REVOLUTIONARY TECHNOLOGIES

A methodology and guide to uncommon opportunities in near-term technology trends

for investors and innovators

JONATHAN DEUTSCH

SENIOR PRINCIPLE & CHIEF ARCHITECT

CAPITAL D DESIGN

HTTP://WWW.CAPITALDDESIGN.COM

JON@CAPITALDDESIGN.COM

DEVELOPED AS PART OF GRADUATE STUDIES AT THE UNIVERSITY OF PENNSYLVANIA

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When management guru Peter Drucker penned in 1985, “There is no doubt that high tech,

whether in the form of computers or telecommunications, robots on the factory floor or

office automation, biogenetics or bioengineering, is of immeasurable qualitative

importance,”1, he could not have been more correct. The entrepreneurial energy focused

on innovative technologies has been a principal reason the American economy has

remained so vibrant and dynamic for the past 30 years. How vibrant? Nominal per

capita GDP in the United States was $7.6 billion in 1975, and was nearly $40 billion in

2005.2 This is a tremendous growth rate, and while there is clearly no single reason for

economic success stories such as this, it is difficult to refute the role technological

advances have played in economic expansion, as well as social and political

improvements. Whether it was Fredrick Smith who invented air delivery and global

delivery logistics... or Bill Gates who dropped out of Harvard to create software for the

then-nascent Personal Computer industry... or Marc Andreessen, who developed the first

mainstream web browser and introduced the World Wide Web to the general public;

these entrepreneurs created and popularized technologies that have fundamentally

changed the world.

With so many transformational technologies already invented and massively deployed, it

is often challenging to consider what is next. There are many “futurists” who predict

technology trends decades into the future, and these predictions are typically vague, and

therefore of limited value to the entrepreneur or investor who seek uncommon

opportunities. This goal of this study is to identify the most promising opportunities in

near-term technology trends. Investors and entrepreneurs can draw upon this study for

information and analysis on the key technology sectors to invest in (or create companies

around) within the next one to ten years.

1 From the book “Innovation and Entrepreneurship,” Peter Drucker, HarperBusiness Publishing, 1985 2 From “What was GDP then?” courtesy of Economic History Services [Source: http://eh.net/hmit/gdp/]

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To reach the stated goal, this study is composed of three sections. First, a methodology

has been devised to identify the characteristics of technologies that are likely to be

revolutionary – that is, technologies that will have a disproportional impact, and therefore

disproportionate economic opportunity3. Next, a list of near-term and widely recognized

technology trends will be put through this specially-designed battery of tests in order to

predict which technologies are most likely to become revolutionary. Finally, an

executive overview, analysis and assessment will be provided on the trajectory of these

predicted revolutionary technologies, from a social and economic value perspective.

The Methodology

Devising and designing methods to identify characteristics of technologies that are likely

to be revolutionary

Technologies and Disruptive Technologies

The Encyclopedia Britannica defines technology as the “application of knowledge to the

practical aims of human life or to changing and manipulating the human environment.

Technology includes the use of materials, tools, techniques, and sources of power to

make life easier or more pleasant and work more productive.”4 This definition helps set

the context of what is considered to be a technology, and thus helps define the scope of

what will be assessed in this study. Based on this definition, and for the purposes of this

study, technology and innovation are closely related terms. Certain technologies and

innovations are more than just additions to the business and social ecosystem – some are

so compelling that they disrupt current standards, trends, or processes. Wikipedia defines

a disruptive technology or disruptive innovation as “a technological innovation, product,

3 “Life changing technology will likely be the most profitable,” Technology, Media, Telecommunications

(TMT) Trends – Predictions 2006, Deloitte Touche Tohmatsu 4 “Technology” entry; Encyclopedia Britannica Concise Edition

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or service that eventually overturns the existing dominant technology or product in the

market.”5 Disruptive technology (and later disruptive innovation) was a concept coined

in Clayton Christiansen‟s 1997 book, The Innovator‟s Dilemma, which caught the

interest of business leaders worldwide.

These definitions are important because, together, they at the same time increase and

limit the scope of what should be focused on when assessing transformative technologies.

For instance, it might not be obvious that Freud was an innovator in psychological

technology, but according to the Britannica definition, his psychological innovations

constitue a technology, as they are applications of knowledge that manipulate the human

environment. On the other hand, the Apple iPod by itself cannot be considered disruptive

because it did not overturn any existing technology or product. It carved out a new

market. However, Apple‟s iTunes + iPod combination was disruptive because,

combined, they have begun to overturn the existing compact disc infrastructure as the

only viable mainstream medium for distributing music.

Beyond Disruptive: Revolutionary Technologies

There are thousands of technological innovations in development worldwide, ranging

from biotech to robotics and holographic storage to quantum computing. Of these, many

will be disruptive. As there are far too many potentially disruptive technological

innovations to review and assess effectively, the technologies identified in this study will

need to reach a higher standard. Technologies in this study will have to go beyond being

disruptive – they will need to be revolutionary. Revolutionary technologies are

exceptional innovations that not only disrupt or create markets and processes, but they

also create new environments from which third party innovations can evolve.

