The Technology, Media and Telecommunications (TMT) practice at Deloitte today announced its predictions for the technology, media and communications sector for 2007, forecasting that the environment’s impact on technology and how it influences the conception, marketing and distribution of various technologies will be a key development.

In addition, it is forecasted that broadband appliances that do not need a PC will vastly increase Internet use in 2007. In the media sector it is predicted that social networking sites will tap into a larger profitable market by charging for privacy.

Commenting on the predictions, Tom Cassin, Head of the Deloitte TMT Group in Ireland said: “2007 is certainly a year in which technologies are moving to the next stage – the next stage of the Internet where a PC is no longer needed and the next stage of social networking where older generations are participating. That said it is important the companies within the sector realise where their key revenues will be coming from and do not overlook the mass-market, simple, product offerings such as text messaging that have proved so successful in the past.” 

Go to the full reports here.

Key trends identified in the 2007 Predictions Series reports include:

Technology

• Technology goes green - As consumers, businesses and governments around the world become increasingly aware of and concerned about the state of the environment, there may well be an escalation in the search for both genuine causes and scapegoats for climate change. While the energy, transport and industrial sectors have borne the brunt of criticism to date, the finger of blame may increasingly be pointed at the technology sector. Technology companies will need to respond, both by building the case for technology’s positive contribution to the global environment (which is likely to be considerable) and by designing products and services that are environmentally friendly.
• Parasitic power to the people - 2007 will also see the technology industry start to deal with one of its most critical problems – portable power. Over $31 billion is spent every year on disposable dry-cell batteries; $6 billion is spent on rechargeable batteries; and over a billion rechargeable batteries are included with the sale of electronic devices. Given that the limits of lithium ion technology may be approaching, it is likely that technology companies will turn to power scavenging solutions which draw energy from the environment around them. Body-heat, ambient light, vibrations and movement may all be harvested to supply supplementary charge to tiring batteries.
• Reinventing the user interface - Over half of all consumer electronic devices returned to retailers are not broken – they have just confounded their owners with their complexity. Consumers’ tolerance is limited to 20 minutes, after which they tend to give up, assume the product is faulty and return it to the store.  In 2007, technology companies will have to make concerted efforts to reduce product complexity. Many will focus on redesigning the user interface, using both existing technologies and newer solutions, from haptics to artificial intelligence. Companies able to minimise product complexity may achieve greater success than competitors with superior, but relatively inaccessible, technology.

Media & Entertainment

• 15 megabytes of fame; one gigabyte of privacy - In 2007, social networking companies should move rapidly to expand both the appeal and the revenue generating capacity of their services. To appeal to older age groups social networks may need to offer privacy – for which users may be prepared to pay to ensure that only their intimate circle, not prospective employers or existing peers, can see their uninhibited moments. Subscription revenues will become an increasingly important part of the revenue mix, potentially offering a range of value-added services – from voice messaging to group chat, from online storage to webpage design.
• Virtuanomics - Real economies are emerging within digital online fantasy worlds. The largest virtual worlds, such as Second Life, collectively host millions of citizens, some spending many hours every day living their virtual lives. The real world value of transactions taking place in virtual worlds is rising steadily, and is likely to continue growing through 2007. The value of this trade may, based on recent growth, become large enough to also attract the attention of tax authorities.
• Video-on-demand may leave you waiting - 2007 should see substantial growth in the number of movies that are made available for download via video on demand (VOD) over the Internet to PCs. VOD’s allure is that it has the potential to exploit the 21st Century consumer’s passion for instant gratification. However video downloads will encounter some challenges in 2007. The key issue is most likely to relate to the meaning of ‘on-demand’. For example, on a typical two Mbit/s DSL network, it can take one minute to download each minute of a movie. Thus in 2007, it may be the case that wanting instant access to blockbusters, a swift walk to the local store may be the most immediate route to satisfaction.

