-data-does-google-store.html]
17
as price per megabyte decreases20
).
One potentially disruptive application that is highly reliant on revolutionary processing
and storage technology advancements is artificial intelligence (AI). This processing-
intensive application has the potential to provide completely new levels of service to
people. However, the potential of AI has been stymied by the relatively inadequacy of
current processing technologies, rendering AI as an interesting research area instead of a
generally available service. AI is merely one example that will demand revolutionary
processing and storage power that is not yet available. The drive for these applications
will drive the need for revolutionary change in processing and storage technologies.
Predicting which technology (revolutionary or evolutionary) will create the next critical
nexus of price/performance will be challenging for investors and entrepreneurs. In
addition, the recent consolidation and rapid commoditization of current storage
technologies (hard drive and flash RAM) provides a challenge for an industry that has
rested on mainstream approaches to magnetic storage for decades. Yet, with
governments and businesses alike set to track more activity, consumers eager to record
and play back high-quality digital audio and video, and data warehousing driving the
growth of a multi-billion dollar market research industry, the future of processing and
storage technologies looks bright.
Relevancy Commerce
Invented by the newspaper industry, relevancy commerce was advanced by radio and
television program directors, and recently revolutionized by Google. Relevancy
commerce (also referred to as advertising-subsidized content) provides advertisers access
20 Next Generation storage technologies and chart from “The Future of Data Storage Technologies,” World
Technology (WTEC) Division; International Technology Research Center
18
to their targeted audiences to promote their services. It allows for more valuable and
meaningful advertising to reach consumers through the art and science of demographic
analysis. Relevancy commerce is what allows the New York Times be sold at newsstands
for a fraction of its production costs.
While most other technology assessments consider this area “search technology,” this
study asserts that search is merely an application that enables relevancy commerce to
exist. In fact, the top Internet search engine, Google, makes the vast majority of its
revenue in relevancy commerce, not search.
When Google invented their AdWords and AdSense programs, they completely
transformed what relevancy commerce could do to for businesses and consumers.
Google‟s “relevancy engine” automatically “senses” (through Google AdSense) the
content on almost any page on the web, and then places “best match” advertisements
along the side of this content. As a result, advertisers are able to reach audiences
worldwide, on almost any website, based on the relevancy of the content that the
consumer is reading. Conversely, web site visitors receive targeted advertisements based
on the topic of – or references on – web page they are visiting. The breadth and depth of
these programs is just starting to be understood by marketers. It is likely that this
approach to advertising will spread further within the web, and beyond the web as well.
The impact of this technology might sound evolutionary at first, but consider the
implications as relevancy commerce continues its ascendance: Goods and services that
many people now have to pay for might very well become “free” in exchange for being a
willing customer for eager companies vying for your attention. In essence, relevancy
commerce converts consumer attention into currency. This evolution could revolutionize
at least two sectors: information devices and information services.
19
1) Information devices -- with a fully developed, mature and massively-deployed
relevancy commerce model, most any device designed to convey content
(including televisions, radios, computers, mobile phones, etc.) would not have any
hard currency cost, but would rather be an exchange for your attention to relevant
advertisements.
2) Information services – Many companies providing information services that
currently sell this intellectual property to clients would likely shift to a barter
agreement of exchanging services for attention. Here is an example to illustrate:
Picture two hypothetical information services companies, called SMI and CDN –
both whom provide pharmaceutical intelligence to the world‟s pharmaceutical
companies. In today‟s economy, both of these companies sell their data, analytics
and information to pharmaceutical companies to help their clients operate more
efficiently. This information is quite valuable, and is worth hundreds of millions
of dollars in revenue each year. One day, the CEO at CDN (a smaller and more
nimble firm than SMI) conducts a study and finds out that the value and quality of
his clients‟ attention is worth more to hundreds of potential advertisers than what
he is currently charging his clients. Based on the results of this study, he conducts
another study to see if his clients will be willing to save $50 million each year in
exchange for their employees receiving targeted ads from a set of pre-approved
sponsors.
At first, this prospect is awkward, and is rebuked by CDN‟s clients. But, after a
few years of being offered “free” services instead of a $50 million annual bill,
eventually the client gives in to economic and shareholder pressures and pilots a
test with CDN. In another year, the tests show that the information is the same as
it ever was, and the pharmaceutical company now has an additional $50 million
dollars in its annual budget as barter for its employees‟ attention. As a result, the
CEO of CDN changes the entire business model of CDN and becomes a content
provider to the pharmaceutical industry that streams relevant advertisements to
20
their client‟s employees, providing a new custom channel for advertisers, who
will pay top-dollar for such a targeted, wealthy demographic.
