The Future of Almost Everything, page 5
China is already the world’s largest e-commerce market, worth $540bn in 2015, and as the world’s largest maker of smartphones, is also about to become the world’s largest mobile commerce market.
Alibaba is the largest online retailer in China, with revenues growing by around 50% a year to around $80bn in 2014, compared to $100bn for Amazon. Alibaba sales were then greater than the global sales of eBay and Amazon combined, around 2% of China’s entire GDP. The shares of the company were worth over $150bn, with 600 million registered accounts and 100 million e-commerce shoppers every day, representing 80% of all China’s e-commerce.
Alibaba has seen a 10-fold increase in mobile revenues in 12 months to a third of all sales, up from 12% the year before, as the number of smartphone shoppers rose from 136 million to over 188 million in just 6 months. But watch out for new, very smart e-commerce competitors in China such as Tencent Holdings, and Xiaomi phones.
Expect new competitors to secure large enough market share to survive as credible threats, with extremely attractive, simple, clever innovations – things that capture the imagination of hundreds of millions of people within days or weeks, making existing huge players look like ‘uncool’ dinosaurs. Expect most new players to be absorbed by acquisition into ever larger familiar brands.
Google will try hard to manage your entire life
Google will set the pace for innovation across many new sectors over the next two decades, ranging from driverless cars, to next-generation biotech, and smart homes. To achieve this, Google will acquire a very wide range of much smaller companies. Take the $550m purchase of Deep Mind for example, which teaches computers to think like humans. Or the move to buy Nest Labs for $3.2bn, which is a leader in WiFi-linked smart devices for use in your home.
By 2014, Google Android had 72% of the mobile market for operating systems, compared to only 14% for Apple. Google will come under increasing scrutiny – particularly in Europe where there are worries about abuse of monopoly, given Google’s more than 90% share of search queries, compared to 68% in America, and in nations like Russia that seek more web censorship (worries about antisocial behaviour). Google will continue to feel a cool wind, along with other large American IT companies, following revelations of deep co-operation with American spy agencies. The EU will continue to try to break up Google’s extending powers.
More web-based billionaires with a touch of genius
Expect many new web billionaires with typical time from startup to buyout or stock market flotation of 4–5 years. Most will make their money with genius innovations that add significantly to the scope of established giants like Google, Amazon, eBay, Facebook, Alibaba. In most cases, at least half the value will be locked up in their loyal user-base that enables the buyer of the company to reach a new community.
Expect such inventions to revolutionise customer experience in personal banking and online payments, wealth management, personal messaging, photo handling, archiving people’s ‘libraries of life’, music handling, note taking/thought capture, speech recognition, document creation, health monitoring and automated homes. Some of the most successful will be in very well-defined areas, as we have seen with taxi-ordering Apps like Uber or holiday rental sites like Airbnb. The secret of success will usually be a really smart, elegant and ‘cool’ site or user interface. YouTube was not the first video streaming site – but it was by far the easiest and most fun to use.
The future of entertainment
So what about the future of video, film, music, theatre, live TV and other entertainment? Mobile is already totally transforming video and TV consumption, while music has been hit by the greatest transformation of them all because of online streaming and digital downloads.
The music industry will face meltdown and chaos
Music is still a $65bn a year industry, and spends $15bn a year on new recordings, but big labels are in crisis. Over 40% of their global revenues already come from digital sales, more than half in some nations, but not enough to make up for loss of revenue from physical albums.
Many big music labels will be wiped out by social media music. Young listeners expect all music to be free – or nearly so. The music market is being flooded by highly talented home-based musicians, churning out millions of hours of free entertainment, in the hope of being ‘signed’ by a label.
In the past, big labels used to invest in lots of small bands, hoping one or two would really take off, but in future they will sign very few, after early success online. Labels will continue to dominate global album sales well into 2020, but 85% of their revenues will come from a handful of ultra-successful bands. Most up-and coming artists will be forced to bypass labels altogether, and sell direct, working with promoters and event organisers.
Expect 80–100 million people to be paying for unlimited streaming via services like Spotify by 2020 – but most musicians will earn less than $0.002 per play.
Radio music will survive
Traditional music streaming was of course radio, and radio will continue to enjoy huge audiences, because it is convenient as background entertainment at home or in the car. Another reason is the feeling of companionship, with tens of thousands of others sharing the same songs.
Live music is a $25bn a year industry. In 2013, concert attendance worldwide grew by 26%. Expect more blockbuster tours – like U2’s 360 tour from 2009–2011, grossing $736 million, playing to 7.2 million people around the world.
Most successful artists will generate the bulk of their income from live events, sponsorships, commercials, celebrity appearances, and so on. More top artists will give away their music, aiming to use it as a way to grow income from these other sources.
