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2009 Deloitte TMT Predictions


February 27, 2009
By Anthony Capkun

“It was the best of times and the worst of times”. That was the theme of Deloitte’s Canadian Technology, Media & Telecommunications (TMT) Predictions in 2008. The ongoing global economic crisis has made the entire economy—including the TMT sector—focus almost exclusively on the “worst of times”, but the 2009 Canadian TMT predictions suggest this year’s theme will be “it may seem like the worst of times, but there are reasons to get excited”…

Although
the ongoing global economic crisis is projected to transform the
Canadian technology, media and telecom (TMT) industries, there are
still reasons for companies to get excited about the future—especially
for those investing and rethinking their strategies. While the weak may
not survive, the strong will be made stronger by the process.




“During
recessions, companies that follow bold strategies and make significant
investment decisions are the ones that will come out on top when the
economy recovers,” explained John Ruffolo, national leader, Technology,
Media & Telecommunications Industry Group, Deloitte. “Companies
that dare to spend, invest and rethink their strategies are the true
innovators. They may enjoy benefits that are many times greater than
what they invested as they act while others retrench.”




The 2009
Canadian TMT Predictions identify some of the important trends that the
current economic climate is fostering: new computing products, telecom
handsets, software categories and media niche strategies that are
likely to show positive revenue momentum and earnings, even in a weak
economy. Some common themes also emerge:





Cheaper helps: At roughly half the price of notebooks, netbooks are
rolling out in high gear with some predicting up to as many as 50
million units will be sold in 2009 – up from virtually none in 2007.




• Free
is better: Realizing cash-strapped consumers are not eager to spend on
new devices and services, carriers and service providers are
subsidizing or giving away smartphones, netbooks, televisions, PCs,
routers and set-top boxes.





Sharing is good: Whether it is sharing common resources through
virtualization, cloud computing or a mandated common fiber optic
infrastructure, Deloitte expects to see more IT buyers spreading the
buying decision across multiple users.




“Although
Canadian TMT companies are likely to benefit from the trends featured
in Deloitte’s 2009 TMT Predictions, many of these companies will
perform even better if they have the necessary support and funding from
the government to go on to become global leaders,” explained Ruffolo.
“They already have the right people and the right technology to thrive;
all that is missing is the funding. Canadian venture capital financing
continues to struggle and as Canadian governments consider various
economic stimulus packages, it is important that they focus on the
right industries: those that are the future of the country rather than
its past. To use a well-known Canadian metaphor, we need to skate to
where the puck is going to be, not to where it has been.”

{mospagebreak}



Highlights from 2009 Canadian Technology Predictions



Making
every electron count: the rise of the SmartGrid: Transforming our
electrical network to be as smart as our telecommunications network




SmartGrid
technologies encompass the entire electrical infrastructure—from
generation to transmission and distribution to consumption—transforming
a ‘dumb’ grid into an intelligent and flexible network. Governments,
utilities, enterprises and consumers are likely to spend heavily on
SmartGrid in 2009 to save money (especially when there is a short
payback of 12 months or less); make the grid more stable; and stimulate
the economy with infrastructure spending.




Disrupting the PC: the rise of the netbook: They’re cheap, they’re small, they’re cute



The
fastest growing (maybe the only growing) category of PC in 2009 is
likely to be the netbook. As many as 50 million of these mini-notebooks
may be sold because they are cheaper, smaller and sometimes subsidized.
The PC industry will need to adapt to the changing economics and
software requirements of these potential category killers: costs need
to be reduced, low-end devices must be offered and subsidy partnerships
should be explored.




Downsizing the digital attic: when infinite storage is a bad thing. Don’t hit that Save key when cheap storage ain’t so cheap



The cost
of storage is now so inexpensive that in 2009 the average enterprise
thinks it can afford to store every bit of data possible. But the cost
of finding ‘needles in a haystack’ means that de-duplication software
will be needed as well as tighter policies on storage limits and more
comprehensive total cost of storage analysis.




Social
networks in the enterprise: Facebook for the Fortune 500. Enterprise
2.0 is affordable and no training wheels are required




Enterprises
and governments are looking for cost-effective ways to distribute
information throughout their networks. In 2009, this is likely to
include more spending on internal social networks and the tools
required to build and enable them. With the world’s highest penetration
of consumer Facebook users, Canada is poised to be a global leader in
transitioning this technology to the enterprise. Although social
networks don’t cost much to deploy, the challenge is likely to be in
measuring their return on investment.




Smart phones: how to stay clever in a downturn. It’s not dumb to pay a premium for a smart phone



Though
growth in demand for smart phones may slow during 2009, it is likely to
remain stronger than any other handset category. Nonetheless, handset
makers may have to reduce costs, streamline functionality and invest in
marketing in order to ensure that mobile operators can continue to
justify smart phone subsidies.




Digital communication loses its message: no e-mail Fridays. When a productivity tool starts impairing productivity



The
value of some digital communications is likely to be questioned by some
corporations during 2009, as employees’ inboxes become overloaded. Many
will try to stem the flow of messages and posts by training staff on
appropriate usage, encouraging individuals to temporarily disconnect
and even rationing the number of e-mail messages sent.




The
mobile broadband accident in slow motion: traffic jams on cellular
networks. Netbooks and smartphones are chewing up bandwidth




Mobile
broadband adoption is expected to continue during 2009. Though operator
data revenues are likely to grow, they may need to upgrade their
networks to cope with higher traffic volumes. Operators may also have
to revise their business models and encourage consumers to route heavy
traffic via other networks.




One for all and all for one: no more redundant fiber optic networks. Sharing the cost of fiber means more speed sooner



The
telecom industry will likely rethink its approach to fiber network
deployment during 2009. Infrastructure-based competition is likely to
give way to structural separation, where consortia and governments
share the cost of network deployment and compete on services, brand and
content alone. Although it is unlikely, we will see a mandated common
network in Canada.




The browser becomes the operating system: changing of the guard? Better living through better browsers



Current
browsers are great, except for how often they crash, how much memory
they take up, how they don’t interoperate and how they don’t work well
on mobile devices. Aside from that, they’re perfect. New,
next-generation browsers and tools mean that the historical
pre-eminence of the operating system may be largely supplanted by
leaner and more robust browsers. This will then allow cloud computing,
Software as a Service and open source solutions will grow at
accelerated rates.




CLICK HERE for more on Deloitte’s 2009 TMT Predictions.