By all indications, 2012 will be a tough year for the electronics industry and most other players in the global economy. Rather than improving, the fiscal and debt troubles in Europe seem to be spreading. The news that borrowing costs for Spain and France have soared to 10-year highs adds to problems in Italy where newly-appointed premier Mario Monti has declared the nation is facing an emergency.
In the electronics industry, most of the leading OEMs and component suppliers have issued dire warnings about their outlooks for 2012. (See: Infineon: Cooling Off for 2012 and Siemens Reports Growth but Expects Slower 2012.) One would safely assume investors are fretting and seeking safe havens for their money in this environment, but that view would be only partially correct. In fact, the focus of an investment conference I attended recently in New York couldn't be more different. Instead, the participants were looking farther out and discussing issues, platforms, companies, and strategies that they believe will dominate the economy in the near future.
The subjects discussed -- it was a private meeting and I can't disclose names or other details -- included the future of technology platforms (think Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL), Facebook (Nasdaq: FB), and Google (Nasdaq: GOOG)), retail metamorphosis, the cloud, and whether educational institutions would "adjust enough to meet the hyper personalized demands of prospective students or see an acceleration of routing around institutions." Participants also discussed technology issues such as the future of Google's Android operating system and whether Microsoft would be "able to penetrate more successfully," and "what investors should know about the various ecosystems."
At a session I attended on the competitive landscape involving Google and Facebook, many participants (and these, believe me, are either authorities on the field or investors) dissected the future of the two companies and weighed in on the numerous challenges as well as opportunities facing the two platforms. (Another session focused on Amazon versus Apple.) Facebook, they said, will continue to be troubled by the tension inherent in its inability to decide whether it wants to be a "private or public platform" and the possible eventual wearing off of its "cool" factor.
Also, critics wondered whether businesses will be happy yielding proprietary ownership of their brands to Facebook. In other words, will a company -- let's call it WidgetsMaker -- be happy being known in cyberspace as www.facebook.com/widgetsmaker, or will it buck this trend and demand to be known on Facebook as www.widgetsmaker.com/facebook?
Hold your horses if you are rooting for Google to win over Facebook. Participants in my session voted on which of the two companies they would put their money into five years from now. The quick poll asked participants to make one of four choices: one, Facebook only; second, Google only; third, both Facebook and Google; and lastly, neither. The results were stunning. Only a handful in a room of more than 40 people would put their funds in either company alone five years from now, while half the room would invest in both companies within the same timeframe. The other half is looking for and expecting something else, something new.
The problem Google faces, according to some participants, is that its search engine -- the main source of revenue at the company via advertising support -- is clashing with the march of technology. The Web was a chaotic place when Google made its debut, and the company has made a fortune out of bringing some order to the Internet by digging up information for users. However, with the advent of smartphone and tablet apps and social media outlets like Facebook -- which don't lend themselves as easily to search -- Google is hitting a brick wall. So much unsearchable data that the company cannot catalogue and categorize now resides outside the walls of the Internet. If apps win over the Internet, Google is "screwed," as one participant said. But that may not happen if Google transforms itself. If it fails to do this, the slide may not be that apparent for another five years.
All of this got me thinking about the future, and especially the next five years. Here are some additional questions from the conference. What platforms will dominate the technology market by 2016? Which companies will be the Zeitgeist (today's Apple)? Would Facebook and Google still be as dominant? Would telecom service providers still be able to control customers' use of broadband? What new products will emerge as must-have similar to smartphones? What would be most important to enterprise IT customers and the equipment and consulting services vendors? And, critically, which five IPOs of 2011/2012 will prove to be great companies with great business models, and which will reveal mediocrity?
Five years ago, the iPhone made its debut before powering on to dominate the smartphone market, the tablet PC segment had not gone mainstream because the iPad had not been born, and Android was just a word associated with aliens from another planet. So, let's collectively project another five years into the future. Let me know what you think the technology landscape would look like five years from now and which new products we might be talking about.
@Parser, the "Provide Feedback link" is an excellent feedback loop for Apple that is in real time. It cuts out independent polling groups and gives the viewer opportunity to visit the site. I applaud the use of Apple products by the design engineers. A real life experience and test of functionality at the same time. Thanks!
Parser, Apple isn't doing traditional consumer survey but it is still getting feedback on its products from its customers. The company is getting information on the iPhone 4S not just from Consumer Reports but also from users directly. The information it gets may show up in the updates to the products or as a new product.
@Parser, You are right. Sometime we get fixated on "marketing and consumer feedback" we forget there are different ways to get consumers to provide information on what they want.
They don't do customer surveys, but each major Apple application like iTunes, iPhoto or Keynote has a pull down menu with Provide Feedback link, which takes you to Apple site where you can write what does not work or what you would like to see implemented. On the other hand I believe Apple engineers use their products themselves and discover cleaver ways to do things from a user perspecitive.
Some people say refining and others would say innovating like who would had put investment money into new cell phone when at that time Motorola, RIM and Nokia had already flooded the market.
@Parser, Apple actually prides itself on doing things others haven't thought of or done before. The company, reportedly, doesn't even do customer surveys to determine what its consumers might like. It just gives consumers what it believes they would like because, according to Apple, consumers really don't know what they like until they get it.
I can't say I agree completely with Apple but as someone once told me, "test your ideas first, and then if they beat mine, I'll adopt yours." Apple's strategy is tested so it's difficult telling the company to try something new. And, just refining what someone else has done or is doing won't make a company the best in its business. That's why Apple is selling the iPad at full price and RIM is selling its Playbook at a hefty discount!
When the two companies go head to head a third one needs to examine what these have done good and what bad and come up with a third solution. Was Apple able to do these comparisions very well in past?
@Electronics862, But how about a replacement for the two of them? If they won't replace one another, competitors aren't waiting to see them merely cannibalize each other. The competition is coming up with new things, new ideas and projects. We may get a platform that is easier to use and more versatile and, just as there was no facebook at the start of the last decade, it may exist only as a sidebar towards the end of the current one.
@Wale, Innovation is important to success in the electronics industry and the winner is the company that can come up with the best product or outwit other players. The barriers to entry are falling faster than innovators can erect new ones, though, and that is a concern to companies because with each innovation, the window to gain profits from inventions is limited.
@Hospice, I wonder too if Google isn't trying too hard to offer a bit of this and that. The extension of its operations to so many different sectors in high tech may initially be a good thing in that it expands and diversify sales but it could also result in brand dilusion or even brand perception problem. At some point, a company has to decide what its core message would be and this difficult task would only be made more daunting by the expanded operation.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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