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Internet of Things June 2020 Viewpoints

Technology Analyst: David Strachan-Olson

The Pandemic Crisis:
Scenarios for the Future of Digital Connectivity and Lifestyles

Contributions by Katerie Whitman
Whitman is a principal consultant with Strategic Business Insights.

Special-Edition Viewpoints

This follow-up to the May 2020 special-edition Viewpoints is part of a set of analyses that investigate the impact of the covid-19 pandemic on technology commercialization. These documents describe prospects for six consequential technology domains by considering three scenarios of interest to planners who are seeking to enact strategic responses to the pandemic. This special-edition Viewpoints about digital connectivity and lifestyles replaces the standard June Collaboration Tools, Connected Homes, Internet of Things, Mobile Communications, Portable Electronic Devices, and User Interfaces Viewpoints.

Also available to Explorer clients is a special presentation—The Pandemic Crisis: Scenarios for the Future of Technology Development—summarizing the scenarios and their implications for the six technology domains.

Digital connectivity and lifestyle companies are seeking strategies to navigate uncertainties brought about by the covid-19 (coronavirus-disease-2019) pandemic. Scenarios provide a useful framework for exploring how digital connectivity and lifestyles might develop through new platforms for remote work, e-commerce, communication, and more. Industry players can evaluate road maps for digital platforms and explore how devices, communications, and platforms might evolve across various scenarios. Interactions among forces also have strategic implications. For example, changing policies for remote work and the development of immersive communications could lead to significant changes in the market for collaboration tools, connected-home technology, and home broadband. High-profile venture-capital-backed start-ups may face many new challenges as their platforms flip upside down, possibly bringing relief to disrupted industries. For the many purposes for which organizations make use of scenarios, Strategic Business Insights analysts invite players to contemplate yourselves and your organizations in three hypothetical worlds: Tough Transition, Big-Tech World, and The Chinese Century.

Scenario A: Tough Transition

General Scenario Summary

After a prolonged and difficult worldwide struggle, popular movements force major governments to join together to bring about a massive, coordinated, eco-focused economic recovery effort.

The world's recovery from the pandemic proceeds very poorly initially. Many governments introduce austerity measures too soon, choking off economic recovery. Political infighting often paralyzes or degrades responses. Relationships among and within countries worsen because of nationalism, cyberwarfare, squabbling over resources, and other factors, intensifying economic harms and further disrupting international trade. After a difficult period of volatility, violence, and unrest, an increasingly restive and desperate citizenry pushes from the bottom up for egalitarian, eco-focused change on a global scale. Led by a handful of countries that achieved a rapid pandemic recovery by reorganizing their societies around ambitious sustainability and green-jobs programs, major governments worldwide take on huge deficits to finance similar changes, and eco-focused high-tech products and services begin prevailing globally by 2030.

Developments in Digital Connectivity and Lifestyles

For digital connectivity and lifestyle industries, a Tough Transition favors companies that develop less-centralized digital platforms as public sentiment gradually turns against established centralized players.

  • By 2023, the drawn-out pandemic and decline of venture-capital investment has allowed platform power to consolidate with legacy players. Remote work is now common, but companies have shifted to collaboration tools provided by large technology companies rather than start-ups. Greatly increased use of surveillance techs that emerged during the pandemic helps fuel popular antipathy toward big-tech companies. The pandemic and global economic instability disrupt 5G deployments severely, and geopolitical tensions limit international cooperation on standards. Global turbulence also leads to a rise in cybercrime—including ransomware and denial-of-service attacks—against businesses and individuals.
  • During 2024 through 2027, tech companies make available new technologies for automation of facilities, logistics, and manufacturing. However, initial deployments of "lights-out" facilities see large societal pushback because of continued high unemployment in many nations. Tech providers pivot the technologies to worker assistance, but the negative sentiment toward big-tech companies remains. As the movement against big-tech companies grows, people shift to emerging platforms that focus on distributed, decentralized apps that provide individual users with tight control over their personal data. Such platforms leverage blockchains and other distributed-ledger methods to secure data and transactions.
  • During 2028 through 2030, populations use distributed apps to organize around action on climate change as extreme climate events increase. Individuals use technologies and platforms that enable them to reduce their own impact on climate change. Regions race to move away from fossil fuels, which leads to regionally distributed AI platforms for managing supply, demand, and storage on the electric grid automatically.

Implications for Specific Technology Areas

As a tool for developing robust strategies and plans, scenarios provide a platform for industry players to think about a wide range of challenges and opportunities that could emerge in various yet plausible futures. Below are some high-level implications for specific digital-connectivity and lifestyle technologies in the Tough Transition scenario.

