2014 Outlook on Technology
Interview with Eric Openshaw
Mixed global demand due to ongoing economic uncertainties, an emerging class of patent pirates and new avenues to raise capital are among trends facing the technology industry in the coming year, according to Eric Openshaw, vice chairman and U.S. Technology, Media & Telecommunications leader, Deloitte LLP. Read on for his perspective on trends to watch and steps to take in 2014.
What is the biggest challenge facing the technology industry in the coming year?
The technology industry is highly susceptible to economic variances because so much of technology spending today is discretionary, versus in the past when enterprise spending dominated. With tech now heavily skewed toward consumer demand, local economies largely drive how much is purchased. Consumers worldwide seem to have an insatiable appetite for the latest and greatest. However, demand going forward will be determined by constantly changing local conditions, evolving views on perceived value and mercurial consumer tastes.
Along with this macro consideration, a more discreet yet growing concern is the proliferation of nonpracticing entities, more familiarly known as patent trolls – holding companies that purchase patents solely to uncover and pursue patent violations. Patents were never intended to operate this way, so patent trolls sap rather than add commercial and customer value, and they impede innovation. Ultimately, in the interest of intellectual property protection and proper use, governments may need to rethink what patents mean and what their role should be. In the interim, we could see a surge in companies buying pieces of patent portfolios, not necessarily because they want the underlying technology, but instead motivated by fear that pieces of someone else’s intellectual property (IP) might reside in their systems. This is occurring today, and it is massively unproductive.
What trends might disrupt “business as usual” for technology companies in 2014?
“Crowdfunding could change the game for startup companies and entrepreneurs … The ability to obtain small funding amounts from many investors could have a transformative effect on the tech industry over the next several years.”
A major development for the industry came in October 2013 when the U.S. Securities and Exchange Commission proposed rules for “crowdfunding.” Once finalized, the rules will provide the regulatory guidance and oversight for businesses to raise capital through direct investor solicitation. Crowdfunding could change the game for startup companies and entrepreneurs. Next to product development, access to cash is the critical path in bringing an idea to fruition. And, it is increasingly urgent as the life cycle to test ideas and then grow them or kill them off continues to compress. The ability to obtain small funding amounts from many investors could have a transformative effect on the tech industry over the next several years.
Another story to watch in 2014 will be the competition underway to deliver a third mobile operating platform to rival iOS and Android. Windows Phone remains in the mix, along with Tizen, the Linux Foundation initiative supported by Intel, Samsung and others. A major factor in how this plays out will be adoption rates in the important China market. Regardless of winners and losers, one possible effect of the competition is fragmentation of the developer community. At the same time, a third choice could be welcomed by telecom carriers, provided it is a fully fledged offering.
What are some steps technology companies can take to foster innovation and/or growth?
For companies of any size, it is important to focus on “exponential technology innovation” built on proactive, thoughtful planning of the ecosystem the business operates in. Ongoing, accelerating advancements in computing power, storage and bandwidth are providing the platform for disruptive innovations, an impact that is amplified when technologies coalesce into open platforms and ecosystems. To be a shaping force, a company needs to understand the ecosystem it operates in, have a clear vision for why participants would want to join and understand what its relative position is in the ecosystem as an orchestrator or a benefactor. The goal is to leverage assets of many for the benefit of many, rather than pursue winner-take-all strategies.