Future of the film industry and gaming
Compared to the drastic transformation in the music industry, the film industry will change rather slowly, with more mega-budget films, and astonishingly realistic imaging of imaginary creatures, worlds and events. The industry will struggle to generate enough quality output to satisfy ultra-high resolution home-based cinema, just as TV and cable companies will struggle.
Most film-making will continue to be directed at the US market – responsible for 31% of around $100bn global film revenues. America generates 29% of global entertainment and media sales, followed by China. The global market will be worth $2 trillion by 2017.
Boom for live cinema
Piracy will remain a constant and annoying issue, but will not prevent rapid growth in cinema audiences across the world, attracted not only by breathtaking visual immersion but also by excitement in sharing the experience.
As with music, most videos in developed nations and emerging market cities will be downloaded or streamed for personal viewing by 2025, with collapse in both DVD and Blu-ray sales.
Films in 3D will continue to impress and disappoint, depending on audience and genre. Expect wide ownership of home video screens that allow small groups a reasonable 3D experience without wearing glasses. The first curved ultra-high resolution screens are an early indicator of what will be possible.
Expect huge growth in on-demand watching, while big live TV shows and sporting events will continue to command huge viewing figures (people like to be virtually joined in a communal watching experience – we used to call it watching TV).
Augmented reality and total immersion gaming
The film industry will continue to merge with gaming, with interactive HD animations and sequences by ‘real’ actors. Headsets will be more widely used, with higher resolution screens and smoother response to head movement. However, headsets will be rejected by most gamers for day-to-day use before 2025, because of eye strain, weight, lack of comfort, cost, being uncool, short battery life. That will not stop expensive experiments, as we have seen with the $2bn spent by Facebook on Oculus. Expect worries about heavy use of 3D glasses in young children.
Augmented reality glasses will be used in a wide range of specialist applications ranging from those aimed at surgeons (to enable them to see extra data), and tourists (to wear when visiting museums or galleries or monuments), to the military.
Future of infotech
The digital revolution has hardly begun. You will see more changes in the next 15 years than since the start of personal computing in 1975.
Microsoft and Apple will both face a similar challenge over the next decade: how to find radical innovations to drive business growth, when both companies are burdened by a range of well-optimised but ageing products, and when the market for computers continues to be wiped out by that for larger mobile devices.
Microsoft will still be addicted to revenues from Windows and Office software, well beyond 2023, plus a growing range of business enterprise products. Microsoft will struggle (and possibly fail) as a global mobile company. Most new investment and revenue growth by 2025–2030 is likely to be from cloud-based services.
Apple will need to reinvent itself
Apple led the way with a generation of simple, usable, elegant products, which transformed consumer expectations. However, Apple will need at least two more breakthrough products between 2017 and 2020, each equivalent to the first iPhone and iPad, totally different to anything seen before.
Apple will be threatened by giants like Samsung Electronics, which is likely to dwarf it by 2020. Apple computers, iPads, iPhones and TVs are history – innovations will be incremental, blurring the differences between these items. The next range of i-devices will be much smaller and larger. Apple will invest heavily in a rapidly growing range of wearable tech, going far beyond the i-Watch. Apple will also make larger smart TV hubs, with total entertainment, web, mobile, home integration, as part of deep investment in home automation.
Expect big investment to integrate all channel activities into a joined-up experience. So the iPhone knows you are watching a TV quiz show, and the iPad knows you are also on the phone to a call centre while searching for better online offers. Every other manufacturer will follow.
Quantum computing means a million times faster
We will see huge investments by government secret services and military into quantum computing (QC), mainly to crack strong encryption. QC will also be used for complex tasks like long-range weather forecasting and simulations of nuclear weapons. In addition, QC will transform personal computing, because we will all be able to access QC power in the Cloud, as we will see later.
For ordinary computers, Moore’s Law will continue for the next 25–30 years, that is, computing or storage capacity will halve in price for the same capacity every 18 months. But traditional computing will eventually be limited by binary electronics. Each bit of data is stored in an on or off state. And there will be limits to size and speed of on/off memory stores – whether magnetic, or on chips.
Quantum computers use qubits, not bits. Each qubit can have many different forms, based on varying properties of atoms, ions, photons or electrons. Imagine writing a book in Morse code using just dots and dashes, and then writing the same book using an alphabet or Chinese characters. That is why a single event in a quantum computer has a million times more processing power than in a normal computer. So a secret military code that takes two years to crack will be decoded in minutes or seconds.
The next great digital revolution
We need to take a close look at three areas that will really matter to our future: the Internet of Things, Big Data and Cloud Computing. Each has been around for a while, but it is the combination of all three in new ways that will create the revolution. If you are not technically minded, you may be tempted for a moment to skim-read the next few pages, but your entire future may depend on what is described here, explained, hopefully, in a clear way. Indeed, the whole of our national security, personal privacy and freedom could be at stake.
These three factors will merge to create immense and lasting opportunities for good, but also for serious abuse on a gigantic scale. We will see huge benefits for all manufacturers, marketers, managers and customers – but also huge benefits for all hackers, terrorists and spies. The latent power of what we are talking about cannot be overstated.