  • Collaboration Tools: Use of collaboration tools remains strong. Large tech companies leverage their size and economies of scale to push out smaller players, but later on distributed apps for collaboration become popular.
  • Connected Homes: Economic uncertainty and low consumer spending hurt many connected-homes companies. Later on, markets strengthen for connected energy-management systems to control at-home energy generation and energy storage.
  • Internet of Things: Industries become more connected as companies reshore manufacturing and automate facilities, but demand falls as populations begin to push back against automation. Later on, smart-grid technologies proliferate as populations demand action about climate change.
  • Mobile Communications: 5G deployments slow significantly, and only the simplest implementations see widespread deployment. Increased geopolitical tensions lead to regional divergences in 5G practices and increased restrictions on hardware suppliers.
  • Portable Electronic Devices: Economic uncertainty and low consumer spending hurt many smartphone makers. Projects focusing on advanced wearables and augmented reality (AR) see reduced priority as suppliers focus on driving down prices of key devices, including non-5G smartphones.
  • User Interfaces: New software user interfaces emerge for collaboration tools, but immersive collaboration via virtual reality and AR remains a collection of niche markets.

Scenario B: Big-Tech World

General Scenario Summary

The world's top cities, leading organizations, and high-resource individuals benefit from a rapid, tech-fueled recovery that mostly excludes everyone else.

As many national governments' responses underwhelm, global cities and major technology companies work together to drive a rapid, tech-enabled recovery, the benefits of which don't extend very widely. Leading companies, well-financed startups, and high-resource individuals are able to make necessary changes quickly, while smaller organizations and low-resource individuals have great difficulty adapting. In 2030, most areas outside major urban tech hubs continue to struggle, and high unemployment persists among less-educated workers because of an accelerated wave of automation. Leading organizations shift rapidly and permanently toward an automation-heavy, telepresence-centric culture, and relevant technologies see high adoption and advancement. Smart-city-infrastructure development increases substantially as public-private partnerships work to repurpose unused office space, improve physical and digital resilience, and facilitate growth of automated delivery services.

Developments in Digital Connectivity and Lifestyles

For digital connectivity and lifestyles, a Big-Tech World favors the established large technology companies in the United States and China that expand into most facets of life. Smaller players struggle to defend their market niches.

  • By 2023, the power of big-tech companies increases substantially as a result of the pandemic. The relative success of contact-tracing technologies, testing-coordination platforms, health-data exchanges, and immunity passports during the pandemic helps big-tech companies become integral to health-care and public-safety functions. Widespread unemployment has greatly expanded platforms for remote low-skill digital tasks ("digital ditch digging"), such as labeling training data and content moderation.
  • During 2024 through 2027, cloud platforms continue to add new machine-learning (ML) and automation features, enabled and supplemented by the low-cost workforce. ML technology helps businesses automate and becomes a common feature in consumer electronics, but it does not radically alter business strategies. For many working professionals, remote work expands after the pandemic and leads to the creation of indoor AR devices and AR platforms for remote collaboration. Big-tech companies begin to shift more of their focus from AI services to health-care and smart-city initiatives. People's confidence in big-tech companies motivates them to store more and more of their data in cloud services with enhanced cybersecurity features.
  • During 2028 through 2030, companies commonly use ML algorithms, but progress in new AI algorithms is incremental. Big-tech companies work together to develop a common smart-city platform, upon which they build apps and services. The nature of the platform commoditizes sensor and device manufacturers while big-tech operators engage in rent-seeking behaviors with third-party apps and services. AR becomes an important platform for remote work and entertainment for professionals.

Implications for Specific Technology Areas

Below are some high-level implications for specific digital-connectivity and lifestyle technologies in the Big-Tech World scenario.

  • Collaboration Tools: AR becomes important for collaboration among business professionals and the creative class. The market for low-skill digital labor—digital ditch digging—expands, with significant mediation by new and traditional digital platforms for task contracting.
  • Connected Homes: Many creative professionals continue to work at home after the pandemic, which drives demand for advanced connected-home tech. Expansion of big-tech companies into health-care applications also leads to an increase in home health monitoring and testing.
  • Internet of Things: IoT deployments proliferate early on as part of warehouse and factory automation. Interest in consumer IoT devices increases for people working at home. Opportunities to sell IoT devices to smart cities become prevalent later, but many IoT technology suppliers struggle to earn service revenue because most IoT deployments rely on the platforms of large tech firms, which capture most of the value.
  • Mobile Communications: 5G expands in urban areas and becomes especially important for industrial and enterprise connectivity and automation. Big-tech companies play an increasingly important role in 5G networks through software-defined networking. Advances in wireless reliability and low-delay communications remain limited to short-distance wireless links.
  • Portable Electronic Devices: AR headsets become available for indoor use by remote workers who need immersive collaboration. Interest in health-related wearables grows as big-tech companies expand into health-care industries.
  • User Interfaces: Demand for immersive remote-working solutions and escapes from reality drive innovations in AR head-mounted displays and AR platforms for collaboration.

