Tech Predictions 2014: Storm Clouds Gathering for Watershed Year Ahead

For those of you who follow my postings, hopefully you have already read my list of implausible tech predictions for 2014.  On a more serious and much less satirical note, and in keeping with the tradition of industry observers to look at what lies ahead in the coming year, below are some views from my crystal ball. 

Note: Here is a hint from the headline. I do not believe that from a revenue perspective any segment of the tech industry will have breakout exponential growth (see below for reasons why). I do believe that across the broad expanse of the Information and Communications Technology (ICT) landscape globally it will be a watershed year. Certain trends will come together to create actions, or at least set the stage, for what will have profound impact on industries’ structure and fortunes for years to come. 

Some introductory observations

Let me start with a few high level observations before getting into the particulars.    

First, unlike many similar exercises, I will steer clear from saying 2014 will be, “The Year Of…”  As someone with decades of industry experience, including as an industry analyst and business strategist, this is the time of year to beware of “irrational exuberance.” 

Despite a new year full of promise beckoning, I will resist temptation and err on the side of pragmatism versus enthusiasm. I have learned from experience that with the exception of selective device and now social media markets all so-called tech revolutions historically have been evolutionary.  It is just that the time frames of evolution cycles are getting shorter, quickly. After all we live in what I have called “The Age of Acceleration” where the only constants are change and the speed at which it is increasing. 

I also wish to point out an excellent explanation as to why most tech markets grow incrementally. By all means read the corporate blog of my old friend and industry guru, Tom Nolle, president of CIMI Corp.  Entitled, “Hockey Stick or Hockey Puck?” it provides terrific context for looking at anyone’s predictions.  I will not give away Tom’s very sound reasons why media and prognosticator darlings for explosive growth—the cloud, virtualization, SDN and NFV, mobility to name a few headline grabbers—will experience rather modest success. However, as a teaser you need to understand his term “buyer literacy,” along with the distinctions about “budgets” and “projects.”

Second. To the extent possible I will try to veer away from “keen grasp of the obvious” observations.  Tech prediction lists by and large come in a few varieties. They are about vertical markets (“The Top 10 Tech Trends in Banking’’), tech specific areas (“The Top 10 Trends in Cloud Computing”,) or some combination of the first two (“The Top 10 Cloud Computing Trends in Banking).  

To me, other than serve as on the record confirmation of the conventional wisdom at a high level, the trends seem to be missing context that would provide the reader a reason to take a more in-depth look at what your organization is up to or is facing.   They also have the feel of siloed views of the world where the vendors themselves in virtually every market are calling for much more holistic, integrated strategic and tactical approaches.

So as the final part of this prolog, here is a sampling of convention wisdom/“there will be growth” predictions for 2014. They include: all things related to cloud computing, as in anything and “E”verything that is “as a Service” (XaaS);   the closely related virtualization markets; all things wireless; and the subject of enterprise security including what to do about BYOD.

Guidelines and guideposts rather than predictions

Rather than start with a traditional “Top X” list, given my belief we are entering a stormy year of major transitions, I am listing some trends in the context of how I like to think about and follow them, along with some commentary on a select group of topic these could impact in the short term. I like to think of these as hopefully more instructive than mere predictions. I see them more as guidelines and guideposts for understanding what is going on as it transpires. Not to worry there will be some actual predictions sprinkled in and at the end.

IT Anarchy. I hate to start with somewhat of a downer. However, whether it is in the areas of BYOD, security in general (enterprise and personal), the cloud, virtualization, social media, big data deployments, mobility, mandates on improving compliance, or optimizing the customer experience, IT will continue to lose rather than gain “control” over their “E”vironment.  This will happen even as they are pressured by management to be more responsible, accountable, more aligned with business objectives, and to do more with less.

The obvious enemy will be sophisticated external bad guys.  However, the lack of trust between IT and end users in larger enterprises will continue to be strained and “Shadow IT” will continue to grow as the alternative.  “Hurry up and wait” is not an option in a real-time world, regardless of risks. This has major consequences that will have to be addressed.

