Red Herring's Top Ten Trends 2002 - Global Future Report - Terry van der Werff - Speaker - Consultant


	December 5th, 2002

Red Herring's editors lay out their top ten trends in technology and business for 2002.

Red Herring's annual top ten list ranges widely around the intersection of technology, business, government, globalization, and the investing community. This year's list is once again provocative and, in my view, pretty much on target, though I believe their contention that the military trend will be the most pervasive is misplaced. Military R&D, where I started my career more than three decades ago, has always been an important driver of technological innovation. Due to the aftermath of the September 11th attacks, it certainly is getting more press and more funding, but it remains a quite small and, over the longer term, a declining percentage of overall technology investment. Red Herring devotes two pages to each trend, including predictions of consequences, as well as company winners and losers. (The descriptions below are mostly paraphrasings, interwoven with a few of my opinions.)

1. Data central. Data centers will be hubs for Internet communications, based on a "service centric" model. They will provide processing power, storage, and software as online services, effectively becoming a company's central office.
2. Military. The September 11th attacks will hasten the transformation of the military and of internal security (especially airports) to respond to new global realities, based on the primacy of intelligence and widespread usage of such technologies as robot aircraft, night vision, battlefield computing networks, automatic bomb detection, facial scanning, and anti-bioterrorism devices.
3. Nanotechnology. Red Herring touts nanotech as "no less than the next industrial revolution," which I have stated publicly for a decade. Nanotech cuts across many technological areas - materials, heat and electrical transmission, molecular electronics, and miniature sensors. Today, nanotech is at about the same stage of development as biotech was a generation ago. It will blossom faster than biotech, because most of its fruits are not subject to biotech's time consuming clinical trials and Food and Drug Administration regulatory processes.
4. Wireless. The industry will split into two broad segments: running networks, and serving customers. The latter go by the moniker of MVNO (mobile virtual network operator), who don't own transmission capacity, but buy it from the network operators. The business model is similar to the credit card industry.
5. Mergers and acquisitions. The crash of technology shares since early 2000, has brought company market capitalizations closer in line with their earning potential, making them ripe for being bought, in whole or part, by private equity firms. The ten largest of these firms have well in excess of $100 billion in capital to do so. Yes, that's billion with a b!
6. Regulation. The European Commission wields huge power over mergers and acquisitions, with a distinctly different bias from their counterparts in the United States. Broadly speaking, the EU bases its decisions on their effect on competitors, and the US on consumers.
7. Energy. Renewable energy sources - wind turbines, photovoltaic devices, and fuel cells - represent about 1% of the global energy market. However, energy generated from fossil fuels - oil, coal, and natural gas - is growing only 1-2% per year, whereas renewable energy is growing 5-15% per year. While still more expensive than fossils fuels, renewable energy's costs have substantially declined over the past two decades, bringing them into the outer realm of competitiveness.
8. Neurogenomics. This subset of biotech will blossom, providing insights, diagnoses, and cures for central nervous system (CNS) disorders, both degenerative and behavioral. As with any prescriptive drug development, however, widespread availability of the drugs themselves is years away. Ethical issues abound, especially as we deal with the brain, just as they did when we dealt with the heart a generation ago.
9. Devices. Oversupply in the global chip industry will make more powerful, no compromise gadgets available cheaply to consumers, who value functionality, but buy on price. Interestingly, the TV, PC, and Sony's Playstation are the only over-$200 devices that sell in great quantities.
10. Digital media. The buzz is around consumer products, but the future of digital media will be with companies of all sizes to deliver information to employees and customers, inexpensively and on demand.

You would be hard pressed to read these brief articles without becoming better informed and better enabled to use these trends to your own advantage.

Check out Red Herring's Top Ten Trends 2001.
Check out Red Herring's Top Ten Trends 2003.

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