5 “Disruptive Technology” entry; Wikipedia, the Free Encyclopedia

http://en.wikipedia.org/wiki/Disruptive_technology

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To differentiate between innovative technologies that are revolutionary and those that are

“merely” disruptive technologies, a methodology (or test) must be defined. For this

reason, a revolutionary technology test – developed specifically for this study6 – has been

designed to surface the uniquely compelling technological innovations that will not only

disrupt, but also revolutionize industries and/or society in a meaningful manner.

This test is comprised of four components: Global Scope, Massively Deployable,

Application Platform, and Non-Proprietary. For the purposes of this study, this battery of

tests will be referred to as the GMAN test, and those disruptive technologies that pass the

GMAN test will be considered revolutionary.

THE GMAN TEST

Global Scope

The most influential technologies must have the potential to affect people, companies,

systems, or processes worldwide. In today‟s global economy and market, technological innovations that only apply to specific regions or cultures are inherently limited in their

social and market potential. And as the percent of share the US economy has in the

world continues to shrink as other countries grow7, US-only innovations will have a

proportionally smaller impact than they have had in the last one hundred years. Thus, the technologies selected in this study must have the potential to scale globally. For

example, LED-based lights that plug into existing sockets can scale globally, but a

technology to enhance the flavor and output of corn has limited regional appeal and application.

Massively Deployable

The technology should not have cost, size, or growth constraints that would limit its deployment to a niche industry or application. Technologies can only disrupt a specific

sector or market and still be considered disruptive, but for this study, the technology

must have broad application and have mass availability. For instance, while a new shatter-proof glass material has the potential to be deployed in a massive scale for

various applications, a new type of automobile fuel would likely have prohibitive cost

and logistical barriers to being massively deployed, based on the cost and scale of infrastructure upgrades.

6 The “GMAN” test, for assessing which disruptive technologies are technology platforms, was developed

for this study by Jon Deutsch, Chief Innovator, MIDI Services 7 “Move Over, U.S.A.”, Jeremy Siegel, Ph.D., The Future for Investors; Sept 25, 2005 [http://finance.yahoo.com/columnist/article/futureinvest/986]

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Application Platform A technology is an application platform when the technology is not only an end in and

of itself, but also a launch pad to other innovations and applications. These types of

technologies are flexible enough to evoke new applications that were not envisioned

when the base technology was developed. This is not limited to “software” applications. Applications can be medical, physical, artistic, etc., and application

platforms can be physical (i.e., national highway system), theoretical (i.e., quantum

mechanics), and virtual (i.e., Microsoft Windows operating system). Conversely, technologies such as the iPod and the laptop PC are not application platforms, as they

are specialized solutions that do not innately attract or support new, innovative

applications that transcend the original device‟s design.

Non-Proprietary

It might seem counterintuitive that the largest commercial gains would come from

investing in technologies that are non-proprietary in nature. After all, aren‟t proprietary solutions the most protected investments? Yes, and that is the very reason why these

protected technologies will typically not be revolutionary – because they are protected

and therefore are limited in their scope, reach, and application based on the prerogatives of the owner of said technology. It is the non-proprietary technology that launches

several (or hundreds) of companies that are in business to extend, innovate, manage and

exploit this technology. An example of the effect of being non-proprietary is the original IBM PC architecture, of which The Economist notes, “It is worth celebrating

the innovation that has been unleashed by the PC. Its flexible, general-purpose

architecture has made it the platform on which new technologies, from voice-over-

internet calling to peer-to-peer file-sharing, have been incubated.”8

Technology innovations that pass the GMAN test are crucial for investors. They

represent technologies that are not only nearly unconstrained in their potential, but due to

their “application platform” nature, multiple levels of innovations are built upon these

technologies. These unique attributes will help cement them into the value chain as

economies and societies progress. To give the GMAN test additional context and

relevancy, consider the following examples of technologies that pass -- and don‟t pass --

the test:

8 “The dream of the personal computer,” The Economist, Jul 27, 2006

[http://www.economist.com/opinion/displaystory.cfm?story_id=E1_SNNQDQN]

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The Personal Computer, the Internet, the mobile phone, Open Source9, electronic storage,

and electricity are all examples of technologies that pass the GMAN test: they have

global scope, have been massively deployed, have proven to be application platforms,

and are non-proprietary.

However, some otherwise quite “disruptive” (and commercially successful) technologies

– such as landline phone, the power grid, and the train locomotive – do not pass the

GMAN test due to the following factors:

Landline phone: expensive to massively deploy worldwide; only a few unintended

applications have emerged (such as fax and data).

Power grid: expensive to massively deploy worldwide; not global in scope

Locomotive train: expensive to massively deploy; few unintended applications have

emerged; cannot span the globe – network must be fragmented.

Relevance

While relevancy is not specifically in the definition of disruptive technology or called out

in the GMAN test, it is crucial that any technology have some level of economic or social

impact. Without impact, a technology risks being invented for technology‟s sake – with

no meaningful application. In order for a technology to have an impact, it must be

relevant to problems that need to be solved, or designed to seek out social and/or market

opportunities that have not yet been addressed.

