Deloitte's 2008 Canadian Tech – Media – Telecom trends

Our friends at Deloitte, John Ruffolo, Duncan Stewart, et al put the following out earlier today. Duncan was on BNN TV around midday, and there was no sighting of Simon, fortunately. Here it is in great detail, in case you haven’t seen it elsewhere:

2008 Canadian TMT Predictions

Canadians continue to benefit from technological advances in nearly every aspect of their
personal and professional lives — from the wired home to the wireless office. However, Deloitte’s
2008 Technology Media and Telecommunications (TMT) Predictions reveal Canadians are finally
awakening to the reality that technology truly is a double-edged sword.

The following is a list of the most significant TMT issues facing Canadian businesses in 2008:

2008 Technology Predictions

1. The rising value of digital protection: instead of “protect and serve” we are now
protecting the server

My PC or smartphone is disposable but what’s stored on it is priceless

As personal computers (PCs) and other electronic hardware devices see their prices plummet,
they are becoming more and more like bank vaults where their value is found not in their
plastic, metal and silicon but in the data, files, songs or images stored in them. Backing up
this content to protect it from viruses and theft, and making sure that files are forward
compatible are growing industries.

2. From anonymity to authenticity: where everybody knows your name

Users are happily exchanging anonymity for usefulness as the Internet is coming of age

Silly user names may have been fun for early generations of cyber geeks but dangerous in
a world concerned with protecting our security and our children. The tide has turned, and the
cloak of anonymity is being stripped from predators and manipulators as Internet service
providers are continuing to divulge user names. The biggest issue in 2008 may be fraud and establishing and proving identity behind transactions may be a critical technology enabler.
Another interesting trend is that users are willingly losing their anonymity if they get
something for it. Social networking sites like Facebook are the direct opposite of the “secret
Internet”: instead of fictitious identities and avatars, Facebook features real names, e-mail
addresses, and photos. And there are a lot of Canadians putting the “face” in Facebook: with 8
million users signed up, Canada leads the world in the percentage of our online community
who are voting for authenticity over anonymity.

3. Managing talent when legacy is the future: everything old is new again

Why IT departments need to keep their COBOL programmers

Almost every business in Canada relies on its information technology department even our
resource companies. Getting and keeping skilled employees is always a challenge and for
years everybody assumed this problem was about trying to hire and retain staff on the cutting
edges of technology. In addition, some skill sets (like being able to program and maintain 30
year old mainframe computers) are still important and becoming increasingly scarce. Are
today’s companies going to grind to a halt because of technology that “seems so last
century?” We don’t think so…and the talent strategies outlined in Deloitte’s 2007 TechTalent
Pulse Survey Report are critical for companies to succeed in 2008.

4. The flight to privacy: the “other” Cookie Monster

How well do we want the Internet to know us?

It is a good thing when our PCs, search engines, online retailers and social networks know our
“private” information: preferences, patterns and priorities are stored as cookies or on remote
servers. They can customize the user experience, help us fill in forms faster and even make
useful suggestions. They are like an electronic butler. But what happens when that helper
turns into a stalker or a blabbermouth? User pushback, rather than governmental regulation,
appears to be the new control mechanism. Recent controversies with Facebook Beacon and
other online sites demonstrate that whether or not privacy has actually been breached, the
online community is highly sensitive to even a perception of violated privacy. In 2008, as
users generate content, they are more than happy to generate (and loudly express)
discontent!

2008 Media Predictions

5. Stop the presses! Online is moving (slowly) to the front page: the whole world is
watching…and filming, reporting, writing, arguing, programming and editing

Canada’s media industry has been a world leader in accepting and embracing the online world.
In many other countries, there has been a seemingly arbitrary division between mainstream
and online media worlds, but that wall is coming down. Here in Canada, a number of print and
broadcast journalists not only cite blogs as news sources they actually have their own blogs
and Podcasts! In 2008, look for even more web content that makes it onto our TV screens and
into our newspapers, as well as the hiring of non-journalist bloggers as writers and computer
programmers who can add interactive content like searchable databases and mashups. This
may pose human resources problems as pay scales and work conditions may need to evolve
and reflect these new hires. Citizen journalism, still in its infancy except for Korea’s Ohmy
News, may make headlines, but is unlikely to make much of an impact on bottom lines. Watch
for some big legal battles as libel laws are tested in the online world to determine if citizen
journalism sites are legally responsible for what they post.

