Deloitte media predictions show unexpected challenges for businesses

Continued congestion in mobile phone networks, vibrant tablet computer sales and modest demand of e-Readers have all manifested as predicted. However, demand for cloud computing has been more limited so far, and mobile search has experienced slower progress, at least for the first half of the year, according to the Deloitte 20/20 Technology & Innovation podcast last week.

The podcast, which assesses the predictions and what these mean for innovation and business, is an update to the Technology, Media and Telecommunications Predictions 2010 report launched in January.

“Unexpected consumer adoption patterns and government fiscal constraints are prevalent as we move into the second half of 2010,” said Paul Lee, director, Technology Media and Telecommunications Research for Deloitte LLP (UK). “To remain competitive, companies need to quickly address these issues, make the necessary changes to their business model, and provide consumers with the products and services they want, at the price point they are not just willing to accept, but which is sustainable.”

Steve Cachia, TMT leader at Deloitte Malta, pointed out: “Malta is no exception and these predictions apply to our local market and local operators will need to adjust quickly.”

The awareness of mobile data congestion is varied around the world. It is most acute in western Europe and North America, but less so in developing countries, even though some emerging markets are starting to promote low cost, all you-can-eat-data packages. However, by 2014-2015, mobile data congestion is likely to be a significant problem everywhere around the globe.

Tablet sales are much higher than expected and will have a significant impact on the computing industry. In January, Deloitte predicted that sales would be in the double digits for the first year, more than 10 million units, while Wall Street’s estimates were much lower at approximately one million. Sales were three million units in the first 80 days alone. Deloitte now expects 12-13 million units sold within the first year, with annual sales of 40-50 million devices per year two-to-three years out.

Government and enterprises have been more cautious in adopting cloud computing – for the delivery of computing services over the Internet – than consumers. Deloitte predicted that cloud computing was going to grow by 50 per cent to a $70-80 billion industry. Companies are still looking at cloud computing but concerns over security, vendor lock-in, and portability are still significant and slowing uptake.

There has been much debate, and little progress about how to monetise advertising in the mobile sector. One approach has been advertising adjacent to a search, while another is advertising within the application. This may change, however, in the second half of the year, particularly as the volume of smart phones shipped continues to accelerate.

Manufacturers of e-Readers have cut prices much faster and sooner than expected. Now, an eReader can be purchased for approximately $150, and by the second half of the year, the price is expected to be in the $99 range. Pricing will determine the growth and sales of this product. In the first 80 days of its introduction, tablet sales matched the total eReaders sales since it was introduced five years ago.

Meanwhile, mobile phone operating systems, visual search and data proliferation look to be the leading industry issues next year. By 2014, 600-700 million smartphones per year will be sold, which is much higher than the number of computers per year. Whoever owns the smartphone operating system is going to own the smartphone market, and therefore determine the innovation seen in the industry.