9 Open Source is a licensing technology and an innovation ethos. [source: http://opensource.org]

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There are two types of relevance with regards to technology: business relevance and

social relevance10

. Business relevance is the impact a technology can have on a business

process or business model to improve efficiency, bring new offerings to the market, or

otherwise provide additional value within the business realm. In the 1980‟s, the local

area network (LAN) was universally adopted because its high business relevance. Social

relevance is the impact technology can have on societies. Social relevance differs from

business relevance because the correlation between additional value and success is not

linear. Social relevance comprises many “softer” attributes, including what is considered

trendy, socially appropriate, stylish, and relevant to being a status symbol. An example

of social relevance is the portable MP3 player: The Rio PMP300 was the first

mainstream portable MP3 player, but the technology did not reach mainstream until

Apple combined technology, elegance, style, and a marketing campaign that oozed

“cool.” Adept at making technology socially relevant in the entertainment and

computing space, Apple is an example of designing socially relevant technology in the

non-business realm.

Methodology Overview

The parameters have been defined, and tests have been designed to identify the unique

characteristics of technologies that are likely to be revolutionary. The technologies being

assessed will need to (as defined above):

Be a technology

Be a disruptive technology

Pass the GMAN test

Be projected to have either business or social relevance

10 Business and social relevance is shown to be tied to financial gain. From “Cashing In,” Articles on

Innovation, Community Research and Development Information Service, European Union, 5/00

[http://cordis.europa.eu/aoi/article.cfm?article=881]

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Revolutionary Technology Assessment

Applying the above set of criteria to near-term and highly regarded technology trends

Using research from respected sources in the technology futures space, including

WIRED, The Economist, The Institute for Global Futures, and Deloitte's Technology

Trends journal, the following likely candidates for revolutionary technologies have been

assembled for consideration:

Open Source

Nano-technology

Hydrogen fuel

Wireless

Biotechnology

Artificial Intelligence

Relevancy commerce

Genomics

Processing & Storage advancement

Mobile information devices

Water purification

Collaboration

Note: While the Internet continues to be on the radar of several technology futurists in

the industry, it will not be included it in the shortlist. The Internet has already

transformed society and is in the process of transforming business. While the Internet

has arguably been one of the most important revolutionary technologies the world has

seen in the past hundred years, and will continue to power many future revolutionary

technologies, the fundamental Internet technology itself (TCP/IP, HTTP, FTP, DNS, etc.)

is highly entrenched and commoditized. Therefore while the existence and the idea of the

Internet will continue to help spawn countless revolutionary technologies, it will not, in

and of itself, evolve substantially at the network level and therefore has not be included in

the selection process.

Any one of these emerging and/or nascent technologies has the potential of being

disruptive. But to be considered revolutionary, these candidates next need to pass the

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GMAN test. Before reviewing the technologies that pass the test, a brief review of the

technologies that did not pass, and the reasons why:

Nano-technology – potentially limited by proprietary evolution. Vast majority of

implementations so far are proprietary and not open for outside innovation upon

baseline technology.11

Hydrogen fuel – multiple challenges to being mass-deployable. Fuel Cells have

been in use since the 1960s, yet countervailing market forces reduces likelihood

of being disruptive.12

Biotechnology – typically not an application platform. Most applications are

custom solutions to specific medical issues.

Artificial Intelligence – multiple challenges to being mass-deployable and

proprietary evolution of technology.

Genomics - typically not an application platform. Most applications are custom

solutions to specific medical issues.

Water purification – multiple challenges to being mass-deployable. Decades of

research in this area and there is still no truly disruptive results.

Put through the GMAN test and assessed against business and/or social relevancy, the

following technologies are deemed very likely to be revolutionary:

Open Source

Wireless Technologies

Processing & Storage

Relevancy commerce

Mobile information devices

Collaboration

11 Most nanotech companies, understandably, protect their very valuable intellectual capital. A case in

point is Applied Nanotech: “An important part of our strategy is to obtain protection for our proprietary

technology.” [Source: Applied Nanotech Patents page on http://www.appliednanotech.net] 12 “Fact Sheet: Hydrogen Fuel: a Clean and Secure Energy Future,” The White House, US Government [http://www.whitehouse.gov/news/releases/2003/02/20030206-2.html]

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These six technologies have successfully completed a systematic series of tests designed

to highlight the very few that have – according to the methodology established for this

study – a high likelihood of being revolutionary, and thus, a disproportionate economic

impact for interested innovators, entrepreneurs, and investors.

Revolutionary Technology Analysis

An executive overview, analysis and assessment of predicted revolutionary technologies

Open Source

The Open Source philosophy is a great example of a technology that is not comprised of

machine parts, processors, engines, or other trappings of the physical manifestation of

ideas. Open Source remains in the idea-state as an operating framework in which people

work to innovate in ways that are, in fact, revolutionary.

How revolutionary? Consider this scenario: It‟s 1987, and you run a company that

develops software and services for other large businesses. When you look to develop a

new product, you have a few options: build the product from scratch, leverage the work

already done in-house on other products, or buy other components from other vendors

and re-sell them as a part of a larger solution. This has been a traditional management

scenario for about as long as modern business has been around.

However, in the mid-1990‟s, a new movement coalesced that worked out a new, viable

alternative that at first seems quite counter-intuitive: build software for free, and share it

for free with the only provision that whatever modifications were made to it also be

submitted back to the public domain. Building software for free doesn‟t immediately

make economic sense, but it depends on how you look at it. There are essentially two

ways to look at the Open Source dynamic:

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1) The “Loss-leader” lens: Common services are built and distributed freely in order

for companies to provide higher-order services more efficiently. The non-

proprietary nature of Open Source software ensures that more companies have

non-competitive access to the same set of basic services, enabling the entire sector

to focus on higher value, higher margin offerings.