6. Overcoming online piracy may not mean the end of counterfeit content: the pirate
that lives by the (technological) sword, dies by the sword

The technologies that once allowed piracy to flourish are being used to turn the tables

Canada has the highest percentage of high speed Internet users in the world. That
technological lead has its downside as faster speeds sometimes mean more illegal downloads.
We have another undesirable accolade according to 20th Century Fox, over 50% of all
pirated movies globally are illegally recorded in Montreal. Piracy seemed unstoppable but
technology now provided by companies like Waterloo-based Sandvine (#1 ranked Deloitte
Technology Fast 50 award winner in 2007) is allowing network operators to detect, slow down
and even stop illegal piracy activities. Deep packet inspection may not be a panacea on its
own, as more may also continue to be done through tougher copyright laws, heftier fines and
more effective user education campaigns. Better digital rights management technology may
also be a more prominent weapon in the fight against piracy.

7. Time for music to get tangible again: how do you gift wrap an MP3 file?

Or to quote Olivia Newton-John: “Let’s Get Physical”

The last decade has seen Canadian sales of recorded music in physical form plummet down
20% in 2007 alone, and down more than 50% since 1997. The songs are still being listened
to, but in their intangible (digital) and usually illegally obtained, format. At the same time,
artists are making more and more money from concerts, with $100 million tours and multiyear
Las Vegas contracts becoming the norm. However, recent declines in the price of flash
memory means that it is now so inexpensive to put files on a flash memory chip or on a low
priced MP3 player that users may start rebuilding their musical libraries in physical formats
again fulfilling our desire for tangible, permanent objects and allowing us to collect and
display our music as we used to. Even better for artists and the recording industry, consumers
may likely pay a premium for a physical version of an album, while new technology may make
piracy more difficult.

2008 Telecommunication Predictions

8. How to capitalize on the $10 mobile phone: ultra-cheap phones may enable machines to talk to each other

Connecting machines to the network makes them more valuable

Canada is a laggard in the adoption of mobile phones at a 60% penetration rate we trail every other country in the developed world. With lots of room for growth, Canada is less aware of looming global handset saturation, however in contrast, more than 40 countries worldwide have more mobile phones than people. In addition, large sections of the world with low penetration rates have no cellular coverage or a population that is too poor to afford any phone, no matter how inexpensive. So what can handset makers and network providers do to continue their incredible historical growth? Advances in semiconductor manufacturing and better integration technologies have created the advent of the $10 phone. By embedding cell functionality in machines from ATMs to vending machines, and from freight containers to cars two-way data communications can now create a far more powerful, reliable and cost effective network of machines. In addition to selling mobile phones to people, there are another 3 billion machines that might make happy little silicon customers, none of which are likely to complain about their last bill.

9. Giving mobile GPS direction: location, location, location

These are the three things that matter most in cellular technologies

Using Global Positioning System (GPS) satellites to determine location is already a multi-billion
dollar market for automobiles and hikers. In 2007, cell phone manufacturers entered bidding
wars for the underlying map software as falling GPS chipset prices have allowed them to
incorporate location functionality on all but the most basic handsets. However, just because
they can include GPS on a phone doesn’t mean they should, nor does it mean consumers may
use it more than a few times for novelty. GPS works well for cars, but its need for “line of
sight” means getting a signal sometimes requires users to walk away from buildings and into
the middle of a street, which may prevent repeat handset use of GPS. Interestingly, Canadian
companies are prominent in the location market using both GPS and cellular technologies.

10. Gray is good : the return on investment from making telecommunications accessible to all: the rise of the Silver Surfer

The Internet isn’t just for kids any more, some of the faces on Facebook have wrinkles.

For years it was assumed that the online community had an average age of about 21. As a
result, websites featured weird colours, tiny fonts and loud song tracks. Mobile phone designs
became smaller and smaller, which meant ever smaller buttons. Social networks were restricted to high school or university students. But with an aging baby boom skewing the demographics, Canada is getting older faster, and this demographic disproportionately controls more wealth than even their numbers would suggest. Deloitte’s 2007 Media Democracy Survey reveals that individuals over 61 want to be online, they use it for entertainment and information, and more than 25% even create their own user-generated content. Making telecom and technology more accessible to the older user may tap a large and under-developed market. Bigger buttons, bigger fonts, and better ergonomics are all just a start.