Telecom

• Broadband appliances unlock the Internet - Internet penetration via PCs has reached saturation point. Future consumer penetration will be driven by innovation that does not centre on the PC. A range of small, specialist, simple and relatively inexpensive devices focused on driving demand for services and applications are likely to quickly be adopted by the mass market. The technology industry has the potential to exploit broadband appliances to make the Internet relevant to a greater part of the whole population.
• Net neutrality - The debate around net neutrality will become increasingly vocal and global in 2007. At issue is whether additional government regulation is necessary to protect the vibrancy and potential of the Internet. The debate relates to whether there is a need to preserve the ability of any Internet user to connect to any web site or service without discrimination or interference. But some ISPs and telecoms operators argue that they should be able to establish preferential carriage agreements to generate revenue. Balancing the two sides of the debate will remain challenging. Something has to change in the economics of Internet access, such that network operators and ISPs can continue to invest in new infrastructure and maintain service quality, and consumers can continue enjoy the Internet as they know it today.
• The killer kilobyte - In the telecommunications sector the biggest revenues and best margins have often come from services based on the smallest files and narrowest bandwidth (text messaging, mobile ringtones, voice). However the telecommunications industry focus may remain on high bandwidth applications based around large files (e.g. IPTV, mobile music downloads). As a result, many operators will overlook a larger opportunity sitting right under their noses. Bigger is not always better. Of most appeal to consumers will be kilobyte applications such as email, instant messaging, calendaring, online chat and other simple services that in combination make the mobile device the centre of gravity for all forms of communication.

For a full copy of the report with all the 2007 Deloitte predictions please visit www.deloitte.com/ie. 

Notes to Editors.

The Deloitte Predictions series has been designed to provide a diverse selection of views and thoughts that challenge, inform and engage industry leaders and executives. It neither aims, nor claims to be a comprehensive forecast of every anticipated event.

The methodology used to generate the Predictions series is revisited every year. For the 2007 series Predictions have included inputs from conversations with member firm clients, contributions from DTT member firms’ 5,000 partners and managers, specializing in TMT, and discussions with industry analysts. This series of Predictions has incorporated two additional sources.

The first is a series of 36 interviews with leading executives from around the world on the key industry theme of convergence. This global primary research exercise, spanning the TMT sectors, produced a wealth of insight, much of which is reflected in many of this year’s Predictions. The interviews, collectively published by DTT as a book, Convergence Conversations, are available from www.deloitte.com/tmt.

The second source is a column, Drowning by Numbers, that the Financial Times invited Deloitte & Touche LLP in the United Kingdom to write on a fortnightly basis. Some of the ideas for Predictions have been tested in this column.

About DTT’s TMT Group

The TMT Group is composed of service professionals who have a wealth of experience serving technology, media and telecommunications companies throughout the world in areas including cable, communications providers, computers and peripherals, entertainment, media and publishing, networking, semiconductors, software, wireless, and related industries. These specialists understand the challenges that these companies face throughout all stages of their business growth cycle and are committed to helping them succeed. DTT is a leader in providing strategic, financial and operational assistance to its TMT clients.

About Deloitte

Deloitte Ireland is a world-class firm of expert business advisers, serving senior business leaders who are seeking to protect and create value in a complex, dynamic environment. Our objective is to help our clients succeed by anticipating tomorrow’s agenda with focused, insightful and fresh thinking borne out of our multidisciplinary strengths. We draw upon our specialist skills in audit, tax, consulting and financial advisory both within Ireland and across the Deloitte worldwide network. 

What’s different about Deloitte is our people, who focus on building long-term relationships and are determined to deliver measurable value for our clients’ business. With almost 900 people in Dublin, Cork and Limerick Deloitte is known as an employer of choice for our innovative human resources programmes and is dedicated to helping our clients and our people excel. 

'Deloitte' refers to Deloitte & Touche and any associated partnerships and companies established under the laws of Ireland. Deloitte is the Irish member firm of Deloitte Touche Tohmatsu. For more information, please visit the Irish member firm’s website at www.deloitte.com/ie.