2) The “Social Equity” lens: Leveraging similar processes that exist throughout

many professions, Open Source developers are able to develop relationships,

credibility, value, and a bit of fame by providing impressive solutions that others

can use, share, and appreciate. This is not unlike the publishing model in

academia -- where being cited by others is a mark of personal and professional

credibility, value and a bit of fame within a network of like-minded professionals.

Going back to the scenario above, consider the same situation, but move the date up to

the year 2007: Your business now has a new option: leverage freely usable resources on

which to build. This enables the business to quickly build products without the added

expense of building the baseline framework – you can now focus more of your

company‟s resources on the specific problem you are aiming to solve. Ultimately, this is

a more efficient business model, which gives you the ability to increase margins and/or

lowers prices.

The Open Source philosophy is also revolutionary in how it operates: massively

distributed contribution, organization, and support. This introduces otherwise cost-

prohibitive redundancy in brainpower, globalization compliance, and resilience. If every

company that needed to build out a global, massively collaborative workforce to develop

common services, this would be a colossal waste of business resources and human

capital. Open Source allows the efficient development of common services, and frees up

organizations to focus on value-added services. A macro-economic dream come true.

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And new applications for Open Source are emerging. The Open Source philosophy is

now being attempted in car manufacturing13

. If this evolution is successful, Open

Source‟s potential to transform business will increase dramatically. Deloitte‟s

Technology Predictions 2006 report states, “the open source community should start to

broaden its reach. There remains a considerable opportunity to take open source code

into new areas, including mobile smart phones, PDAs, and even set-top boxes. As more

and more devices become intelligent, the opportunity for the open source model will

likely grow accordingly.”14

One potential limit to Open Source, however, is that its scope is currently limited

primarily to software development. While Open Source will continue to impact business

dramatically, the investor or entrepreneur does not have many places to invest

specifically in this technology. Instead, the investor and entrepreneur are advised to fully

understand the trajectory of Open Source and take the time to understand its potential, in

order to fully leverage it for economic gain and business competitiveness.

Wireless Technologies

Wireless communication technologies provide information and access to information

well beyond what was traditionally considered economically feasible. With wireless

technologies, poor, remote, and challenging locations can inexpensively be “plugged in”

to the global information network. From a social perspective, this revolutionary

technology has – and will – fundamentally shift global conversations and transactions

from the wealthy regions of the world toward a more statistically normalized population.

13 The Open Source Car Project (OScar) is the Open Source‟s first attempt of applying the Open Source

philosophy to the physical world. Source:http://www.theoscarproject.org/ 14 “Open Source Moves Toward Center Stage”; Delotte‟s TMT Technology - Predictions 2006 [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf]

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However, a more accessible poorer population doesn‟t necessarily have the immediate

economic impact that most investors are looking for. In the future, it will likely be a

huge global economic boost. But in near-term, wireless‟s impact will be more

evolutionary than revolutionary.

Wireless communications technologies are a solid application platform, in that they

enable a host of different devices, ranging from mobile phones to computers, satellite

radios to television, and various proprietary information devices for vertical industries.

For this reason, companies that innovate in the wireless communications space are

uniquely positioned to be the delivery backbone for increasingly crucial, business-critical,

and sometime life-critical information. While communications technologies do quickly

become commoditized, an innovative wireless communications firm will continually

invent new, value-added ways and means to move information from where it is to where

it needs to go.

There is a reason why it is referred to as “wireless technology” here instead of wireless

communications: there are new applications of wireless technology that also have

substantial room for economic impact. One new potential is wireless power. Using

specially tuned resonance waves, one object can coerce another object to resonate on a

similar frequency (similar to how musical instruments will “play notes” without being

touched by responding to the same frequencies being generated by another nearby

instrument).15

Why is wireless power a potential revolutionary technology? Today, there are two

realities about power and portability:

15 “Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006 [http://news.bbc.co.uk/2/hi/technology/6129460.stm]

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1) People‟s behaviors are subtly shifted by the limits of power available to their

portable devices. Because people know that a cell phone only have 3-4 hours of

talk time, they intuitively understand that they need to moderate mobile phone

usage throughout the day. Similarly, laptop PC users must also moderate their

usage on long trips without power, reducing potential productivity. And with the

complete overhaul of the camera industry, the majority of people now rely on

digital cameras for their photos. And while these digital cameras no longer rely

on the limited supply of film one can carry in a day, the user trades off this

limitation with the limitation of the built-in battery of the digital camera.

2) Designer‟s, when devising a portable device, build and skip features based on

energy utilization estimates. A mobile phone manufacturer will not build in a

feature if it is energy hungry, and laptop PCs are designed to reduce their CPU

speeds dramatically when on batteries in order to conserve power.

The promise of wireless power will alter both of the above dynamics, and could once

again revolutionize what services mobile devices can provide. For instance, a mobile

phone with virtually unlimited available power could actively track, record, and monitor

bodily life signs, provide proactive “heads up” alerts based on where you are and what

you are doing, or even record every thing you see and hear throughout the day for

archival or evidentiary services. Privacy issues notwithstanding, these would be

revolutionary services for a mobile phones.

