Trends I'm Watching

Hyper-Growth Niches

Trend: High growth niches include Solid state lighting, Solar power, Wind energy, and High-definition-video.

Tobin Smith of ChangeWave Investing describes four hyper-growth niches at MSN Money. Excerpts below.

Link: Tobin Smith Journal.

...multitrillion-dollar mega-economic, technological, demographic and political ChangeWaves set the fundamental secular engines of growth for the world economy. Now we look inside these engines of transformation for the niche hyper-growth areas (20-40% plus secular annual growth rates out 3 to 5 years):

1. Solid state lighting. The mandated death of the incandescent light bulb. This 100%-plus annualized demand growth wave is HUGE.

2. Solar power. The wave of mandated carbon reduction creates a 40%-plus demand growth wave for the next three to five years.

3. Wind energy. Wind-turbine growth will run at more than 75% a year for the next four to five years, with turbine capacity sold out.

4. High-definition-video. The transformative rise of video-over-IP (YouTube growing 7% per week) and now high-definition video creates the next great wave of infrastructure growth.

Eight Global Trends

Trends: The ascension of the Chinese, Indian, Russian and Brazilian middle class, the economic rebirth of Europe, the world baby-boomer binge, the rise of fundamentalist Islam and radical Islamic terrorism, carbon-emission management, the new oil/energy age 2008-2015, mega-technology, and the $2.5 trillion sovereign wealth fund.

Tobin Smith of ChangeWave Investing lists eight global trends at MSN Money. Excerpts below.

Link: Tobin Smith Journal.

...the most powerful transformations in the global economy:

1. The ascension of the Chinese, Indian, Russian and Brazilian middle class. This is the most powerful transformative, mega-secular macroeconomic event, with roughly 75-100 million new active consumers coming into the world economy yearly. Trillions of dollars of new consumption is turning export-based economies into consumer economies, a world first. The U.S. is only 20% of the world's GDP now, and falling. That's good -- because the pie is getting bigger for all.

2. The economic rebirth of Europe. The birth of U.S.-style capitalism, corporate governance and election of pro-capitalism leadership in Germany, Central Europe and even FRANCE!

3. The world baby-boomer binge. The world's 225 million baby boomers are hitting their PEAK earnings and wealth accumulation period from 2008 to 2015.

4. The rise of fundamentalist Islam and radical Islamic terrorism. Hundreds of millions of human beings now live in Islamic nonsecular countries under nonsecular governments.

5. Carbon-emission management. The adoption in Europe, Japan, Canada, California (more to come) of carbon-emission controls and credits.

Subscriptions on Cell Phones to challenge Web Search?

Trend: Subscriptions to web sites and alerts allow cell phone users to track events and receive incremental information immediately.

Rajesh Jain at Emergic.org descrbes why mobile users with subscriptions will be the next big trend on the Web, especially in places where mobiles are the primary means of accessing the web. Excerpts below.

Link: Emergic: May 16, 2007 Archives.

Search engines are the primary way to navigate the Reference Web. We no longer bookmark sites or even try and remember their URLs; we Google everything. This becomes possible because we trust Google to have made a copy of everything that has been created and appropriately ingested it with its algorithms. Search works very well with the PC screen -- most of the space is taken up by the results with some relevant ads thrown around. This works great for us, the search engines and the advertisers.

As the Live Web starts to occupy a greater importance in our lives, Search on a PC will no longer be the dominant form of interaction. Instead, I believe it will be Subscriptions delivered to a mobile screen. Let me explain.

The Live Web is about events and incremental information. There are a number of things we would like to know as soon as they happen. In this context, the best way to be alerted is to set up an alert. So, when we want to track something, we can set up a Subscription to that site.... The mobile is the perfect device to send out an alert to since we can be pretty sure that the user will see the message almost immediately.

In emerging markets like India, access to the PC is still limited, but mobiles (and SMS for now) can reach over 150 million users.... The mobile thus becomes the ideal device to send people information about the Live Web.

Search does not become irrelevant for the Live Web. In fact, we will still use Search for things we cannot Subscribe to in advance. My point is that Subscription will be the dominant way we interact with the Live Web ? just like Search is the primary way we interface with the Reference Web.

With this change in behaviour and device, the business model will also morph.

Five reasons for the eco-tech boom

Trend: Clean technology could be a major business opportunity.

GigaOM picks five reasons why the mix of tech, business and green is going to be on massive opportunity for innovators. Excerpts below.