The account managers at competitor SMI are now bidding against a vendor that is
in a barter agreement with pharmaceutical companies. How can SMI compete
with their traditional “pay for information” model? They can‟t. They must adapt
and provide a better, more advantageous barter agreement for the client if they are
to compete with CDN.
This hypothetical example sheds some light on how revolutionary relevancy commerce
could be. And it appears that things are heading in that general direction. The Financial
Times just reported that Google has inked a deal with BskyB (a British satellite television
company) to replace traditional ads with Google‟s AdSense targeted ads. Says the
Financial Times about the deal, “If the companies manage to do that successfully, they
could well transform the TV advertising industry.”21
The outstanding question around all of this is one of social relevance. Many beneficial
and astounding technologies never fully reach their potential due to a lack of
compatibility with basic human nature. Like the videophone that never reached its
potential due to lack of consumer acceptance, despite the fact that it represents a superior
technology to the traditional voice phone, relevancy commerce might suffer a backlash if
people value their attention more than their hard currency.
Relevancy commerce offers entrepreneurs and investors an opportunity to support or
envision new ways of conducting commerce, and new ways of valuating people‟s
attention as a source of currency. Finding the right “connections” where people are
21 “BSkyB in Google link-up”, Andrew Edgecliffe-Johnson, Financial Times, Dec 6, 2006 [http://www.ft.com/cms/s/99f7fb12-8530-11db-b12c-0000779e2340.html]
21
willing to sell their attention for value-added services could produce new economies that
do not exist today.
Mobile Information Devices
In the post-industrial age, information is power, and time is money. Mobile information
devices afford an unprecedented number of people around the world22
flexible and ready
access to information, at just about any time. The convergence of these three axes around
a single class of device will likely ensure that mobile information devices become one of
the most revolutionary technologies since the advent of the Internet.
Mobile information devices vary in shape, size, function, and ability. Popular variants
include mobile phones, PDAs (personal digital assistant), the iPod, UMPCs (Ultra Mobile
Personal Computers), Smart Phones, and the Blackberry. As each generation of these
devices come to market (and new generations are launched annually), connectivity,
interactivity, and multifunctional capabilities are all improved upon.
Unlike the Internet, where the baseline technology exploded and then steadied, mobile
devices continue to evolve at a rapid pace, and have a great deal of potential to further
revolutionize society and business. In conjunction with wireless communications
technology, mobile devices can become “portable portals” into information networks
such as the Internet, which potentially extends the Internet‟s potential reach by almost
500% as compared to traditional internet access points, personal computers23
.
22 Around 80% of world's population has mobile phone coverage as of 2006. This figure is expected to
increase to 90% by the year 2010; AFP News Service reporting on Singapore Telecom study; 11/06 23 Current internet population is approx 1 billion, or 16.6% of the population. A 482% increase matches the
total mobile phone coverage. While not all current mobile phones have internet access, it is trending
toward this reality.
22
When 80% of the world‟s population is able to communicate with one another –
independent of location, socio-economic status, or other traditional barriers – new
relationships and economies emerge. For instance, eBay is a fantastically successful
online venture, but its current business model is not centered around the 3 billion people
in Africa and Asia that don‟t have PCs, but who will soon be able to buy and sell things
on eBay from remote locations in the world. What happens when a craftsperson from a
tribe in central Africa is able to sell their custom-made tiger tooth necklaces? In their
tribe, a necklace might be worth, say, three months of food as barter. But on eBay, what
if the same necklace commands $1500? This potential dynamic has the potential to
revolutionize commerce and cultures, as well as further integrate the world‟s economies.
Another revolutionary trend enabled by mobile information devices is giving a voice to
the politically voiceless. SMS – or short messaging service – is a common service on
mobile phone services worldwide. SMS messages (or “text messages”) are just starting
to be used to organize disparate groups of people across towns, regions, and countries.
The impact of this capability could be observed during the “Danish Prophet Muhammad
Cartoon Crisis” where Danish Muslims sent SMS messages to friends and family in the
Arab region, reportedly misconstruing the facts on the ground in Denmark. But the text
messages came through, and were forwarded to tens of thousands more across the region,
and the misconstrued facts spread like wildfire, inciting riots in Syria, Jordan, Egypt and
Iran.