However, wireless power is still just a promise, not a reality. In addition, if it does

become a reality, it will (at least initially) have substantial limitations, including a 16-foot

range.16

16 “Physics promises wireless power,” Jonathan Fields, BBC News; Nov. 15, 2006 [http://news.bbc.co.uk/2/hi/technology/6129460.stm]

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In the wireless technology space, investors and entrepreneurs should focus on the

opportunities to provide new levels of service that have broad appeal. There are a lot of

commodity wireless offerings available today, which are of limited interest to investors

and entrepreneurs. But look at the “line extension” possibilities in each commodity

service to unearth new value from existing infrastructure. And, like in the case of

wireless power, keep your mind and wallet open to imaginative applications for wireless

technology. Ask yourself “If I could alter the rules of physics, what would I want

delivered wirelessly tomorrow that seems impossible today?”

Processing & Storage

The ultimate “application platform” technologies, processing and storage combined are

the closest we currently have to mimicking the primary functions of the mind: the ability

to process information combined with the memory to store this information. As

processing and storage continue through the Moore‟s Law17

and Kryder‟s Law18

continuums, respectfully, they will increasingly provide societies and businesses with

higher-level services to analyze information, automate processes, and solve complex

problems.

Like most platform technologies, there is a high degree of commoditization at the

mainstream technology level. But as future processing and storage technologies that

provide breakthrough price/performance solutions emerge, they will enable new,

disruptive, and even revolutionary technologies and applications. For instance, a

minimum price/performance ratio is required for massive storage and processing to

17 Moore's Law is the empirical observation made in 1965 that the number of transistors on an integrated

circuit for minimum component cost doubles every 24 months. It is attributed to Gordon E. Moore, a co-

founder of Intel.; From Moore‟s Law entry; Wikipedia, the free encyclopedia [http://en.wikipedia.org/wiki/Moore's_law] 18 Kryder's law states that hard drives (HD) are benefiting from an exponential increase in the density (bits

per unit area) of information they are able to store. Source: ”Kryder‟s Law,” Scientific American, August,

2005

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enable Google to operate profitably enough to sustain its business model. If the current

price/performance mark in processing and storage was where it was in 1985, it is unlikely

that the very idea of a global search engine that required over a petabyte (1,000 terabytes)

of storage19

would even be considered.

There is a high likelihood that there will be points throughout these technologies‟

evolution where the price/performance ratio will suddenly spark revolutionary

applications throughout the foreseeable future. And as the industry continues to innovate

around new and novel ways to store and process information (through holographic

computing and storage, 3D optical storage, biocomputing, micro-electronic mechanical

systems [MEMS], advanced magnetic storage, probe storage), new applications will be

invented to fully utilize the availability of a hyperbolic leap in available, affordable

processing and storage technology. Importantly, for each application that requires the

next generation of processing and storage technology, this new processing and storage

technology is all but required to fuel the growth and expansion of these new applications.

As a result, the

creativity around

applications reinforces

the investment and

growth of the base

processing and storage

technologies, even as

the price declines (see

chart to observe how

revenues increase even

19 Size of Google database assembled by Ionut Alex. Chitu, on the Googe Operating System Blog; 9/10/06 [http://googlesystem.blogspot.com/2006/09/how-much-data-does-google-store.html]

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as price per megabyte decreases20

).

One potentially disruptive application that is highly reliant on revolutionary processing

and storage technology advancements is artificial intelligence (AI). This processing-

intensive application has the potential to provide completely new levels of service to

people. However, the potential of AI has been stymied by the relatively inadequacy of

current processing technologies, rendering AI as an interesting research area instead of a

generally available service. AI is merely one example that will demand revolutionary

processing and storage power that is not yet available. The drive for these applications

will drive the need for revolutionary change in processing and storage technologies.

Predicting which technology (revolutionary or evolutionary) will create the next critical

nexus of price/performance will be challenging for investors and entrepreneurs. In

addition, the recent consolidation and rapid commoditization of current storage

technologies (hard drive and flash RAM) provides a challenge for an industry that has

rested on mainstream approaches to magnetic storage for decades. Yet, with

governments and businesses alike set to track more activity, consumers eager to record

and play back high-quality digital audio and video, and data warehousing driving the

growth of a multi-billion dollar market research industry, the future of processing and

storage technologies looks bright.

Relevancy Commerce

Invented by the newspaper industry, relevancy commerce was advanced by radio and

television program directors, and recently revolutionized by Google. Relevancy

commerce (also referred to as advertising-subsidized content) provides advertisers access

20 Next Generation storage technologies and chart from “The Future of Data Storage Technologies,” World

Technology (WTEC) Division; International Technology Research Center

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to their targeted audiences to promote their services. It allows for more valuable and

meaningful advertising to reach consumers through the art and science of demographic

analysis. Relevancy commerce is what allows the New York Times be sold at newsstands

for a fraction of its production costs.

While most other technology assessments consider this area “search technology,” this

study asserts that search is merely an application that enables relevancy commerce to

exist. In fact, the top Internet search engine, Google, makes the vast majority of its

revenue in relevancy commerce, not search.

When Google invented their AdWords and AdSense programs, they completely

transformed what relevancy commerce could do to for businesses and consumers.

