Lovers of fashion look forward to the September Issue and in the Valley we look forward to Mary Meeker's annual delivery of this year's Internet Trends Analysis, delivered in the 2016 Code Conference.
Some of the information provided about the general state of economy was not as positive as we'd like it to be; the fact that we have an aging population worldwide, global economic growth is decreasing and public debt is increasing in every country are not the best of news, though it has not caught us completely unawares.
However, focusing on the subject matter of technology, the prospects are far from negative and we would like to highlight the following:
- The internet economy is slowing down globally: We all knew exponential growth could not last forever and it seems that internet economy growth is starting to stabilise. There are many factors involved, but the main one is that emerging markets are getting up to speed and the technical gap that existed a few years back has been greatly reduced, which in practice means less devices are purchased. Global growth is relatively flat. Having said that APAC, and specifically India, is still growing. Even though the global purchase of devices (such as Smartphones) has reduced dramatically, APAC is still holding strong as their relatively large young population gets online. That said, 10% of retail sales are now online only sales. How far we've come since 2000.
- There are new opportunities for companies who innovate, increase efficiency, lower prices and create jobs: Online advertising and e-sales are going strong with a steady growth thanks to their constant innovation.
- Voice is the new interface: As voice recogniser technologies get better (now accuracy is getting nearer to 95-99% which is far from the tragicomic experience we all remember a few years back) users shift from typing to voice interfaces. The reasons vary but in a nutshell, voice is perceived as a safer means of communicating with our devices in many scenarios (such as driving, for example) but also because it is faster and nearer to human interaction. Texting seems to be on its way out…Voice search is on the way in…..
- Personalize, personalize, personalize: Users want their online experience to be as "real" and tailored as possible. The overall look and feel of the online experience seems to be heading towards a 1930's department store, where the product and services are completely focused on each specific customer's experience. Consequently, the market is growing for both online advertising companies and product/services providers who are capable of offering a fully personalized service. As Mary suggests: "If there has ever been a call to arms to create better ads, this is it" these ads are the fuel of the Internet economy.
- Bye, bye home screen: Messaging apps have the largest use rate in the market. In time, these apps may rival or even replace home screens as the key point of interaction with user devices.
- An image is worth a thousand words: Online advertisers are finding that by creating new tools which enable users to react to ongoing events in real time (such as a football match) or being creative (by using Brand Filters, for example), users create content (with a strong marketing component) that has a farther reach in most cases than ordinary online advertising. Another observation (albeit an old one, Coca cola discovered this years ago) is that simple, personal advertising that evokes feelings in the target audience has a larger success rate among users.
- Self driving cars are more advanced than you imagine: Although there is still a lot of work to be done in this field, companies like Tesla and Google have fully working prototypes that could be in the market in the next decade. Nevertheless, it is unlikely that they will fully replace the car population in this generation, it has potential to expand hand in hand with shared transport tools (such as Uber of Lyft) thus opening another market opportunity for online businesses: commuting entertainment.
- Augmented reality is the goal: We all had a creative friend or relative who could "see" what furniture or a new wall colour would look like in their new apartment before even purchasing it. Online businesses are now offering this option to the rest of us mortals, by creating apps which allow you to "see" how a particular object in their catalogue would look like in the place you happen to be. The door is wide open for any online businesses who can combine the ability to receive the information that is available online with what a user is experiencing at a particular point in time.
- Keeping data safe: Cybercrime is a problem, and the more data we use to personalize services, the more mechanisms/assurances need to be in place to keep it safe. Fighting cybercrime is an up and coming sector.
Data stands out as the common denominator for all the opportunities listed above. Users need to be willing to provide data so that companies can offer the tailored experience they offer and, in turn, they need to keep the data safe from any ill-intended third parties.
Notwithstanding the above, the 2016 internet trends analysis also maps out the key concernsusers have about the ways companies interact with personal data. Therein lies conflict and the story is not over when we think about data exchange and monetisation. The surveyed consumers where very concerned about:
- If/Where they sell their data
- Where they keep they data
- How they identify me as an individual
- How long they have their data
- Who sees and analyses the data
- How a company gets their data
- When and how they opted into sharing
- How they use data to personalize marketing
In our view, this means there several challenges for privacy specialists to try and balance out what the user wants to receive from an online service with the data it is prepared to give in exchange, mainly:
1. Voice is always on: The privacy concern here is that, in order to have a voice interface working it needs to always be on, so, effectively, it is collecting anything and everything a person says (as is the case with Amazon echo, for example).
Users need to be made aware of this and, ideally, an option to switch it off or ensuring the voice mechanism only captures data if a key word is said (for example, the famous "hey Google") is enabled.
2. To personalize you need data: This is the eternal consumer paradigm. Whereas users are not particularly happy to provide data, they want (and expect) services to be personalised.
Companies have the challenge of effectively informing consumers (in user friendly language) what their data will be collected for and restricting the use they make of the data to the purposes it was collected for. An old challenge that gets increasingly complicated as the amounts of data and the purposes increase and get more and more technical (and difficult to explain in plain English).
3. More data means safer self-driving cars: The efficiency and reliability of self-driving cars relies on data, the more miles they do, the more information they collect and are hence safer for the user.
Users in general need to be aware that these vehicles are constantly capturing data. On the other hand, the data they capture should be limited to the strictly necessary for the purpose: road safety.
4. Keeping data secure: This is still work in progress. We have firewalls, antivirus, layers of security software, encryption and a long etc. but the fact of the matter is that if someone wants to hack you and has the time and resources to do it, they probably will. Data security still has a long way to go and the issues this creates are increasingly evident. With every breach or incident, users are more concerned that their data is not safe and this is an obstacle for development. Users, for example, are unlikely to use a safe-driving car if they fear that there is a not-so-remote technical possibility that someone could hack into the system and cause an accident.
However, there is light at the end of the tunnel. The issue of public perceived safety is not uncommon in any new technology (it happened to cars, jet planes and even films at one point) and as soon as it is perceived that data is "safe enough" users are more likely to willingly provide it in exchange for the personalized services and new tools they so crave.
As the Washington Post puts it: "Taken together, [Mary's slides tell a remarkable story about how better and cheaper information technology disruption is transforming market economies, giving consumers powerful new leverage in the process."The Internet spans the globe but the top 20 Internet darlings by revenue remain predominantly US based. For all our desire to regulate to innovate in the EU not a single European Internet play features in this list. Nor last year (and probably not the next)?!