On the Cover

Consumer rush

Thursday, 01 February 2007 00:00 Written by Paul Furber

In the 1990s, corporates determined the shape and direction of technology. But in the 2000s, the lowly consumer sets the trends - even for business. Now the man in the street drives the business of IT IN AN INTERVIEW with Fortune Magazine in November 2006, Seagate CEO Bill Watkins said that the modern technological age is all about the consumer and that as a result, technology trends are shifting. Watkins, known for his frank and direct manner, heads up the largest hard drive manufacturing business in the world, and is in a good position to know which devices are the most popular skins around his storage.

"The `90s were all about the enterprise, and that`s why Dell did so well," said Watkins. "Now, it`s all about the consumer, and that`s why Dell is having problems. They don`t understand the consumer. They want a competitor to the iPod and what do they do? They go with Creative."

Dell is currently battling to maintain its lead in the worldwide PC market. According to `s figures from 2006, HP tied with Dell for total PC shipments for the year thanks to a 17.4% market share for the fourth quarter (up from 15%) while Dell slipped to 13,9% from 2005`s 16.4%. HP`s figures for the year, while the same as Dell`s, are up nearly 20% while Dell`s are only up 3.5%.

Worldwide PC shipments are slowing. The US market was actually down over 3%. Gartner gives a number of reasons for the overall slowdown in 4Q growth, including an overall "wait and see" attitude towards Vista, but the most significant one is that consumer electronic goods are distracting consumers. TVs, games consoles and other electronics are selling well at the expense of PCs. Not only is money flowing away from traditional computing, but the consumer is having an effect on the way IT is evaluated, purchased and implemented.

"Apple figured out a long time ago that this business is about the consumer, and the world finally caught up to them," said Watkins. "Most companies have a technology and go looking for a problem to solve. looked at what was happening - people were loading music onto their computers and wanted to take it with them - and he built a product to solve that problem."

ARMIES OF CONSUMER COMMUNITIES

The iPod, multifunctional cellphones and PDAs, the latest generation of operating systems from , Apple and the OSS communities, as well as high-speed Internet connections at home are all prompting consumers to ask why their offices are such restrictive and dysfunctional environments, particularly in Europe where high-speed lines to the home are added, almost as an afterthought, to telephone line bundles.

Communities of all shapes and sizes - whether video sharers like subscribers, game players in virtual worlds like Second Life or programmers collaborating on the Firefox Web browser - are becoming a potent force, both for advertising eyeballs and future directions of technology.

"The phenomenon of Web 2.0 is mostly driven by generation Y (under 25s) who are in the consumer market," says , business development manager of open standards at SA.

"They will, of course, find their way into the corporate market sooner or later and we`d better be ready for them. It is all about collaborative innovation. With the connected consumer market we have today, I cannot see this not happening. Although they may shape the technology, it does not mean corporates will implement it immediately."

, country manager of Microstrategy, says that the consumer trend will depend on the technology.

"Certainly in consumer products, consumers are becoming wiser and more demanding. In enterprise products, this will always be driven by where the spend is."

Manny Moreira, MD of Edge Consulting, agrees that consumers will shape target platforms, but says the back-end technology that serves them is still going to be shaped by the corporates.

"In Africa, corporates are shaping technology, but there is a gap in the market for SMEs to shape African solutions for the African market."

SOCIALISING ON STEROIDS

The new money in Internet investment is after the business of communities. Probably the highest-profile deal in 2006 was Google`s purchase of YouTube for a staggering $1.6 billion in stock. Social networking, while not quite as unrealistic as the original Internet bubble, is exciting venture capitalists who want to convert eyeballs to revenue in ways other than by banner ads. One of the up-and-coming means is via widgets - reusable components of Web content with links back to the parent site.

"Sites like MySpace, Flickr, and YouTube and new distributed social self-expression sites or widgets like RockYou, Widgetbox and others enable users to invite friends to view personalised digital content," says Lightspeed Venture Capital.

"These new viewers are required to become registrants on the social networking site or can make the decision to adopt a widget in order to broadcast their own content inducing a viral growth cycle as these new users then invite additional viewers into the system.

"Thus far, monetisation has occurred primarily through online advertising although early experiments with the sale of digital goods foreshadow a more transaction-based model."

The Internet has been tremendously disruptive to many business models, information owners and even governments. But its greatest disruptive act might be still to come: in which ordinary consumers determine the corporate market.

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