Google‟s “relevancy engine” automatically “senses” (through Google AdSense) the

content on almost any page on the web, and then places “best match” advertisements

along the side of this content. As a result, advertisers are able to reach audiences

worldwide, on almost any website, based on the relevancy of the content that the

consumer is reading. Conversely, web site visitors receive targeted advertisements based

on the topic of – or references on – web page they are visiting. The breadth and depth of

these programs is just starting to be understood by marketers. It is likely that this

approach to advertising will spread further within the web, and beyond the web as well.

The impact of this technology might sound evolutionary at first, but consider the

implications as relevancy commerce continues its ascendance: Goods and services that

many people now have to pay for might very well become “free” in exchange for being a

willing customer for eager companies vying for your attention. In essence, relevancy

commerce converts consumer attention into currency. This evolution could revolutionize

at least two sectors: information devices and information services.

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1) Information devices -- with a fully developed, mature and massively-deployed

relevancy commerce model, most any device designed to convey content

(including televisions, radios, computers, mobile phones, etc.) would not have any

hard currency cost, but would rather be an exchange for your attention to relevant

advertisements.

2) Information services – Many companies providing information services that

currently sell this intellectual property to clients would likely shift to a barter

agreement of exchanging services for attention. Here is an example to illustrate:

Picture two hypothetical information services companies, called SMI and CDN –

both whom provide pharmaceutical intelligence to the world‟s pharmaceutical

companies. In today‟s economy, both of these companies sell their data, analytics

and information to pharmaceutical companies to help their clients operate more

efficiently. This information is quite valuable, and is worth hundreds of millions

of dollars in revenue each year. One day, the CEO at CDN (a smaller and more

nimble firm than SMI) conducts a study and finds out that the value and quality of

his clients‟ attention is worth more to hundreds of potential advertisers than what

he is currently charging his clients. Based on the results of this study, he conducts

another study to see if his clients will be willing to save $50 million each year in

exchange for their employees receiving targeted ads from a set of pre-approved

sponsors.

At first, this prospect is awkward, and is rebuked by CDN‟s clients. But, after a

few years of being offered “free” services instead of a $50 million annual bill,

eventually the client gives in to economic and shareholder pressures and pilots a

test with CDN. In another year, the tests show that the information is the same as

it ever was, and the pharmaceutical company now has an additional $50 million

dollars in its annual budget as barter for its employees‟ attention. As a result, the

CEO of CDN changes the entire business model of CDN and becomes a content

provider to the pharmaceutical industry that streams relevant advertisements to

20

their client‟s employees, providing a new custom channel for advertisers, who

will pay top-dollar for such a targeted, wealthy demographic.

The account managers at competitor SMI are now bidding against a vendor that is

in a barter agreement with pharmaceutical companies. How can SMI compete

with their traditional “pay for information” model? They can‟t. They must adapt

and provide a better, more advantageous barter agreement for the client if they are

to compete with CDN.

This hypothetical example sheds some light on how revolutionary relevancy commerce

could be. And it appears that things are heading in that general direction. The Financial

Times just reported that Google has inked a deal with BskyB (a British satellite television

company) to replace traditional ads with Google‟s AdSense targeted ads. Says the

Financial Times about the deal, “If the companies manage to do that successfully, they

could well transform the TV advertising industry.”21

The outstanding question around all of this is one of social relevance. Many beneficial

and astounding technologies never fully reach their potential due to a lack of

compatibility with basic human nature. Like the videophone that never reached its

potential due to lack of consumer acceptance, despite the fact that it represents a superior

technology to the traditional voice phone, relevancy commerce might suffer a backlash if

people value their attention more than their hard currency.

Relevancy commerce offers entrepreneurs and investors an opportunity to support or

envision new ways of conducting commerce, and new ways of valuating people‟s

attention as a source of currency. Finding the right “connections” where people are

21 “BSkyB in Google link-up”, Andrew Edgecliffe-Johnson, Financial Times, Dec 6, 2006 [http://www.ft.com/cms/s/99f7fb12-8530-11db-b12c-0000779e2340.html]

21

willing to sell their attention for value-added services could produce new economies that

do not exist today.

Mobile Information Devices

In the post-industrial age, information is power, and time is money. Mobile information

devices afford an unprecedented number of people around the world22

flexible and ready

access to information, at just about any time. The convergence of these three axes around

a single class of device will likely ensure that mobile information devices become one of

the most revolutionary technologies since the advent of the Internet.

Mobile information devices vary in shape, size, function, and ability. Popular variants

include mobile phones, PDAs (personal digital assistant), the iPod, UMPCs (Ultra Mobile

Personal Computers), Smart Phones, and the Blackberry. As each generation of these

devices come to market (and new generations are launched annually), connectivity,

interactivity, and multifunctional capabilities are all improved upon.

Unlike the Internet, where the baseline technology exploded and then steadied, mobile

devices continue to evolve at a rapid pace, and have a great deal of potential to further

revolutionize society and business. In conjunction with wireless communications

technology, mobile devices can become “portable portals” into information networks

such as the Internet, which potentially extends the Internet‟s potential reach by almost

500% as compared to traditional internet access points, personal computers23

.

22 Around 80% of world's population has mobile phone coverage as of 2006. This figure is expected to

increase to 90% by the year 2010; AFP News Service reporting on Singapore Telecom study; 11/06 23 Current internet population is approx 1 billion, or 16.6% of the population. A 482% increase matches the

total mobile phone coverage. While not all current mobile phones have internet access, it is trending

toward this reality.