The enemies within, of a malicious nature (discontent employees), along with competitors for budget (i.e., marketing having the final say on social media, for example) and a lack of skilled individuals who have the talents to handle the increased complexity of being an IT worker have conspired to create a tipping point.  Who IT is and how it delivers services has reached a stage where there is no alternative to the status quo forcing a frank discussion of this topic as a corporate priority with urgency.    

The silver lining in tipping points is they tend to force change. Here are some things to keep an eye on:

• Preferred vendor lists will continue to get shorter. The shorter vendor lists will drive vendor acquisitions in key spaces like security, hosting and mobility as the likes of IBM (News - Alert), HP, Oracle, etc., move to fill in critical portfolio gaps where ownership is seen as better than partnership.
• More IT functions will be outsourced, and many functions previously considered sacrosanct will end up in the cloud.  The good news here is that so long as IT retains control, as opposed to ownership, this can be seen as a positive.
• The terms “visibility” and “context” will dominate almost every article or product launch as new tools to help IT regain trust and control hit the market and start to gain traction.

Ecosystem Disruptions.  This is a very big topic.  I have written about it many times over the past few years.  At a macro level, the reference here is what to now has been the main battle between Google, Apple and Microsoft (with Facebook and Twitter as notable interlopers) to create “E”vironments that users never leave.  A simple example of what I mean is that you have an Android device, Chrome as you browser (including on the mobile device), and take advantage of all of Google’s various services like Google Search, MAPs, DOCs, Google+, Hangouts, Google Play, etc.

The goal is obvious.  It is to create a virtual monopolization of our time that translates time spent into money.  Advertisers will flock to where we are, and the enticement is all of that data being collected about us for more targeted marketing. 

Ecosystems blur traditional lines of interests that let people look at the mass market versus business markets.  Part of this is because of the proliferation of smartphones and tablets and the so-called “consumerization of IT.”  Part is a corollary impact of said consumerization where the world is becoming datacenter and app-centric.   

That said, here are just a few of a long list of things I am looking for as once again it seems we have reached a critical juncture in ecosystem maturity:

• In the enterprise, as one major aspect of IT regaining trust and control, enterprise app stores will proliferate to accommodate user needs in an “approved” matter. This will be part of a broader effort to not just accommodate BYOD but actually leverage it on a host of fronts.
• Despite skepticism, more and more apps in the enterprise space will be HTML5 as well as in such areas of growth as gaming in the mass market.  The combination will put pressure on app store profitability and change the nature of discussions between Apple and Google and the independent software developer community.
• Speaking of Google, look for extreme pressure to mount on the need to recalibrate business relationships in the Android community as Google’s pushing in the device area leads to not just competitive concerns but raises issues with anti-trust regulators.
• Assuming Microsoft can find a visionary CEO quickly, ecosystem turbulence provides them a real (pardon the expression) window of opportunity to regain their mojo. It is a window that will close quickly.

Industry Restructuring, General.   Because of uncertainties in the global economy in general, and softness in critical geographies (Europe) and markets (ARPU shrinking ins mobile services, for example), M&A activity for the past several years across ICT has been muted compared to other periods.  While I am not a financial analyst or engage in private equity investing, no matter where one looks, there are too many strategic product and service holes to fill in too many areas for M&A not to be robust. 

For your consideration, think about the following:

• Software, network hardware and device makers all need improved security capabilities. With all due respect to my friends in the security business, there are too many players. As enterprise IT vendor lists get shorter, and demands grow for integrated end-to-end solutions that enable IT to have better visibility and things like context awareness for improved policy enforcement and control, as mentioned above will put pressure on the big guys to take the best in breed innovators off the field. 
• Ditto in the much ballyhooed big data/analytics market. Market imperatives are going to force traditional vendors to not want start-ups to get any more traction now that the value proposition for such capabilities has become more evident to the C-levels.

