Last decade, Next decade

We are now just a few weeks away not just from the end of the year but the end of the first decade of the 21^st Century. Over the next couple of weeks, TechMarketView will be bringing you our predictions for the next decade,

But, before we start that series, let’s cast our minds back to Dec 1999.

Bursting the Bubble

In Dec 1999 I had my first (and only!) appearance on News at Ten with (Sir) Trevor MacDonald. I was being interviewed with Adam Faith (who had set-up the Money Channel), the lead singer of Brotherhood of Man who had set-up an internet investment fund, a grandmother from Up North who had mortgaged her house to buy internet stocks…and me. I still have the recording and my main contribution was to utter the phrase “It will all end in tears” four times.

Forecasting the bursting of the bubble had been a main theme of mine in 1999. 1998 had been a cracker of a year for our industry with 25% growth in real terms. This was fuelled by both the internet and the build-up to Y2K. But Y2K had gone into lockdown in 1999 and we had already forecast that the “Y2K hangover will not go away with the Alka Selzers on 1^st Jan 2000”.

The last issue of the decade of my organ System House was headlined the Emperor’s New Clothes (a title I was mighty proud of!) It also contained the spoof www.freejellybeenz.com (how to turn a silly internet idea into a $15b IPO in six months..) which I then used at the Jan 2000 Regent Conference.

I also had the biggest FT headline of my career when I described Sage’s valuation of a P/E of 184 as ‘North of Stupid’. Sage was considered as the UK’s Best Internet stock bet. Sage shares hit £10. When they subsequently crashed to about £1, the grandmother from Up North emailed me asking “What was wrong with Sage?”. My answer was ‘Nothing – except you buying them at £10”. Indeed, Sage despite growing its EPS in every one of the 10 years since, are still only 230p!

10 years ago, the FTSE SCS Index was 4304 and the FTSE100 was 6930. Ten years on and the FTSE100 is down ‘just’ 25% compared to a massive 85% decline (to 616) for the FTSE SCS Index. So much for long term investment! Indeed let me be so bold as to predict that the FTSE SCS Index will not regain its end 1999 level in my lifetime.

Forecasts for the Internet too pessimistic

It’s the analysts who get blamed for over-hyping the internet. There are two types of analysts – equity analysts (who give Buy and Sell recommendations) and industry analysts (like us) The equity analysts got their valuation metrics totally wrong. But the industry analysts, if anything, underestimated the impact the internet would have.

The real breakthrough for the internet came with broadband. Remember that in 2000 almost every consumer used dial-up. Not only was it extremely slow but, as you paid for the time you were online, you didn’t dawdle. Always on, fast broadband, ‘all you can eat’ for c£15 per month means that internet use is ubiquitous. It is part of the fabric of everybody’s life. It is the 4^th service. We literally cannot live without it.

Play it again, Sam

I’ve written many times throughout the decade about Holway’s Martini Moment. I defined this in 2002 as the ability to access the internet (and listen to The Archers) “anytime, anyplace and from any device”. Remember in 1999, there was no BBC Listen again, no iPlayer.

I achieved my audio Martini Moment several years ago and am well on the way to achieving my video Martin Martini moment too.

Apple of my eye#1

Ten years ago and music was the CD. Our music collections were physical. I have a room full of CD racks for the 5000 CDs I have amassed.

Then Apple introduced the iPod in Oct 2001 and the way we consumed music changed forever. It’s been hugely liberating. I can take my whole music collection everywhere I go.

Some in the music industry rue the day that music went digital. But music now is much better than ten years back. The industry is thriving making far more money from concerts, merchandising, advertising and subscriptions than it does from music tracks. Music is now the marketing channel to other stuff. Where music went in the last decade, so publishing will go in the next.

Apple of my eye#2

For Apple to be responsible for one of the iconic products of the decade is good enough. But, in my books, they made it twice with the iPhone/iPod Touch.

We started the decade with phones used only for talk and text. In 2002 RIM introduced the Blackberry which brought mobile email to the enterprise and Apple, with the iPhone (introduced in Jan 2007), took it to the masses. It defined how we will use MIDs for the next decade.

But the iPhone/iPod Touch is more than that. It is just the most beautiful technological gadget ever produced. It feels right. It looks right and it performs right.

Consumers stick their head in the clouds

Ten years ago there were no ‘social networking sites’. Ten years ago the term ‘Cloud’ did not exist and the concept (variously known as ASP, SaaS etc) hardly registered on anybody’s radar screens.

It was the consumer who really embraced Cloud. Firstly for their emails, then for their photos. But the real Cloud breakthrough coincided with the advent of social networking sites. Sites that could be accessed from anywhere and on any device.

Where the consumer treads, the enterprise now follows. So Cloud and social networking will be ubiquitous in Enterise too in the next decade.

More for Less and less and Less

The four decades of IT leading up to 2000 were characterised by ever increasing % of GDP spent on IT. Indeed, even consumers felt inclined to spend MORE on each new generation of PC or laptop.

The last decade has seen the exact reverse. The UK will be spending less on IT as a % of GDP in 2009 than it did in 1999. Consumers expect each new step forward to be better but cost less. In 2009 I replaced both my laptop and my desktop – they both cost less than a quarter the price of the units they replaced.

Offshore

There was some offshoring in 1999 (indeed Anthony Miller had featured it in his 1996 Regent Conference speech) but it hardly registered. Certainly here in the UK we hadn’t heard of Wipro, Infosys, TCS etc.

Now we estimated that c20% by revenue and c40% by headcount of the UK’s SCS activities are undertaken either offshore or by staff from offshore companies working onshore.

Whether this is a ‘good thing’ we can debate elsewhere. But it is worthy of note that IT graduate recruitment was still buoyant in 1999. Seems now the only place you can get an entry level IT job is in India.

Enough of looking backwards. Look out for our series of predictions for the next decade in HotViews over the next few weeks.

Posted by Richard Holway at '19:07'