Top Five 2008 Green TMT Predictions

1. The challenges and opportunities of water scarcity: water is the new oil

Luckily, Canada has lots of both, but not without challenges

Oil has surpassed $100 per barrel, the oil sands are in full swing, and the recoverable oil from
the sands puts Canada solidly in second place in estimated global oil reserves, behind only Saudi Arabia. Population, economic and environmental pressures make it likely the oil crisis of
the 20th century may be echoed by a water crisis in the 21st century. Canada has freshwater in abundance, as more of our surface area is lake water than any other country in the world, and our rivers discharge almost 10% of all the renewable freshwater globally, while supporting
0.5% of the global population. Despite the profusion of domestic fresh water, Canada also has
a history of technological innovation in the filtering, remediation, conservation and purification
of water. There are three key Canadian trends relating to water scarcity. 1) Global warming is
melting glaciers, and much of our available summer water is glacier derived. What will we do
when they’re gone? 2) The oil sands are an immense resource, but it takes four barrels of
water to produce a single barrel of oil. Will our oil bounty ironically endanger our water
supply? 3) Global water shortages increase the pressure for desalination plants, but require
enormous energy inputs. Burning fossil fuels seems like a poor solution, and many are
advocating nuclear power. As a popular reactor choice in the developing world, what role will
Canada’s CANDU technology play in creating fresh water without creating greenhouse gases?

2. From zero to green hero : the renaissance of nanotechnology: how something very
small could solve some very big problems

Making molecules do our dirty work

Just after the telecom bubble burst, there was a short-lived boom and bust in nanotechnology.
Premised on the ability to manufacture technology and biotechnology at a cellular or molecular scale, the industry was forecast to grow to over $10 billion in annual revenues. Stocks that happened to have the phrase “nano” in their name soared hundreds of percentage points in weeks. By 2007, the stocks were back down, the industry was under attack from doomsday scenarios and nanotech was viewed as yet another over-hyped technology with no future. But for all of nanotech’s limited successes in life sciences and conventional technology, there has actually been a stealth explosion in nanotech usage in the clean technology arena. By some estimates, the single biggest user of nanotech today is for environmental applications. Atomic-level innovation is driving technology in power production, transmission and storage, lighting and LEDs, filtering and desalinating water, cleaning up polluted soils and groundwater, and controlling automotive emissions. Canada is at the forefront of some of these initiatives led by the National Institute for Nanotechnology in Edmonton.

3. Let there be light emitting diodes: the year when LEDs go green (not literally)

They’re bright enough, they’re cheap enough, and doggone it, people are starting to
like them

How many years does it take to change a light bulb? About 130 years (and counting) in the
case of the incandescent light bulb, a technology which has long been recognized as an imperfect approach to shedding light. But in 2008 the conventional light bulb may finally start
to be superseded by a viable replacement: the white light emitting diode (LED). For years LEDs were too expensive, gave off the wrong colour of light and were suitable for only certain applications (traffic lights, automotive turn signals, etc.) But rapid advances in semiconductor
manufacturing combined with rising energy prices has shifted the balance, and LEDs are now
the superior choice over the long term in most home lighting applications. The first widespread use of LEDs was in digital watches that told the time with a red glow. Although most LEDs will likely emit a whiter light in the future, their true hue may really be “green”, as they offer dramatically lower power consumption, as well as clean manufacturing and disposal.

4. Getting value from virtualisation: rethinking the virtual machine revolution

The machines may be virtual, but the environmental benefits are real

Virtualisation, a form of software first used in the 1960s, was one of the most talked about
technologies of 2007. It is claimed to be a technology that offers cost savings, better security,
better use of resources, better disaster recovery and lower power consumption. While 2007
was characterized by a rush to evaluate or deploy virtualization, in 2008 companies may be
more cautious as virtualization is neither a one-size-fits-all solution nor a panacea. Even as
some assumptions about cost and security are being made, the energy savings driver is likely
to be key, especially for the new server farms that are driving “cloud computing” similar to
Google. Recent estimates suggest that these massive collections of computers will represent
5% of world electricity demand by 2010. Canadian virtualization companies like Platespin (#2
ranked Deloitte Technology Fast 50 award winner in 2007) are helping transform server farm
power hogs into energy sipping piglets.

5. The living room moves closer to being Public Enemy Number One: media aren’t just
reporting on environmental problems, they are contributing to them too

You can now destroy the planet without leaving home

In our guiltier moments, we all know that driving SUVs, filling the stratosphere with jet pollution and not recycling makes us environmental sinners. Instead, we figured that sitting in our living rooms with the thermostat turned down while we watched hockey was an environmentally friendly activity. We may, however, want to check the math before counting on David Suzuki’s blessings. Consumer electronics now use 15% of household electricity consumption, up from 5% in 1980. And forecasts say that number could reach 50% by 2020.

Giant screens, especially plasma, use two to four times more power than CRT TVs. And dozens
of other household devices are using up energy, even when we think they are in standby mode. When they say protecting the environment begins at home, that has to include home entertainment. Look for 2008 to bring in more power efficient home media devices, including
ones that that have “real” off switches.

MRM