Mobile information devices also represent a new opportunity for “convergence” – where
multiple applications that generally require distinct devices come together into a single
user experience. As applications begin to converge on the mobile device, we will start
seeing rich mobile application platforms to provide new, innovative services to people
worldwide. An example of convergence can be seen with Apple‟s iPhone product. The
23
iPhone looks like a mobile phone or a PDA, but integrates an astounding amount of
services in a device that is only 11.6mm thick and easily fits in a pocket:24
Apple iPhone Application Convergence
Mobile phone features (contact lists, speed dialing, voice dialing, conference
calling, integrated speakerphone)
Messaging features (SMS text messaging, video, image, audio messaging)
Video features (including dedicated video camera and instant uploads to on-line
services such as YouTube)
Personal information management features (calendar, to-dos, email, syncs
wirelessly with Microsoft Outlook)
Digital camera features (3 megapixel camera)
Video camera features (DVD-quality recording quality)
Digital music player (MP3s, streaming audio)
Digital audio recorder (built-in microphone)
GPS features (built-in GPS receiver with turn-by-turn directions, text-to-speech
translation, 40 million points of interest database available via cell network)
Tens of thousands of applications written for the iPhone by a development
community
Apple iPhone Hardware Convergence
Data services: Hi-speed data transfer over the global GSM cell phone network
Connectivity: Able to connect in most countries around the world, as well as
connecting to any WiFi wireless computer network.
Computing platform: Hi resolution, hi color LCD, OSX application platform, up
to 32GB RAM
A “physics engine” user interface that makes it respond as if the controls were
real-life objects
Full mobile gaming platform
24
Nokia N95 device information available at http://www.apple.com/iphone/
24
With this much flexibility and power in a device that fits in your pocket and goes
everywhere you go, revolutionary innovations, solutions, and services previously
considered implausible will now not only be viable, but will be globally extensible and
mass-deployable. This applies to consumer needs as well as the needs of business. If this
device becomes a blueprint of the future mobile information device, the ideas of
“telecommuting” and “global outsourcing” might very well evolve to human capital
being completely mobile and even more dispersed (and traceable). “Working from
home” evolves to “working from anywhere”; “Office hours” evolves into “on-demand
resources”; “Outsourcing” evolves from thinking of India and China to thinking of any
country where talent or expertise resides. As “outsourcing evolves from option to
obligation”25
, the most effectively organizations outsource becomes a critical success
factor.
There are countless other innovative applications for the mobile device. The Economist
provides some additional examples of how mobile phones are transforming traditional
processes worldwide: “Merchants in Zambia use mobile phones for banking; farmers in
Senegal use them to monitor prices; health workers in South Africa use them to update
records while visiting patients. All kinds of firms, from giants such as Google to start-ups
such as CellBazaar, are working to bring the full benefits of the web to mobile phones.
There is no question that the PC has democratised computing and unleashed innovation;
but it is the mobile phone that now seems most likely to carry the dream of the „personal
computer‟ to its conclusion.”26
25 The title of a chapter in Deloitte‟s TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf] 26 “The dream of the personal computer”, The Economist; Jul 27, 2006 [http://www.economist.com/opinion/displaystory.cfm?story_id=E1_SNNQDQN:]
25
Mobile information devices tend to be more social devices than other information
devices.27
Because these mobile information devices are the interface between the
information and the person, they serve an important and very personal role in a person‟s
life. Because of this, social relevance plays a large role in mobile device success or
failures. This means that less tangible factors (as described earlier) such as style,
usability, form factor, and “cool factor” matter just as much as functionality in this type
of technology.
Investors and entrepreneurs can approach the mobile information device sector from
multiple perspectives and expect to see a wealth of opportunities. Demographically,
there is the potential to attract previously unreachable audiences. Commercially, there is
potential to develop new premium services that are attractive and useful to users in
wealthy nations, as well as new, inexpensive basic services to the less wealthy but more
populous customer base in Asia and Africa. Politically, there are a bevy of opportunities
to integrate mobile information devices to help manage, coordinate, and enable grassroots
political movements or campaigns. From the business efficiency perspective, most any
company currently providing services that involve information delivery (even customer
service) should extend its delivery platform and user experience to the mobile
information device.
To summarize, mobile information devices promise an unprecedented opportunity to
create new business opportunities, enable social and political change, and enhance the
efficiency of current business processes.