Industry Restructuring, Service Provider. Take your pick as what can happen. What is interesting is not what can but will happen in the next year or two.  Of all the areas in flux, this is the one with the most potential blockbusters. The reasons are manifest. There is urgency is beating competitors to market with a ubiquitous LTE footprint in the mobile area.  It has become apparent in most parts of the world that quadruple play (a physical network ecosystem if you will) is the path to success in the future.  This means the jockeying between fixed-line network service providers, wireless network service providers (fixed, mobile, satellite), cable companies and OTTs will be intense. To use the title of a recent popular movie, “There Will Be Blood.”

In terms of conjecture as to what the need to act may lead to, here are a few thoughts.  It is likely that the rumor that Softbank having acquired Sprint will now go after T-Mobile in the U.S. will be true. This will create some interesting issues for regulators, goaded no doubt by Verizon and AT&T, regarding foreign control of critical infrastructure. For anyone who follows activities in Europe, Telefonica (News - Alert) and Liberty Global are aggressive and not the only ones on the hunter list to watch in the next few months. Google with its fiber experience could choose to start buying fiber networks in key markets rather than build them.

Again because of the urgency it is hard to imagine the year going by without a traditional service provider making an attempt to buy rather than compete against a leading OTT or MVNO.  In fact, with WiFi and small cell deployments having moved from nicety to necessity the possible combinations and permutations of how makes a move on is something IBM’s Watson might wish to chew on.

Emerging areas and terms to watch

Without going into to great detail here some key technology terms/trends and markets to pay close attention to in 2014.  Part of the reason is that we are in the midst of what I call a “Technology Mashup.”  Reality is that terms of art like “Internet of Things (IoT),” “Internet of Everything (IoE)”, “M2M (Machine-to-Machine),” “Unified Communications (News - Alert) (UC),” “The Mobile Enterprise,” “The Virtual Workplace” and things like “Smart Grid” cannot be discussed without talking about the integral role of the cloud, virtualization, mobility and security. In fact, after decades of the promise of “convergence” has become reality. 

Emerging Markets

Wearable Technology: This is not a fad. It also is way more than the over-exposed Google Glass and all of those fitness devices and associated apps for your smartphone. A perfect storm of technology innovation, ecosystem maturity (incubation labs, developer and venture interest, bloggers, etc.) and fashion industry fascination are quickly going to make this mainstream. The industry, as could be expected, has had it fits and starts but it seems to be learning from its mistakes and a combination of style, price points and applications mean the entire personal device-centric awareness and monitoring business is at the point of becoming mainstream.  Remember when most children did not have cellphones and now they all do, this is a market in its many guises (including network-aware clothing) that is going to capture the imagination of the mass market, and quietly become extremely important for improving operational excellence in various business verticals.     

WebRTC.  For those unfamiliar, the RTC stands for Real-Time Communications and the web is your browser.  Without going into detail, most industry experts believe WebRTC deployment will likely be the most profound change in how we interact since the consumerization of the Internet itself.  This is one that no matter where you specific interests in ICT are focused you need to know about. Your business will be impacted, and the speed at which it will happen is going to surprise those who are not paying attention. This includes service providers of all types who best make a full understanding of WebRTC a 2014 priority.

Software-Defined Network (SDN) and Network Functions Virtualization (NFV).  With a type of the hat to the Gartner (News - Alert) Group, the hype curves on these are immense. I happen to believe that despite the hype, 2014 is going to be a foundational year for each of these. The simple reason for the belief is that it is clear the future of the datacenter-centric world involves the transformation of datacenter networks via SDN and the transformation of traditional telephone networks to more agile and applications fluent software ones via NFV. 

Is 2014 going to be “the year of” either of these?  NO!  There is a lot of work to be done on both and the conventional wisdom about major SDN deployments being 2-3 years away with NFV in the 3-5 year range seems accurate. What 2014 should be is the year vendors put aside the desirability of having a “unique” approach to standardized initiatives, and do everything possible to push both SDN and NFV forward as fast as possible. 

