Sunday, 20 September 2009

Even the Bad Times are Good

(By Richard Holway 5.00pm Sunday 20th Sept 09) On Monday night, I give my 11th “State of the ICT Nation” Presentation for the Prince’s Trust Technology Leadership Group in an event sponsored by BT at BT Tower.

This year it's entitled "Even the Bad Times are Good" and this is a summary for HotViews readers.


Since the economic crisis burst into our lives in Q3 2007, we seem to have been swamped by doom and gloom. As HotViews readers know, we immediately revised our forecasts to three years of negative growth in real terms (2008/9/10) with a return to growth forecast for H2 2010. Most other forecasters are still trying to cover their tracks and come in line. We have so far seen nothing to make us change our forercasts.

But such gloom is far from universal. My first presentation at BT Tower in 2005 was entitled ‘The Shape of Things to Come’ and introduced the chart shown. With a top line of declines, there are some companies and sectors which have done appallingly badly. Conversely others have shown fantastic growth.

The presentation this year concentrates on the areas of technology market have done well in the downturn and gives an insight into the winning areas for the years to come.

Some specifics

Although GDP has fallen dramatically, in the general economy some sectors have boomed. Sewing machines have raced off the shelves as people ‘make do and mend’. Vegetable seeds have overtaken flower seeds as people ‘Grow their own’. Staycations have boosted sales of tents and roof racks and visits to National Trust properties – as well boosting the birthrate!

The same applies in every area of the TMT market that TechMarketView researches.

Although revenues from hardware sales are down dramatically, sales of netbooks are up equally dramatically. HP may be crying but Acer is smiling.

Mobile phone sales are down for the first time in decades. But smartphone sales are up dramatically. Nokia may be crying but Apple is smiling.

Sales of gaming consoles like the Nintendo Wii and Sony Playstation have plunged, but hand held units have held up well. Indeed, there has been a switch to people using their iPhones and iPod Touch units for gaming as sales from the Apple Apps Store testify.

Sales of DVDs have declined as people have switched to HD in the home – as Sky’s continued subscriber growth testifies.

Revenues generated from the sales of recorded music are down as growth in downloads has failed to compensate for declines in the sale of CDs. But this has been more than compensated for by major rises in the revenues generated from live concerts and B2B merchandising. EMI might cry but Coldplay are smiling.

This move to ‘free’ in the music sector is replicated in other sectors. Most noticeably newspapers. I do not think that the subscription model for online newspapers will work. And neither will online advertising compensate. I think that newspapers should use their online content as a marketing channel (as the musicians do) They should use online newspapers to sell other things like The Sun’s bingo and holidays. By the way - that’s pretty much TechMarketView’s model with Hotviews.

In 2003 I introduced Holway’s Martini Moment – the ability to access the internet “Anywhere, Anytime and from Anydevice’. I also introduced you to the Mobile Internet Device (MID). I now have three – my netbook, my iPod Touch and my Blackberry Bold. MIDs demand Cloud solutions. Consumers are now pretty much won over to Cloud.

In 2007, my presentation was all about social networking. FaceBook seems to be the ‘site of choice’ for most (certainly me!) More and more people are using Facebook as their ‘first port of call’. That’s why I have long believed that Microsoft should buy Facebook and make it their portal to the Microsoft Cloud.

In my view, many of the themes outlined above will come together to make 2010 “The Year of the Tablet”. Apple’s upcoming iTablet launch will revolutionise the MID market. Online newspaper and ebooks will become hugely popular. The Tablet will be the gaming console of choice. Why carry a netbook when you can have a Tablet?

In the more enterprise oriented fields of Software and IT Services, almost everything connected to ‘new projects’ has dipped. This includes management consultancy, project implementation and upfront software product sales. But, conversely, ‘Make do and Mend’ has thrived in the business world too providing much needed revenue to the hard pressed software suppliers.

But software providers face an even more uncertain future. TechMarketView research has determined that ‘conventional software product package sales’ will continue to decline for years to come. Although Cloud is and for some time will remain, a very small part of the software market – it is the only sector showing growth. So, if you are not ‘Cloud-enabled’ your future will look increasingly bleak.

In Services, the only really bright spot is any ITO or BPO service that can save clients money in the shortest time. That’s why whenever we visit Paul Pindar at Capita he has a grin like a Cheshire cat. The election of a Conservative Government would boost the UK outsourcing market significantly. Indeed might well finally allow an honest debate on the use of public sector offshoring.

Even a good time for new companies

Many of today’s leading companies like HP, Microsoft and even Google had their formative years during downturns. Downturns always accelerate change – none less than technological change. Established companies with the most baggage are hit by the Double Whammy of reducing costs and accelerating investment to head off intense competition from new, often sleeker, rivals.

But many established companies will achieve that transformation alongside many new companies that will become tomorrow’s giants. That’s why this year’s presentation is full of optimism that “Even the Bad Times are Good”.
Footnote - If any paying TechMarketView client would like a copy of the Powerpoint presentation, please email If you are NOT a client, I'm sure Puni can help you correct the error of your ways!

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