Inside the Information Society: What’s in store? Scenarios for the ICT sector

Each week David Souter comments on an important issue for APC members and others concerned about the Information Society. This week's blog post looks at the relationship between ICTs and post-conflict reconstruction.

What's the future for ICTs and Internet? You’ll find different perspectives and priorities in different places.

At the Stockholm Internet Forum, three weeks ago, for example the talk was of development and rights; reaching the next billion (and the next one after); empowerment, expression and data protection.

At the launch of iDATE's DigiWorld Yearbook ecently in London, today in Paris – it’s been about technology and markets; finding the next business model; reaching the next paradigm rather than reaching the next billion.

What's happening to markets?

iDATE'sYearbook summarises what's been happening in the markets it calls 'DigiWorld' - telecoms, the Internet, TV and video; hardware, software, services. Not everything's as simple as it seems. Four trends (from many):

• Those markets are growing consistently year-on-year if you put them all together - at around 4% a year - but that's less, not more, than current growth in the world economy as a whole (in global GDP).

• Growth's faster in developing markets in percentage terms - 7.4% in Africa and the Middle East, for example, against 3.2% in Europe - but not in cash terms. Europe and North America still make up 60% of these markets when cash value is considered.

• Internet services make up less than 10% of iDATE's 'DigiWorld' markets, but are growing much fastest than the rest - up by 17.8% between 2015 and 2016.

• Smartphone sales are growing still, but PC and tablet sales are falling. The mobile phone is becoming more and more the way we're doing digital – which may mean less devices each in future rather than more.

Who’s driving the markets of the future?

Some writers on ICT from a development perspective argue that the size of markets for mobile/Internet/broadband in developing countries will be decisive in the long run. As phones/smartphones (for example) become ubiquitous in rich countries, IT businesses (they say) will compete to sell more of them in the much bigger, if much poorer, markets of Africa and Asia.

That’s partly true, of course: developing country markets for ICTs are growing fast (see above) and will continue to do so. And that might be decisive if technology were static, but it's not. In practice, because technology is moving very fast, it’s what happens at the cutting edge that’s driving business strategies – the constant innovation of new hardware and services that take advantage of faster, cheaper tech to do more things, more quickly, more accurately, and with better quality.

An ICT business that doesn't frequently upgrade its offer to consumers is going to lose out in those richer markets. So Apple and Samsung, will keep packing handsets with novelties for intensive users in order to keep up market share. And Microsoft, Google, Amazon et al. will keep on innovating services to keep the customers whose data, monetised, provides shareholder value. None of them wants to go the way of Nokia.

What about the future?

For iDATE, therefore, a research consultancy focused on business markets, the clues to where the industry is heading don’t lie in underserved markets in Africa or Asia, but in what’s happening at the cutting-edge: in artificial intelligence, blockchain technologies, autonomous vehicles, 5G, the 'data lakes' that drive machine learning, 5G. They lie, especially, in combining services, offering users one-step access to digital nirvana. I'll write next week about the pros and cons of one aspect of that, the development of 'digital assistants'.

Four scenarios

So where are business strategies based on innovation at the cutting-edge likely to take the Information Society? iDATE sees four possible scenarios, depending on how open innovation stays and how extensively data are monetised. It’s not predicting that one of these will necessarily win out: there might be different outcomes in different parts of the ICT market. I’ll summarise.

Scenario 1: a ‘club’ of a small number of global businesses dominates technology and infrastructure, exploiting economies of scale to increase their market dominance. Consumers like this because it provides them with ‘a finely-tuned user experience.’ iDATE cites Amazon as an exemplar for this model.

Scenario 2: more or less the opposite: a ‘tech’ environment ‘teeming with innovation’, in which ‘many technologies … connect to one another relatively seamlessly’ – seamlessly enough, at any rate, for tech-savvy users to navigate their way around. Bitcoin is iDATE’s exemplar here.

Scenario 3: a ‘low-cost’ scenario, in which ‘new digital solutions are adopted chiefly in response to a need to streamline costs’ compared with older ways of doing things. Disruptive services like Uber (iDATE’s exemplar for this scenario) undercut, disrupt and automate, relying on digital rather than personal service.

Scenario 4: a ‘shield’ scenario in which users, scared by breaches of cybersecurity, ‘put their faith in a small number of players they believe capable of protecting them.’ iDATE here cites Apple; in the past it might have cited Compuserve.

So what?

Which of these scenarios do you think likely? Any or none? Which appeals to you as a desirable way forward? Any or none? Are there alternatives that you’d prefer that might realistically emerge from today’s commercial Internet/IT world?

What’s most significant, I think, is that these four scenarios (and those who think about them) are focused on the direction in which the Internet is going rather than that from which it’s come. What will keep their businesses ahead of the game? What will second-generation digital natives find essential to their lives in the way that millennials have found (say) gaming or Instagram? What will maintain and build their market share? What will add shareholder value?

Two closing thoughts

Two thoughts strike me to end with.

First, how do those with different perspectives on the Information Society – such as development or rights perspectives, governments or regulators – engage effectively with the commercial imperatives that are driving digital tomorrow? With difficulty, I think, but understanding those commercial priorities is a crucial starting point. iDATE’s scenarios seem to me quite a good way to think about them.

Second, are we beginning to move from the age of Internet to a new phase in the evolving Information Society? One in which commercial power becomes more concentrated across a wider range of goods and services? In which end-users relate to wide-ranging ICT service providers in the way they once identified with Compuserve or AOL and many now identify with Facebook or Weibo (see next week’s post) rather than the diverse model of the World Wide Web?

Most interestingly, one in which the Internet is just one part of an Information Society that’s driven by robotics, machine learning and artificial intelligence – rather as telephony’s just one part of what we nowadays mean by ‘a phone’.

Image: Digiworld Yearbook 2017