Deloitte's technology trend outlook 2013

Chung Sung-il is the Korea technology, media & telecommunications leader at Deloitte Consulting.

By Chung Sung-il

Deloitte provides an in-depth view of key developments over the next 12 to 18 months that are likely to have significant medium- to long-term impacts for companies in the technology, media and telecommunications (TMT) sector and other industries. Our view is that across every global industry, knowing what is likely and unlikely to come next in TMT trends is a key competitive differentiator in our fast track advancement in the ecosystem.

For 2013, we expect key changes to include an upsurge in momentum behind Long Term Evolution (LTE) mobile networks, the start of preparations for the next generation of high definition television, known as 4K, the first one billion shipments year for smartphones and increased challenges for standard passwords. We believe key non-changes include many hundreds of millions of new smartphone owners continuing to use their data capable devices mostly for voice and text messages; further we expect the PC to remain a dominant device, as measured by usage rather than just units.

Smartphones ship a billion but usage becomes simpler

For 2013, we expect that global shipment of smartphones, defined as any device perceived by consumers as being a smartphone, will likely exceed one billion units for the first time. The installed base of all smartphones, per this definition, is likely to be close to two billion devices by year-end.

Connected TV: hits and misses

In 2013, Deloitte predicts that tens of millions of connected TV sets will sell globally, and the installed base of TV sets with integrated connectivity should exceed 100 million. By the end of the decade, the vast majority of new TV sets sold in developed countries will likely incorporate two-way connectivity. But despite the forecast boom in sales, only a modest proportion of connected TV sets sold in 2013 and beyond — 15 percent at most — are likely to be purchased solely or primarily for their integrated two-way connectivity. In the vast majority of cases price, size, thinness or bezel width are likely to be the primary reasons for purchase.

The bottom line is that unless must-see content at a competitive price point is made exclusive to connected TVs, for example via a channel or portal that is only available via connected TVs, the need for connectivity in televisions is likely to remain marginal. TV manufacturers do need to consider ways of differentiating their products. They should determine precisely which functionality and features customers are most likely to value. Broadcasters, in considering which services they should offer, should keep track of the installed base of devices on which their content could be received and consumed. And they should also monitor carefully the extent to which new forms of consumption grow in popularity.

Not all mobile advertising is created equal

We also expect that mobile advertisements shall be distinctly divided for smartphones and tablets. The difference in screen sizes between the two types of devices is driving fundamental differences in how they’re used and hence the value of the advertisements that users see. Even the biggest smartphones only have about 11 square inches to place display advertising, let alone content. On tablets, the larger screen offers four times the display area, which ratchets up usability, and enables a far greater role for display advertising. Compare the 2013 display revenue forecast of about $7 per tablet to that of smartphones, at about $0.60 per device.

Rumors of PC’s death are greatly exaggerated

We predict that more than 80 percent of Internet traffic measured in bits will continue to come from traditional desktop and laptop personal computers. Some have suggested that strong sales of tablets and smartphones mean that the PC is becoming an anachronism. Some enterprises are even looking at replacing PCs. But for any employee who has to create content or enter data, the traditional PC is a far more useful device. And while not matching the explosive growth of smartphones and tables, PC sales have actually continued to increase, too. We are not in a “post-PC era.” We are in the era of “PC Plus.”

Your “Secure” password won’t be

Deloitte predicts that in 2013 more than 90 percent of user-generated passwords, even those considered strong by IT department, will be vulnerable to hacking. Inadequate password protection may result in billions of dollars of losses, declining confidence in Internet transactions and significant damage to the reputations of the companies compromised by attacks. What makes passwords vulnerable? It’s partly us. We use trick to make memorizing passwords easier. For example, we select passwords for their patterns and not their random sequences — and re-use of our passwords on multiple accounts. And it’s them; there have been advances in password-cracking hardware and software, and hackers can now band together — referred to as “crowdhacking” — using thousands of relatively slow machines to each attack a different part of the puzzle.

Existing players will rule the OTT market

Thanks to brand loyalty, exclusive rights to familiar quality content and awareness, legacy broadcaster’s OTT services will have more appeal to consumers than some pure-play OTT provider and OTT divisions of larger companies not in the TV industry. Viewers will use broadcasters’ OTT services principally to “catch up” — Deloitte estimates that more than 75 percent of programs will be watched within a week of their initial broadcast.

Larger screens need more dots

We expect that the television industry will commence the roll-out of the next generation of high definition (HD) TV, known as 4K, which will offer four times higher resolution than the current highest standard HD. Larger screens, advances in video games and rising expectations for higher resolutions across all screens are driving the move to 4K. to meet expectations for higher resolution, the consumer electronics industry will start to roll out the 4K TV set models — on which pixels will be invisible from a meter away — will be available by year end. Wealthy early adopters will be the first to own the sets, watching per-recorded or streamed content in 2013.

Calling it “Social” doesn’t guarantee success

Deloitte predicts that by the end of 2013 more than 90 percent of Fortune 500 companies will have partially or fully implemented an Enterprise Social Network (ESN), a 70 percent increase over 2011. ESNs are internal platforms designed to foster collaboration, communication and knowledge-sharing among employees. Because they are social, they are intended to be engaging, encouraging adoption and participation. According to a recent survey, if registration is required, some 20 to 30 percent of employees will not sign up. Of those who register, only a third will read content once a week or more and just 40 percent will make an ESN post in the average month.

To build an ESN that employees will actually use, it’s critical to set realistic expectations and benchmarks. It’s vital to make sure that employees are encouraged to use their ESN and are taught how and why, by demonstrating tangible benefits. Above all, designing an ESN to be part of existing workflows and process may be the tipping point in building engagement and offering real utility.

Bring your own computer?

We predict that in 2013, very few additional companies will adopt a bring-your-own-computer (BYOC) policy, and some of those that already have one will abandon them. At the same time, Deloitte also predicts that more than 50 percent of Fortune 500 companies will allow employees to bring their own computers. The reason for the dual prediction is that there are two common (but different) interpretations of what BYOC means. While the Bring Your Own Device (BYOD) trend changed how enterprises offered smartphones to employees, the same payment model isn’t happing with PCs. Many companies would lose key tax benefits by implementing broad BYOC polices, and there’s too big a downside to individuals being responsible for their own tech support and security. Plus, most employees are usually happy with their corporate PCs, as long as they are relatively recent.

Deloitte’s research for technology trend outlook is to catalyze discussions around significant developments that may require companies or governments to respond. We provide a view on what we think will happen, what will occur as a consequence, and what the implications are for various types of companies. We do not however presume that ours is the last word on any given topic: our intent is to stoke the debate.

This report has been presented as a single report rather than split by technology, media and telecommunications. Deloitte’s view is that developments in each sub-sector are now so inter-linked and interdependent that TMT executives need to be conscious of key trends across all sectors. We are often asked what differentiates Deloitte’s TMT Predictions from other perspectives.

We hope that you find this year’s Tech trend outlook for the TMT sector useful. Again, we would like to remind readers that our aim with this report is to catalyze discussions around significant developments that may require companies or governments to respond.

The only thing sure thing about business in 2013 will be that no one can be sure of anything.

Chung Sung-il is the Korean technology, media & telecommunications leader at Deloitte Consulting.