My dream: significant breakthroughs will help us achieve energy independence from OPEC in the near future.

Link: GigaOM » 5 reasons for the eco-tech boom.

1). Bigger business revolution than the Internet: Some analysts and investors are starting to call the business of clean technology a bigger opportunity than the Internet.

2). Web as the green organizer: Green is the latest fodder for social networks, web 2.0 services, blogging (us) and videoblogging. Learning about and collaborating on eco-friendly practices is easier now than its ever been with grass roots web tools, a broadband connection and a passionate community. Today Business Objects and nonprofit Zerofootprint Toronto launched an online footprint calculator and social network. Yahoo launched its green site yesterday. And if you’ve never read Hugg, the green Digg, then seriously, go check it out.

3). IT needs earth-friendly: The costs of powering computing is reaching close to the cost of the data centers themselves. Companies like Google that need massive data centers don’t like the sound of that.

4). Gore’s gang — business leaders join in: Gore used to be the quintessential symbol of the intersection of business (savvy investor), tech (he, uh, invented the Internet right?) and green (need we say An Inconvenient Truth). Now all the big business leaders are joining the eco club.

5). Decentralized: In some ways the distribution of digital content driven by the Internet, is going the same way as the distribution of energy - decentralizing.

The Rise of Mobiles

Trend: Mobile communication devices will be the primary connection tool to people and the internet in emerging markets, with different dynamics than PC-based technologies.

Emergic.org describes the rise of hand-held communication devices. Excerpts below.

Link: Emergic: May 14, 2007 Archives

...emerging markets like India and China that will give rise of the next set of global technology companies. These companies will create solutions for a mobile-centric world. Mobiles will be the dominant form of Internet access devices in the developing markets.

...Today, mobiles masquerade as handheld multimedia computers (see the campaign for Nokia's N95). Wireless data networks are near ubiquitous because they are layered on an ever-expanding mobile infrastructure. For consumers in emerging markets, the mobile has rapidly become the centre of their lives, an extension of their body.

...In emerging markets, the mobile is the primary, if not the only, interactive device that people own. This "Mobiles First" and "Only Mobiles" environment and lifestyle is going to very different from that of the developed markets. For example, SMS and not email becomes the dominant form of asynchronous communication. The Contacts on the phone and not the IM Buddy List is at the centre of social interactions.

Yahoo Partners with Comcast

Trend: The era of personalized advertising on contained networks has begun.

Media mogul Mark Cuban sees a significant advertising breakthrough in the Yahoo-Comcast deal. Excerpts below.

Link: Yahoo - Comcast = The Deal of the Year - Blog Maverick

Little has been written about yesterdays announcement that Yahoo would be selling display and video ads for Comcast's websites, in particular, Comcast.net.

What's so special about this deal beyond the sheer size of Comcast and the inventory it makes available to Yahoo to sell its the network.

The one thing that Google doesn't have is a contained network. Comcast does. The implications are significant.

For the first time, an advertising monetization platform, such as Yahoo's Panama, can be integrated into a NON internet video platform. When Comcast serves video from comcast.net to its own high speed data customers, those are NOT internet customers. They are private network subscribers.

In short, Yahoo and Comcast can start working together to develop video content and ad platforms that Google can't touch. Any video that is streamed from Comcast.net can be streamed at bit rates that match the user's throughput, including commercials. If Comcast can deliver on demand video at full DVD quality to PCs, it can deliver commercials at that quality. All without ever touching the internet.

More importantly, since all the users of Comcast.net video are Comcast customers, the two companies can work together to leverage customer data (within privacy limits) to deliver ads that are not only personalized, but also can evolve to be "over the top" of the set top box and be delivered to the TV in the future using Comcasts future switched digital capabilities and OCAP features.

Together Comcast and Yahoo have created an advertising playground that could potentially define the future of advertising on the net. Rules that even Google and Microsoft would have to follow.

The competitive landscape for video advertising just changed, and no one even noticed.

If done right, this is the first step towards integration of integrating advertising from websites

Virtual Gold Farms

Trend: 3D virtual games are becoming a global marketplace that transcend culture and language.

GigaOM describes a MTV documentary about virtual gold farms, gray market companies which collect and sell virtual gold (primarily from World of Warcraft) to wealthier gamers in the developed world.

