Global recession to transform the Canadian technology, media and telecom industries
2009 Canadian predictions exhibit recessionary trends: cheaper helps, free is better and sharing is good
Toronto, January 20, 2009 — Although the ongoing global economic crisis is projected to transform the Canadian technology, media and telecommunications (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.
Deloitte’s global TMT Predictions are greatly anticipated each year by executives and consumers around the globe and are based on research and input from more than 6,000 Deloitte member firm practitioners specializing in TMT, Deloitte clients and alumni, industry analysts, and leading global TMT executives. They feature 10 predictions for each TMT industry sector and showcase the key emerging global trends that may significantly impact their businesses in the coming year and beyond.
“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,” explains 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:
“As Canada and the world emerge from this recession, the TMT industry will be transformed,” says Duncan Stewart, Director of Deloitte Canada Research. “It will be more profitable, more flexible and even more responsive to customer needs. The lessons learned during these hard times are painful but as a result we will continue to see new and better devices, business models and entrepreneurs emerge.”
“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,” explains 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.”
Each of the three sets of Canadian 2009 TMT Predictions reports are available online and will be showcased in a five-stop, cross-country TMT Predictions road show series in Toronto (January 20), Montreal (January 21), Vancouver (January 27), Calgary (January 28) and Ottawa (February 12). A live streaming video of both the Toronto and Montreal events will be featured in real time.
The 12 most significant TMT trends that will impact Canadian business in 2009 are:
2009 CANADIAN TECHNOLOGY PREDICTIONS
1. 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 — and transform 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.
2. Disrupting the PC: the rise of the netbook — They’re cheap, they’re small, they’re cute….did we mention they’re cheap?
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.
3. 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.
4. 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.
2009 CANADIAN MEDIA PREDICTIONS
5. Putting print out of peril may require stopping the presses — 4 sale: 1 major city nwspapr – $20 obo (or best offer)
The global economic crisis is hitting all industries — but the newspaper and magazine publishing industries are particularly affected. Already weakened by readers and advertisers moving online, the heavily indebted industry looks set to be decimated in 2009, with one in 10 ceasing print publication entirely. While Canadian advertising revenues have not fallen as rapidly as those in the U.S., our publishing industry seems to be heading down the same path. Cost-cutting and online strategies have not been enough to change losses into profits so far.
6. Rising stars take on the megastars: indie is the new mainstream — Be like Feist: 1, 2, 3, 4…smaller acts pack the floor
Cost-conscious consumers still need to be entertained in 2009 — but premium content may be out of reach as expensive headline acts and clubs lose sponsors who had partially subsidized the cost. Minor league teams, fringe theatre, independent music and film should all do relatively well as the superstars go into eclipse — at least for now. With bands like Arcade Fire and Broken Social Scene, Canadian independent music is already a recognized phenomenon. Reasonably-priced Toronto FC games have been sold out for two seasons and there is a significant waiting list for season tickets. Another example will be next fall when the CFL and NFL may schedule games on the same weekend. Are people going to pay $250 a seat to see the Buffalo Bills when the Toronto Argos played the day before for around $25 a seat?
7. The dawn of WiFi radio: 10,000 radio stations in your pocket — It lets you listen while you travel, but knows where you are
While most other media has made the transition to digital, analog radio still dominates today. But in 2009, the availability of reasonably priced standalone Internet radio devices, 10,000 available stations, pervasive WiFi and location-aware technology will push consumers and advertisers alike to turn the dial to the Internet. Imagine a Vancouverite in Toronto on business — able to listen to CFOX and get Vancouver news, but with Toronto ads.
8. Mobile advertising finds its meaning: cell phone ads are the new billboards — Monetizing the screen you look at 50 times a day
Advertising on mobile phones is less than 0.4% of total ad spending last year. But higher smart phone penetration, higher network speeds, better mobile operating systems and, in some cases, a better understanding of the medium means that mobile ads are likely to be the only category of advertising that grows in 2009. Mobile ads should be less expensive than other forms of advertising and have a higher return while addressing an untapped market.
2009 CANADIAN TELECOMMUNICATIONS PREDICTIONS
9. 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.
10. Digital communication loses its message: no email 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 email messages sent.
11. The mobile broadband accident in slow motion: traffic jams on cellular networks — Netbooks and smart phones 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. This is primarily a U.S. and European issue that Canadians will need to address over time.
12. One for all and all for one: no more redundant fibre-optic networks — Sharing the cost of fibre means more speed sooner
The telecommunications industry will likely rethink its approach to fibre 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.
Each year, Deloitte Research considers many more global TMT Predictions than those that make the top 30. One prediction that that did not make the cut this year but that has recently gained importance in the TMT sector both globally and in Canada is outlined below:
2009 BONUS CANADIAN TMT PREDICTION
13. 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 to finally start growing at accelerated rates.
About the 2009 global TMT Predictions
Now in its eighth year, Deloitte’s TMT Predictions is an annual series of global insights that showcase emerging global TMT trends that may significantly impact business in 2009. The global study showcases a diverse selection of views that challenge, inform and engage industry leaders and executives, including 10 predictions for each TMT industry sector. The study also features Deloitte’s outlook, conclusions and recommended action items for each prediction. The 2009 TMT Predictions are based on research and input from more than 6,000 Deloitte member firm practitioners specializing in TMT, Deloitte clients and alumni, industry analysts, and leading global TMT executives. This year, research also included in-depth interviews with 50 TMT C-level executives from around the world. For a copy of all three reports, please visit www.tmtpredictions.ca.
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