2010 Saw the iPad; 2011 May See Cord Cutting Get Real

Alcatel-Lucent’s Allison Cerra, vice president of marketing, communications and public affairs in the Americas Region, and co-author of "The Shift: The Evolving Market, Players and Business Models in a 2.0 World" has made some predictions for 2011, and has also taken a look back at 2010 at what she calls "game-changing shifts."

For 2010 she writes:

1. The iPad changed everything. Apple redefined mobile. Consider the following: In terms of quarterly revenues, the iPad alone exceeded what Apple as a total company generated just ten years ago. For the first time in 14 years, Apple’s revenues (not just its valuation) surpassed Microsoft, and innovations like the iPad were no small reason for this impressive feat. Not only did the iPad and multifunctional devices like it shift the economics in favor of the user, such a benefit will lay the foundation for a more hyper-connected market as a result. And, it is these very connections that now can be further monetized across the ecosystem with innovative business models to benefit all stakeholders.
2. Content virtualization reached a tipping point. PricewaterhouseCoopers recently anticipated that sales of digital music will exceed physical for the first time next year. Netflix now accounts for 20 percent of US Internet consumption. Over 24 hours of video are uploaded to YouTube each minute. 2010 marked the first year when legal PC gaming downloads surpassed sales of disc-based alternatives.
3. Meaningful use requirements catapulted healthcare providers into a new age of patient identification. The electronic health record (EHR) was and remains at the center of this change. The security of the sanctity of one’s sensitive patient information has only scratched the surface of consciousness that individuals possess about privacy considerations.
4. Social networking converged with search, casual gaming, mobile, virtual goods… Facebook made history this year when the time visitors spent on the site surpassed that of Google sites for the first time. Facebook appears to have cracked the code on the mysterious business model challenge of monetizing “free”. From location-based services to search cannibalization to casual gaming, Facebook is more than just a place to connect with friends.
5. Millennials stormed the workplace. Millennials have proven themselves an unstoppable force in the consumer market. Their insatiable appetite for anytime, anywhere content and connectivity on their terms has transformed the complexion of a 2.0 market. In the next four years, this behemoth generation is expected to represent a third of the workforce and they are already leaving their indelible mark. Unlike its predecessors, this generation is characterized by its penchant for bringing technology behaviors from the home to the workplace (rather than vice versa). Think social networking in the enterprise is a passing fad? Not likely with the architects of a social networking world entering the ranks in critical mass.

If those are the twists in the road in our rearview mirror, writes Cerra, what shifts can we expect as we embark upon our 2011 journey?

1. The Internet of things gives way to the Internet of identities. With the proliferation of devices connected to a network comes a world where one’s digital footprint covers far more territory. Want to know if Grandma touched her pill bottle today? Device and network intelligence can tell you. Want to know where I’ve been? My mobile device has been able to tell you that for some time. I’m not suggesting that the Internet of Identities becomes a major force in 2011, but we’re already seeing the privacy concerns heralded by advocates worried we are exposing too much of ourselves in a virtual world. And, the advent of new identities, such as the EHR, magnifies these privacy concerns.
2. Cord-Cutting is more than a sign of the times. For all of the headlines surrounding video cord-cutting, critics would argue it’s much ado about nothing. After all, only a fraction of households have completely cut the cord on paid television. And, many would argue that this anomaly is merely a reflection of the recession. While it may be true that cord-cutters are the current exception to the rule, there are echoes in history protecting establishments that have since seen radical transformation (with the erosion of landline voice and the digitization of music content being obvious examples). 2011 will be the year that defines cord-cutting as more than a recessionary blip. While complete cord-cutting may still be relegated to the niches, consumers will increasingly look for more cost-effective alternatives to premium content options.
3. The Cloud gets serious. We have literally been talking about cloud computing as an industry for decades. Yet, even mentioning X-as-a-Service has been likely to provoke a roll or glazing-over of a CIO’s eyes. Security issues have been the primary stumbling block in the past (do I really trust a provider to warehouse my most sensitive data or be responsible for my computing resources?). However, the need for more economic business models – those governed by opex models that allow an organization to flex its IT resources – is becoming more important in a recessionary time. Further, with Millennials entering the workforce ranks and expecting to bring any device with them, the notion of restricting employees to a certain device portfolio is becoming more problematic. The cloud must become more secure and intelligent. Technology exists to accommodate these challenges and 2011 will be the year opportunistic providers enter this space with greater vigor.
4. A “new” economy gets mobile fuel. Consumers proved in 2010 they rely on their mobile phones for commerce. For example, eBay recently reported it saw sales in the US from its suite of mobile applications nearly double on Black Friday. More interestingly, the company is making news through its PayPal service, which accounted for 37 percent of the parent’s company revenue in the third quarter of this year. And, the new frontier of microtransactions is the mobile device. Not only has PayPal set its sights on mobile, but Google and Apple have also signaled the same. Add to that a new joint venture formed by AT&T, T-Mobile and Verizon called Isis, which uses near-field communications to allow consumers to pay with their mobile device by waving it at a checkout terminal, and you now have a horse race of companies seeking to introduce their own mobile.
5. Broadband gets untethered. With major providers like AT&T, Sprint and Verizon committing network buildouts and an equally burgeoning arsenal of 4Gcapable devices entering the fray, 2011 will be the year we see wireless transformed. Consumers will get the much-needed boost they have been craving to download and upload multimedia content without speed bumps in their way. But, perhaps more importantly, enterprises will benefit from enhanced productivity gains yet to be realized. And, in an economy stretching for efficiency in every dollar, that’s a welcome story for all of us.