Link: GigaOM » Inside World of Warcraft Gold Farm, Future of Work

Drawing from an fascinating upcoming documentary⁵ by UC San Diego grad student Ge Jin (YouTube clip from his film here⁶), the MTV segment features interviews with workers and managers of several gold farms, which resemble a cross between a 24 hour LAN party and a very shabby college dorm. By the segment’s estimate, an astounding half million Chinese now make a living - about $100 a month - from the acquisition and sale of WoW gold to US and EU gamers. Why is this is the future of work online? Consider the numbers, youth, and low wages of the gold farmers, and the growing interest in outsourcing tasks online.

In Second Life, a Hollywood production company is outsourcing its Second Life projects to its Vietnamese branch⁸, where highly-skilled workers can create professional 3D environments for a fraction of the cost, were it done here. It’s easy to see how the Chinese farmers of Warcraft might evolve into the blue collar workers of the 3D Internet.

MTV producer Matt Sunbulli put us in touch with Ge Jin, and we asked him about this phenomenon, and sought his own thoughts on its relation to the future of work online.

I think these gold farms indicate that the game platform has the potential to engage more people in Internet-driven economy. The gaming workers in China don’t have skills like English, software or graphic design to participate in other forms of Internet-driven work, but they can communicate and navigate in a 3D game world whose tools and routines they are familiar with… So if more social and economic activities happen in an accessible 3D game world, people who don’t have access to other culture capital but gaming knowledge will be more likely to be included in global interaction.

Sprint Nextel's Hidden Advantage

Trend: WiMax implemented on a large-scale cellular network promises to bring broadband speeds to cell phones, PDAs, and rural areas.

Robert X.Cringely explains why Sprint Nextel has the infrastructure to overcome the weaknesses and leverage the strengths of WiMax. Excerpts below.

Source: PBS | I, Cringely . August 18, 2006 - Sprint Nextel's Hidden Advantage

Get ready for the REAL WiMax, now that Sprint Nextel has finally revealed its plans for deploying the new wireless networking technology in the United States.

I'm not saying that WiMax is bad, just that it isn't all that it has been promoted to be.

So what makes Sprint Nextel different? Everything.

I have long predicted that Sprint Nextel would come to dominate the U.S. WiMax business, primarily because the company has the largest portfolio of licensed frequencies usable for WiMax -- most of those acquired in an early-90's buying spree that cost Sprint more than $1 billion.

Reason number one, then, why Sprint Nextel's WiMax service is different from its competitors is that the company already owns the frequencies, so the effective cost of acquiring them is nothing. Most competing WiMax operations that intend to use licensed frequencies have to pay for those frequencies, which constitute a large part of their network budget. Meanwhile, Sprint Nextel can just move forward and build its network.

...Where any new WiMax player would have to build towers or buy space on them and install or purchase network connections to those towers, Sprint Nextel already has a national cellular network in place with thousands of towers in hundreds of cities, all connected through an existing fiber-optic network. Again, they have more money to spend yet less to accomplish.

And here's an important distinction. Sprint's core cellular network is based on Personal Communications System (PCS) technology, which uses less power and therefore shorter ranges than other cellphone systems. This meant that when Sprint built its PCS network in the 1990s, it had to have proportionally more cells with towers closer to end-users. More towers closer to users works well with the weaknesses of WiMax as described at the beginning of this column.

This disadvantage of PCS turns out to be an advantage for deploying WiMax.

Compared to an ab initio national WiMax network, then, Sprint Nextel's job is a lot easier. Rather than building a new network, they can adapt an older one. Rather than buy new frequencies, they can use licenses bought long ago and feared worthless. Even the multipath interference problems of MMDS are handled by the fact that WiMax is specifically designed to work in multipath environments and even to derive greater range from the interference.

Even the way Sprint Nextel announced its WiMax service was different. They positioned it as the company's 4G wireless data service -- a MOBILE WiMax service -- making it a simple upgrade for millions of existing voice and data customers.

It is a lot easier to up-sell an existing customer base (Sprint Nextel already has 51 million customers) than to create a new customer base from scratch.

Why, then, if it appears to have every advantage, does Sprint Nextel still have to spend $2-3 billion? Because for all the company's advantages WiMax is still difficult to do well. Thousands of towers need to be upgraded along with beefing up the supporting network that will have to carry 10 or more times as much data as before.

This is Sprint Nextel turning lemons into lemonade. It plays to all the company's strengths. Unlike other 3G wireless data providers, Sprint Nextel won't be afraid of people actually using its WiMax system, so they can aggressively market the service. While Sprint Nextel is talking about WiMax as a mobile service, there is no reason why they can't also compete for fixed wireless customers. You don't see Verizon or Cingular, for example, trying to sell their 3G products for use in fixed home or office applications. Some 3G operators, in fact, specifically prohibit using their equipment in that way, because while the network is fast, its total aggregate data capacity is a lot less than you'd expect.