The truth about the Internet of Things
The Internet of Things will be the biggest single advance in manufacturing, wholesale, distribution and systems control for 20 years. It’s all about tracking, monitoring and management of billions of different things.
At least 30 billion different items will be communicating with each other online by 2022, rising to 100 billion by 2030 – hardwired into the web, or using radio-frequency identification devices (RFIDs). These are tiny chips, the size of a grain of sand, plus a small aerial, which is used to power the device and receive or transmit as needed – so-called near-field communication.
More than 6 billion new RFIDs are already entering the environment every year, attached to clothes in shops (1.5 billion), food packaging, airline baggage, supply chain components, farm animals and pets, tickets and passports. Airbus has tagged 1.5 million different components used in its latest planes. RFIDs are already a $20bn a year market. It all adds up to greater efficiency, fewer production line faults, automated supply chains, fewer stolen goods and reduced human error.
RFIDs have limitations: it is hard to read them in general groceries because water, foil and steel can interfere with radio signals, and transmission distance is usually only a metre or two. More reliable is a permanent web connection, using a fully powered wireless device such as a watch or a light.
Expect your fridge to be able to sense changes in outside weather for example, making extra ice on a very hot day. Expect your gas boiler to send an alert if it breaks down. Expect your alarm clock to wake you up earlier if it is snowing.
Human bodies linked to Internet of Things
Human beings are already part of the Internet of Things, despite health risks. Some people have already injected themselves under their skin, with the same RFID devices as vets use in animals. In 2002 VeriChip gained a US licence to implant RFIDs into humans but in 2007 it was revealed that hundreds of animals with RFID implants had developed cancer, and the company collapsed.
People have injected RFIDs under their skin as keys to gain access to secure facilities. The Baja Beach Club, a nightclub in Rotterdam, has used VeriChip implants to identify VIPs and to enable them to pay for drinks.
In the meantime, much larger GPS devices are being widely used by police services in countries like the UK to tag convicted criminals and others who are under house arrest. They are also being used by worried parents to track children. Expect rapid growth of all kinds of people tracking, mainly using hidden Apps on mobiles. Expect abuse by oppressive regimes to control large numbers of dissenters, as well as by family members to spy on each other.
However, the Internet of Things also includes wearable devices implanted inside your body: monitoring or controlling your health, sensing blood sugar, heart rate or a host of other things, connected at all times to health services.
Expect many new hacking threats, and added worries about privacy. What happens, for example, if a terrorist hacks into 100,000 driverless cars while they are on the road (the average car already contains 60 processors and 10 million lines of software coding). What happens if hackers threaten to take over the controls of 35,000 pacemakers?
Big Data – why it really matters
The Internet of Things is generating an even greater explosion of so-called Big Data (vast stores of information about people, systems, and activities). The big question is what will we do with it all? Around 90% of all the data we have ever created has been generated in the last two years – 2.5 million trillion bytes a day. Past data will be one of the world’s most important assets, but how will it be protected from attack? The people most excited about Big Data are in marketing departments of large companies. However, most companies will struggle to get a return on their investment in this area, and losing data to criminals will be a constant nightmare.
On the world’s busiest websites, up to 1,300 companies are watching everything you do. Even if that data is anonymised, it is often very easy to work out who you are from clues.
More than 40 trillion gigabytes of data will be produced a year by 2020 – over 5 gigabytes for every human being. The volume of data collected each year by US companies alone is large enough to fill the Library of Congress around 20 times over. New generators of data will include networked cars, smart grids and smart electric metering, and smart buildings.
Big Data will take many forms, including:
your phone location – second by second for the past 5 years
all your shopping and online habits – every payment made/page searched/time per page
social media – every friend you have and what you talk about
global product tracking – every component, every moment
public transport times – every bus, every train tracked
medical statistics – every one of your own test results, diagnosis, treatment; continuous health monitoring using mobile Apps
bike accident locations – every street, time, date, age, driver.
Big Data already reveals the truth about YOU
What happens when data is used to build a complete picture of your daily life? Many companies sell your data without permission. One data firm has already built a billion personal profiles, each containing an average of fifty different pieces of information. These are used to target online ads that already account for 25% of the $500 billion global marketing spend.
As we saw when Snowden leaked secret US documents in 2013, every intelligence agency is also using Big Data to track people, detect patterns, prevent or solve crimes, and for political surveillance.
Big Data will save money and lives – but over-reliance will be lethal
Expect fortunes to be won (and lost) investing into Big Data companies, and huge demand for experts in pattern recognition. Here are some examples of the value of Big Data:
At the Hospital for Sick Children in Toronto, all data is analysed about babies leaving the neonatal ward. As a result, doctors discovered how to predict blood infection 24 hours before a baby becomes ill, by spotting newborns whose heart rates vary less than normal.