22

When 80% of the world‟s population is able to communicate with one another –

independent of location, socio-economic status, or other traditional barriers – new

relationships and economies emerge. For instance, eBay is a fantastically successful

online venture, but its current business model is not centered around the 3 billion people

in Africa and Asia that don‟t have PCs, but who will soon be able to buy and sell things

on eBay from remote locations in the world. What happens when a craftsperson from a

tribe in central Africa is able to sell their custom-made tiger tooth necklaces? In their

tribe, a necklace might be worth, say, three months of food as barter. But on eBay, what

if the same necklace commands $1500? This potential dynamic has the potential to

revolutionize commerce and cultures, as well as further integrate the world‟s economies.

Another revolutionary trend enabled by mobile information devices is giving a voice to

the politically voiceless. SMS – or short messaging service – is a common service on

mobile phone services worldwide. SMS messages (or “text messages”) are just starting

to be used to organize disparate groups of people across towns, regions, and countries.

The impact of this capability could be observed during the “Danish Prophet Muhammad

Cartoon Crisis” where Danish Muslims sent SMS messages to friends and family in the

Arab region, reportedly misconstruing the facts on the ground in Denmark. But the text

messages came through, and were forwarded to tens of thousands more across the region,

and the misconstrued facts spread like wildfire, inciting riots in Syria, Jordan, Egypt and

Iran.

Mobile information devices also represent a new opportunity for “convergence” – where

multiple applications that generally require distinct devices come together into a single

user experience. As applications begin to converge on the mobile device, we will start

seeing rich mobile application platforms to provide new, innovative services to people

worldwide. An example of convergence can be seen with Apple‟s iPhone product. The

23

iPhone looks like a mobile phone or a PDA, but integrates an astounding amount of

services in a device that is only 11.6mm thick and easily fits in a pocket:24

Apple iPhone Application Convergence

Mobile phone features (contact lists, speed dialing, voice dialing, conference

calling, integrated speakerphone)

Messaging features (SMS text messaging, video, image, audio messaging)

Video features (including dedicated video camera and instant uploads to on-line

services such as YouTube)

Personal information management features (calendar, to-dos, email, syncs

wirelessly with Microsoft Outlook)

Digital camera features (3 megapixel camera)

Video camera features (DVD-quality recording quality)

Digital music player (MP3s, streaming audio)

Digital audio recorder (built-in microphone)

GPS features (built-in GPS receiver with turn-by-turn directions, text-to-speech

translation, 40 million points of interest database available via cell network)

Tens of thousands of applications written for the iPhone by a development

community

Apple iPhone Hardware Convergence

Data services: Hi-speed data transfer over the global GSM cell phone network

Connectivity: Able to connect in most countries around the world, as well as

connecting to any WiFi wireless computer network.

Computing platform: Hi resolution, hi color LCD, OSX application platform, up

to 32GB RAM

A “physics engine” user interface that makes it respond as if the controls were

real-life objects

Full mobile gaming platform

24

Nokia N95 device information available at http://www.apple.com/iphone/

24

With this much flexibility and power in a device that fits in your pocket and goes

everywhere you go, revolutionary innovations, solutions, and services previously

considered implausible will now not only be viable, but will be globally extensible and

mass-deployable. This applies to consumer needs as well as the needs of business. If this

device becomes a blueprint of the future mobile information device, the ideas of

“telecommuting” and “global outsourcing” might very well evolve to human capital

being completely mobile and even more dispersed (and traceable). “Working from

home” evolves to “working from anywhere”; “Office hours” evolves into “on-demand

resources”; “Outsourcing” evolves from thinking of India and China to thinking of any

country where talent or expertise resides. As “outsourcing evolves from option to

obligation”25

, the most effectively organizations outsource becomes a critical success

factor.

There are countless other innovative applications for the mobile device. The Economist

provides some additional examples of how mobile phones are transforming traditional

processes worldwide: “Merchants in Zambia use mobile phones for banking; farmers in

Senegal use them to monitor prices; health workers in South Africa use them to update

records while visiting patients. All kinds of firms, from giants such as Google to start-ups

such as CellBazaar, are working to bring the full benefits of the web to mobile phones.

There is no question that the PC has democratised computing and unleashed innovation;

but it is the mobile phone that now seems most likely to carry the dream of the „personal

computer‟ to its conclusion.”26

25 The title of a chapter in Deloitte‟s TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf] 26 “The dream of the personal computer”, The Economist; Jul 27, 2006 [http://www.economist.com/opinion/displaystory.cfm?story_id=E1_SNNQDQN:]

25

Mobile information devices tend to be more social devices than other information

devices.27

Because these mobile information devices are the interface between the

information and the person, they serve an important and very personal role in a person‟s

life. Because of this, social relevance plays a large role in mobile device success or

failures. This means that less tangible factors (as described earlier) such as style,

usability, form factor, and “cool factor” matter just as much as functionality in this type

of technology.

Investors and entrepreneurs can approach the mobile information device sector from

multiple perspectives and expect to see a wealth of opportunities. Demographically,

there is the potential to attract previously unreachable audiences. Commercially, there is

potential to develop new premium services that are attractive and useful to users in

wealthy nations, as well as new, inexpensive basic services to the less wealthy but more

populous customer base in Asia and Africa. Politically, there are a bevy of opportunities

to integrate mobile information devices to help manage, coordinate, and enable grassroots

political movements or campaigns. From the business efficiency perspective, most any

company currently providing services that involve information delivery (even customer

service) should extend its delivery platform and user experience to the mobile

information device.