Not so with Sprint Nextel, or at least that's the way it looks from here. With smaller cells and a robust backbone, there is no reason why the company's 4G (WiMax) network can't compete directly with cable modems and DSL, which was the original vision of WiMax , whether it was really practical or not. And as an existing landline voice provider operating now primarily in the backyards of its competitors, Sprint Nextel could mount a devastating VoIP telephony sales campaign using its WiMax network.

Sprint Commits to Mobile WiMAX

Trend: Fast, inexpensive wireless broadband will available next year, and it will jumpstart mobile networks into the next wave of computing and communications.

Katie Fehrenbacher at GigaOM describes Sprint's commitment to mobile WiMax and the implications for partners and competitors. Excerpts below.

Link: GigaOM : » Sprint Details Mobile WiMAX Plans

Sprint confirmed it has chosen mobile WiMAX as the technology for its 4G network and says it will spend between $2.5 billion and $3 billion on capital expenses by 2008. The company says it is working with Intel, Samsung and Motorola, though didn’t specify how much additional money each of those companies is investing in the plan.

Sprint executives said the network will offer between 2 to 4 Mbps, and will be launched in the Q4 2007, with a nationwide rollout in 2008. With that much bandwidth available, Sprint executives referred to a network that will be built to run user-generated content, and enabling subscribers to access “YouTube and MySpace on the fly.”

Sprint detailed some of the reasons for its mobile WiMAX choice, and said the company can create a “mobile WiMAX ecosystem” with 4 times the performance and a tenth of the cost of a technology like EVDO. In a call after the conference Sprint phrased the benefits as providing ten times the combined performance and cost saving over other available networks, but wouldn’t clarify more on this somewhat confusing metric.

All of the cheering on the call was of course at the expense of Qualcomm, which Sprint did not choose for the 4G network, and which builds a business off of owning proprietary IP standards and a closed model. Sprint said Qualcomm’s tech was not chosen for technical differences, among a variety of reasons, and emphasized its interest in mobile WiMAX as a global standard with a business model for building an ecosystem.

...The first winner is Motorola, who looks to have taken a huge early lead over rivals such as Ericsson and Nokia and is in a good position to stave off the coming threat of AlcateL(ucent). The second winner is Samsung, who is right now the biggest WiMax player from a global perspective and can make the most compelling argument that the are The Leader, when dealing with emerging markets (which is a far bigger play than the US in the long term). The third winner is all the small-time players who have already deployed WiMax (well preWiMax and upgradeable to WiMax really) in the 2.6 GHz band. These guys now have the potential to craft nationwide roaming offerings for their customers. They also get a good outlook for an exit plan, as sooner or later Clearwire or Sprint will look to gobble them up, which means it should be easier for them to raise money to continue to build out their regional networks.

Transportation and Broadband

Trend: Less energy is consumed when fast broadband reduces the frequency of travel and commuting.

Excerpts from Peter Cochrane's Blog reminds us why fast broadband can offset travel.

Link: Peter Cochrane's Blog: The GDP threat - Broadband & ISPs - Breaking Business and Technology News at silicon.com

After degrading the broadband definition to much less than 2Mbps, and endlessly wondering why people would want more, and what would they do with it, governments, regulators, telcos, cable cos and ISPs are starting to realise the Japanese and Koreans got it right. A dedicated 100Mbps service is a minimal specification and 1,000Mbps looks like a more realistic target for a vibrant 21st century economy.

Are there any other choices? As far as I can see the only other options are a reduced GDP at a national level followed by a rapid slide down the global economic scale of productivity.

Beyond the creation of new industries and the transformation of the old, internet communication is about the only technology that allows us to offset travel and the associated burning of a lot of oil. But in this regard, we need big screens, hi-fi sound, telepresence technologies and more to make it work. And this we have, except we don't have the bandwidth necessary to get the level of realism of connection and communication to make it really work.

Hopefully the GDP threat will tip the balance where all previous logic, technology, economic and futurism arguments have failed. Fingers, wires and fibres crossed that we can catch up in time - the leaders in the field are way ahead and stealing more than a march!

We need to reduce energy consuming activities — super-fast broadband encourages more telecomuting, teleconferencing, and online education.