27 Phones, like cars, are fashion items. Both are social technologies.
Source: “Phones are the new cars,” Technology Trends, The Economist; Nov 30, 2006
26
Collaboration
Like Open Source, collaboration is not a traditional “technology” per se, but it does fit
within the definition of technology referred to earlier in this study. In fact, the definition
of technology specifically includes the “application of knowledge,” and collaboration is a
methodology of applying knowledge to solve problems.
What enables collaboration (which has existed in some form since the first intelligent
organisms on earth interacted and evolved) to be a revolutionary technology is how the
possibilities of collaboration have recently exploded thanks to the convergence of other
revolutionary technologies like the Internet, World Wide Web, the personal computer,
and mobile information devices. These convergent technologies together enable new
forms of collaboration that remove the traditional constraints of space, time, and
circumstance.
Collaboration is an activity that most every organization -- ranging in size as small and
diverse as local support groups or municipal governments to as large as national
governments or international movements -- is involved in. Collaboration regularly occurs
within organizations to assemble deliverables, and collaboration commonly occurs
between vendors and customers. Through this lens, it is straightforward to see the
diversity, quantity, and scope of collaboration occurring around the world.
As technologies that enable new ways to communicate continue to evolve, the
opportunities to enable new, revolutionary forms of collaboration atop these technologies
make themselves available. One of the more prominent innovations currently underway
is a concept called “Web 2.0” – where entrepreneurs are leveraging the latest web
technologies to transform traditional websites (that are viewed) into collaborative portals
27
(that are used and viewed). Web 2.0 concepts enable what this study refers to as mass
collaboration – collaboration that extends beyond a typical, structured team or
organization and enters into the realm of a new type of collaboration where the general
public is invited to participate in content development.
Web 2.0 innovations that enable mass collaboration include wikis such as Wikipedia.org
(a mass collaborative encyclopedia that is so effective that it has been utilized for some of
the research for this study), Flickr (a mass collaboration photo sharing and identification
service), YouTube (a mass collaborative video sharing and categorization service),
Facebook (a massive social network), Blogs (a hybrid of traditional publishing and mass-
collaborative discussion), and Twitter (an instant-message service by and for the masses).
Tremendous economic value has already been realized by the Web 2.0 revolution (Flickr,
YouTube, and Blogger were purchased for billions of dollars in the past few years), but
this is just the first phase of utilizing the Web and the growing global information
network to enable new forms of collaboration. Mobile devices (such as the Apple
iPhone, among others) will provide new platforms for collaborative applications, linking
in the mobile and distant contributors to what is now currently a PC-based collaborative
ecosystem.
In support of this outlook, Deloitte‟s Technology Trends report predicts that collaboration
plays an increasingly strategic role in the innovation process.28
Specifically, the Deloitte
study focuses on collaboration‟s role in the R&D process for global organizations that are
now distributing R&D activities around the world. In addition, Deloitte predicts that
companies will use evolving collaboration technology to better co-operate with
28 “Innovation becomes collaborative,” TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf]
28
government and academic research institutions to access leading edge thinking at the
non-commercial level. This is yet another example of how new technologies enable not
just improved collaboration, but new collaborative networks.
Investors and entrepreneurs have immediate and future opportunities to fund and imagine
new, revolutionary collaborative technologies that have a high likelihood of creating
substantial economic value by improving upon one of the most fundamental work
processes that exists in our society.
Summary
The global economy is currently reaping the benefits of revolutionary technologies
invented over the recent decades. Thanks in part to innovations that converge into a
larger, more strategic whole, people are working, playing, and navigating their lives in
vastly different ways than just thirty years ago.
But these technologies are still relatively young, with much more growth potential in
store. It is in this context that this study focused on near-term, next generation
technologies that leverage and could significantly enhance innovations and services
available today. The guidance presented here is distinct from other studies, yet has many
common links. It is worth noting that none of the studies researched published a
methodology to assess which technologies made the cut. There very well may be
sophisticated methodologies behind the scenes, but the reader is only exposed to the
results.
It has been the goal of this study to help guide investors and entrepreneurs toward the
more influential and rewarding areas in which to invest their time and money. New
29
energy directed towards these predicted revolutionary technologies will only help ensure
that they do become revolutionary. Creative thinking and problem solving, a focus on
growth and prosperity, and an eye toward social factors like usability and design are the
disciplines needed to take the human condition to the next level.
We have already decided as a society to embrace technologies that enhance our lives and
improve our productivity. However, as with all first generation technologies, there have
been some compromises made for these gains. The next generation of revolutionary
technological innovations promises to make this embrace less of a compromise and more
of an unfettered step forward.
30
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