No Recession for Tech, Ongoing Search For Next Big Idea

Technology is suffering many of the same economic pangs as other businesses: a hit on company values and stock prices, a decline in money flow, and waffling consumer demand. But the innovation engine driving the digital interactive revolution continues.

There is no denying the heightened nervousness in and around hardware, software, infrastructure, applications, content and services--and whether the economic tumult will impair the next big developments for digital consumers. The signals are becoming more mixed.

Wall Street and the press were all over what appeared to be the cockamamie marketing ploy by Apple for its iPhone, and much-anticipated 3G version that turned out to be an embarrassing inventory depletion caused by overseas demand. Just when many on Wall Street had become sanguine about PDAs, Research in Motion reignited the sector by exceeding sales and guidance estimates by growing its non-enterprise consumer smart phone market share--now 38% of its base.



There has been ample marketplace consternation over the executive defections from Google (for greener pastures at EMI Music and Facebook), which is redistributing tech intelligence across a spectrum of players.

Most troubling, however, are the mounting concerns that many cost-hounded companies will slow their support for the innovations that will take us to the next level. The pummeling of tech and Internet innovation stocks in the first quarter has left many looking unfavorably on the companies shaping the transformation. Apple stock lost 27%, and Google fell 36% in the quarter. The Nasdaq, where many tech companies reside, declined 14% in the first quarter. More than half of 1,000-plus corporate tech decision-makers recently surveyed by CDW say their budgets will continue to increase over the next six months--15% more than the beginning of the year. Services and software sector companies historically outperform during market downturns, although that will be tested during the remainder of 2008.

Even as many companies across all industries downsize and restructure, enterprise must be preserved, measured-risk encouraged and strategic innovation mandated. The importance of developing a co-creation process of building value by collaborating with customers and third parties on open, interactive platforms can get lost amid cost-cutting. Not pushing the envelope on global personalization and utility will impair the inevitable work out of sensitive--but significant--e-commerce, security and privacy matters.

For now, the tech innovation machine appears to be running at top speed. Efforts to put the Internet in everyone's pocket continues with Intel's first-generation data-centric Mobile Internet Devices. They promise to host a new wave of compact, portable gadgets for Web browsing and cyber-chatting--complete with the most critical PC applications and without the wildly popular voice communications that would place them in competition with smart phones.

Smart phones are about to make another cool leap with advanced voice recognition, GPS-based social networking, Web browsing, wireless payments and banking, live video, 3-D virtual chat and games, remote surveillance, digital storage and projection video. (The smart phone market is so intensely competitive, it can leave an established giant like Motorola stumbling.)

The affinity shared by 3 billion cell phone users may find ultimate nirvana in more reliably powered and functional wireless devices embedded in the human body--a decade or two from now. It would facilitate cerebral communications as well as body monitoring and diagnostics, according to recent comments by Martin Cooper, credited with inventing the wireless phone. For now, AT&T and other companies are embedding touchscreen technology into inanimate objects, such as tabletop services kiosks for customers in their stores.

Even as consumer electronics wizards work to reinvent hybrid living-room devices, there is declining demand for televisions--perhaps because computers, cell phones and other universal screens are connected transmitters of TV fare. The new age of devices has altered our perceptions of what television is and should be.

The attention to dazzling devices is equally matched by exciting developments in applications and content that embellish and improve their utility. The lumbering computer interface that has universally slapped onto devices and platforms is finally getting a revamp in the rush of touchscreen technology that is more like the fluid extension of the user. Google's Android system for AT&T and other handsets and Apple's innovations will be touchpoints as we move into an era of cloud computing in which applications, information, services and content become globally integrated and managed across all platforms and devices.

That hyper-convergence will be driven by consumers' insatiable demand, underscored by eMarketer's U.S. projections that 88% of all Internet users will be video viewers by 2012 and 67% will be online buyers.

Consumer exuberance was at the core of Google's April Fool's Day Web rundown of farfetched and maybe not-so-farfetched fictitious services. The "pranks" included scratch-and-sniff search, organizing all human ignorance, analytic AdSense for dreams and casual conversations, establishing permanent settlements on Mars, and street views or maps with Google competitors' locations deleted. Here's betting that at least one of these "big ideas" eventually flies.

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