Scenario C: The Chinese Century

General Scenario Summary

As the pandemic and its aftermath ravages Western democracies, an exceptionally well-managed China rises, becoming the global economic and technology leader.

Throughout the 2020s, the Western powers experience a decline in their economic and geopolitical status because of their consistently poor handling of the pandemic. Ongoing popular resistance to necessary cultural and behavioral changes in Western countries complicates recovery efforts further. A relatively intact, exceptionally well-managed China becomes a key source for international aid and economic revitalization, greatly increasing the country's global standing. China's global leadership position benefits from an unexpected transformative advancement in AI-reasoning capability that originates at one of the country's top tech firms. By the time Western scientists recreate the innovation, Chinese companies have already been using it for years to create powerful new AI-enabled products and services, and have begun leveraging the technology's capabilities to make radical advances in diverse fields, including materials science, energy storage, health care, communications, cybersecurity, and sensing.

Developments in Digital Connectivity and Lifestyles

For digital connectivity and lifestyles, The Chinese Century sees the influence of Chinese digital technology and platforms increase in countries around the world. Chinese tech companies make significant advances that US and European tech companies struggle to keep up with.

  • By 2023, Chinese technology companies have reached parity with US technology companies on the world stage in terms of hardware, software, and digital platforms. China leverages its rapid recovery from the pandemic to accelerate its Digital Silk Road initiative to spread its digital technologies and AI to other countries. Chinese tech companies deploy 5G throughout China and begin deployments in developing countries. Coming out of the pandemic, US tech companies become mired in investigations into their treatment of workers and their influence on society.
  • During 2024 through 2027, Chinese technology companies make a major advance in AI that enables ML systems to reason. This breakthrough proves to be as disruptive as the development of deep learning. The availability of AI-reasoning services on Chinese cloud platforms begins to challenge the dominance of US cloud providers. All-day wearable AR devices that leverage edge computing for graphics rendering begin to emerge.
  • During 2028 through 2030, China has become the world's technology leader. The nation's advanced AIs provide cognitive capabilities, insights, and optimizations for a diverse variety of fields, such as materials science, health care, and cybersecurity. US companies are just introducing cognitive AIs, but they are years behind Chinese AI. China reveals Urban China 2035: a plan to construct next-generation smart cities that incorporate 6G, fully autonomous vehicles, extensive sensing, and cognitive environments throughout China and the world.

Implications for Specific Technology Areas

Below are some high-level implications for specific digital-connectivity and lifestyle technologies in The Chinese Century scenario.

  • Collaboration Tools: AI with advanced natural-language capabilities and AR glasses become key elements of collaboration tools. AI helps to automate professional tasks on the fly and coordinate between multiple project contributors.
  • Connected Homes: China's big interest in connecting the rest of the world encourages companies to make products for newly connected homes in developing countries. Availability of 5G plays a key role in products and provides the connectivity for many homes. Chinese tech companies take center stage in this expansion.
  • Internet of Things: IoT becomes tightly integrated with 5G development and deployments. Smart cities leverage ultrareliable and low-latency (URLLC) and machine-to-machine (M2M) communications.
  • Mobile Communications: A sharp divide in 5G technologies between the United States and China emerges as 5G practices diverge, with China deploying excellent URLLC and M2M networks having excellent coverage. China's 5G spreads to much of the world thanks to financing from the Chinese government.
  • Portable Electronic Devices: Prices of 5G smartphones fall quickly. A shift to low-cost devices that leverage 5G connections and cloud/edge computing gains speed. All-day wearable AR glasses that leverage edge computing enable new types of apps and services.
  • User Interfaces: Gesture and AI interfaces for AR glasses become common. Later on, massive communications, sensor networks, and AI in Chinese smart cities begin to enable cognitive environments that understand and predict users' needs.

Download Explorer's special scenarios presentation—The Pandemic Crisis: Scenarios for the Future of Technology Development—summarizing these three scenarios and their implications for the six technology domains.