History of the ICT industry has a few fundamental truths.  A big one is that because of standards being developed and collectively practiced, all boats do rise when the tide comes in. This is an area where 2014 should be one of good news. There is tremendous industry momentum and cooperation already in place.   

Compliance and Corporate Governance.  The market drivers nobody likes to talk about but which have incredible

Terms

You may wish to create alerts on the following terms. They are technology developments that will help drive markets. Below is the short part of a long list, but it is a start.

• Augmented Reality: An area of huge potential in a variety of verticals and a place where developers will look to exploit the growth of wearable devices.
• Mobile Applications Management, Mobile Device Management, and Indentify Management: security matters! Enough said.
• Neural Networks: Back in the headlines after a period of dormancy.
• Peer-to-Peer Computing (PPC) and Bring Your Own Cloud (BYOC):    The genie is out of the bottle and we increasingly want a customized and more personal experience under our control.
• Counter Measures:  The security industry is poised as a result of all the headlines to start offering capabilities that are proactive and not just reactive. This means devices and software will be able to disable malicious activities and strike back in some instances. We are already seeing this in an interesting form in the car insurance business where insurers can offer discounted rates to those who enable them to disconnect cell phones when cars are in motion. Privacy concerns will drive this market.
• Crowd-sourcing and Crowd-funding:   The wisdom of the crowd, assuming filtering of planted information to tilt results can be implemented, is just getting started and is a trend that can profoundly move markets.
• Virtual Currencies:  In two words, “simply irresistible.” I am not sure I agree with a prediction I saw that postulated that over half of all transactions 10 years from now will use virtual coins of the realm.  However, the attraction is compelling and once governments figure out how to regulate this, the clouds are the limit.
• VoLTE:  A must have for mobile operators as they compete with each other and OTTs.

At the risk of over-staying my welcome, and with a nod to my belief that long-form items rich in content and context will help revive the publishing industry, as promised I would like to close with a few predictions that I think bolster why 2014 is going to be a watershed year.  Aga in no particular order they are:

1. The recent Target data breach is not an isolated incident. Another large U.S. retailer is going to suffer a similar fate and create interest in legislation that mandates rapid adoption of chips for credit and debit cards.
2. As a result of the Snowden revelations, U.S.-based tech companies are going to force the Congress and the Obama Administration to put limits on intelligence gathering activities. The laws will change not because of legislative interest in securing citizen privacy but because of real financial losses resulting from the ripple effects of the revelations.
3. As a corollary to the previous point, Europe will adopt stricter privacy measures.
4. Again in Europe, the EU will find Google remedies for perceived violation of antitrust rules in regards to search to be insufficient.
5. The Verizon challenge to net neutrality in the U.S. will be upheld and the FCC will be forced to go back to the drawing board as other parts of the world adopt net neutrality.
6. As noted above, Softbank will make an offer for T-Mobile USA and despite objections it will be approved.
7. Verizon will buy Boingo (News - Alert). It needs to increase its WiFi footprint dramatically and this will be viewed as better than cooperating with cable operators.
8. Google will buy and ILEC in the U.S. 
9. A social media network that pays subscribers for clicking on ads and search terms using micro-payment technology will emerge which promises advertisers better targeting based on big data analysis of the context of transactions.  This will raise questions on Wall Street about social media company valuations.
10.   Cloud markets that will experience more than average growth will include: security-as-a-service (including mobile device and mobile app management along with increased malware protections), cloud-based contact centers (particularly in the SMB space), and software licensing on a subscription basis. 

You are invited to keep track of my prognostication ability over the course of the year. I also encourage you to send your thoughts on what you see ahead. If nothing else, I hope you agree that no matter where in ICT one looks, 2014 is going to be one filled with roiling changes so fasten your seat belts. The storm clouds are gathering.

Happy New Year!