To summarize, mobile information devices promise an unprecedented opportunity to

create new business opportunities, enable social and political change, and enhance the

efficiency of current business processes.

27 Phones, like cars, are fashion items. Both are social technologies.

Source: “Phones are the new cars,” Technology Trends, The Economist; Nov 30, 2006

26

Collaboration

Like Open Source, collaboration is not a traditional “technology” per se, but it does fit

within the definition of technology referred to earlier in this study. In fact, the definition

of technology specifically includes the “application of knowledge,” and collaboration is a

methodology of applying knowledge to solve problems.

What enables collaboration (which has existed in some form since the first intelligent

organisms on earth interacted and evolved) to be a revolutionary technology is how the

possibilities of collaboration have recently exploded thanks to the convergence of other

revolutionary technologies like the Internet, World Wide Web, the personal computer,

and mobile information devices. These convergent technologies together enable new

forms of collaboration that remove the traditional constraints of space, time, and

circumstance.

Collaboration is an activity that most every organization -- ranging in size as small and

diverse as local support groups or municipal governments to as large as national

governments or international movements -- is involved in. Collaboration regularly occurs

within organizations to assemble deliverables, and collaboration commonly occurs

between vendors and customers. Through this lens, it is straightforward to see the

diversity, quantity, and scope of collaboration occurring around the world.

As technologies that enable new ways to communicate continue to evolve, the

opportunities to enable new, revolutionary forms of collaboration atop these technologies

make themselves available. One of the more prominent innovations currently underway

is a concept called “Web 2.0” – where entrepreneurs are leveraging the latest web

technologies to transform traditional websites (that are viewed) into collaborative portals

27

(that are used and viewed). Web 2.0 concepts enable what this study refers to as mass

collaboration – collaboration that extends beyond a typical, structured team or

organization and enters into the realm of a new type of collaboration where the general

public is invited to participate in content development.

Web 2.0 innovations that enable mass collaboration include wikis such as Wikipedia.org

(a mass collaborative encyclopedia that is so effective that it has been utilized for some of

the research for this study), Flickr (a mass collaboration photo sharing and identification

service), YouTube (a mass collaborative video sharing and categorization service),

Facebook (a massive social network), Blogs (a hybrid of traditional publishing and mass-

collaborative discussion), and Twitter (an instant-message service by and for the masses).

Tremendous economic value has already been realized by the Web 2.0 revolution (Flickr,

YouTube, and Blogger were purchased for billions of dollars in the past few years), but

this is just the first phase of utilizing the Web and the growing global information

network to enable new forms of collaboration. Mobile devices (such as the Apple

iPhone, among others) will provide new platforms for collaborative applications, linking

in the mobile and distant contributors to what is now currently a PC-based collaborative

ecosystem.

In support of this outlook, Deloitte‟s Technology Trends report predicts that collaboration

plays an increasingly strategic role in the innovation process.28

Specifically, the Deloitte

study focuses on collaboration‟s role in the R&D process for global organizations that are

now distributing R&D activities around the world. In addition, Deloitte predicts that

companies will use evolving collaboration technology to better co-operate with

28 “Innovation becomes collaborative,” TMT Trends – Predictions 2006, Deloitte Touche Tohmatsu [http://www.deloitte.com/dtt/cda/doc/content/TMT%20Technology%20Predictions%202006_FINAL_FA_LOW%20RES.pdf]

28

government and academic research institutions to access leading edge thinking at the

non-commercial level. This is yet another example of how new technologies enable not

just improved collaboration, but new collaborative networks.

Investors and entrepreneurs have immediate and future opportunities to fund and imagine

new, revolutionary collaborative technologies that have a high likelihood of creating

substantial economic value by improving upon one of the most fundamental work

processes that exists in our society.

Summary

The global economy is currently reaping the benefits of revolutionary technologies

invented over the recent decades. Thanks in part to innovations that converge into a

larger, more strategic whole, people are working, playing, and navigating their lives in

vastly different ways than just thirty years ago.

But these technologies are still relatively young, with much more growth potential in

store. It is in this context that this study focused on near-term, next generation

technologies that leverage and could significantly enhance innovations and services

available today. The guidance presented here is distinct from other studies, yet has many

common links. It is worth noting that none of the studies researched published a

methodology to assess which technologies made the cut. There very well may be

sophisticated methodologies behind the scenes, but the reader is only exposed to the

results.

It has been the goal of this study to help guide investors and entrepreneurs toward the

more influential and rewarding areas in which to invest their time and money. New

29

energy directed towards these predicted revolutionary technologies will only help ensure

that they do become revolutionary. Creative thinking and problem solving, a focus on

growth and prosperity, and an eye toward social factors like usability and design are the

disciplines needed to take the human condition to the next level.

We have already decided as a society to embrace technologies that enhance our lives and

improve our productivity. However, as with all first generation technologies, there have

been some compromises made for these gains. The next generation of revolutionary

technological innovations promises to make this embrace less of a compromise and more

of an unfettered step forward.

30

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