The prognostications of IT analysts and consultants often veer toward the mundane and the mercenary. Rarely do they inspire and provoke. The very best among them outline a credible and comprehensive vision of how the world might look if the technology reaches its full potential.
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A recent report from McKinsey Global Institute, the research arm of the management consultancy McKinsey & Company, hits all of the high notes. Titled "Disruptive technologies: Advances that will transform life, business and the global economy," it sets out to identify technologies that will have "massive, economically disruptive impact between now and 2025."
The mobile Internet leads a list that consists entirely of technologies that are either IT-based or would not exist without the communicative and computational power of increasingly cheap microprocessors. The 12 include such world-shaking technologies as robotics, renewable energy and genome sequencing, among others. That the mobile Internet beat all of them by a mile is worth noting, in part because of its relevance to practical issues -- cloud, mobile analytics, consumerization -- that executives and IT professionals are wrestling with today.
The well-written, 162-page report can stand as a fun read for science nerds. But it also advances a serious argument built on McKinsey's rigorous process for vetting technologies and winnowing the 100 contenders. First, they must exhibit a high rate of technology change, such as rapid advances in price/performance compared with alternatives. They must have broad potential scope of impact, touching large numbers of industries and companies or affecting a wide range of products and services. They have to create significant economic value by disrupting "profit pools," adding to a nation's gross domestic product or making previous capital investments obsolete. (McKinsey doesn't try to predict revenues and instead uses economists' metrics, such as "consumer surplus," the difference between actual prices and what people would have been willing to pay for goods and services.) Finally, a technology must have substantial potential for disruptive economic impact, changing how people live or work -- even reorienting countries' comparative advantages in certain industries.
Mobile Internet's impressive numbers
The McKinsey researchers have an armload of statistics to make their case for mobile Internet as the most disruptive technology. More than 1.1 billion people already use smartphones and tablets. The number of smartphones in use grew by 50% last year, while app downloads increased by 150%. With smartphones and tablets starting to outnumber PCs this year, mobile devices could account for 80% of Internet connections by 2025.
The 12 disruptive technologies
McKinsey Global Institute sifted through 100 technologies to come up with this potentially world-shaking dozen, ranked by estimated economic impact:
- Mobile Internet
- Automation of knowledge work
- Internet of Things
- Cloud technology
- Advanced robotics
- Autonomous and near-autonomous vehicles
- Next-generation genomics
- Energy storage
- 3-D printing
- Advanced materials
- Advanced oil and gas exploration and recovery
- Renewable energy
The high end of mobile Internet's potential impact, McKinsey estimates, is $10.8 trillion, a cool $3 trillion, give or take, above the top range of technologies No. 2-4 (knowledge work, cloud and "Internet of Things") and 36 times the impact of renewable energy, which was last place at $300 billion. To paraphrase the late U.S. senator Everett Dirksen: A trillion here, a trillion there, and pretty soon you're talking real money.
The researchers say the economic impact will come from three main sources: improved delivery of services, more productivity in selected work categories and the value that will come with the first-time Internet users who get on board via mobile devices. More than $2 trillion could be saved by more efficient treatment of chronic diseases, for example. Ingestible heart-monitoring sensors could alert patients and caregivers.
Cloud-based services and mobile Internet together could level the playing field and make IT more accessible to smaller companies and developing nations. They could also raise productivity and quality in education, health care and public services. Both, however, come with privacy and security risks.
Like some of McKinsey's other technology standouts, mobile Internet could have drastically different effects on different regions. People in advanced economies such as those of Europe and North America could gain "remarkable new capabilities," but in the developing world, mobile Internet could be the vehicle that brings three billion new people into the digital economy. It could also help them leapfrog older, less efficient technologies, such as the telephone and cable TV.
Adding three billion consumers from less advantaged economies -- 64% of their population isn't yet connected -- could help entrepreneurs there compete with first-world businesses while giving global companies a new channel to reach the world's fastest-growing markets. Some of the 100 million children that UNICEF says do not go to school might start attending online classes. But McKinsey cautions that battery capacity, which has only grown at a fraction of the rate that performance has, could hold back mobile Internet growth in places with unreliable electric grids. And the already stressed wireless spectrum will need a $300 billion infrastructure upgrade.
Interestingly, mobile Internet is the only technology with an economic impact that McKinsey predicts will be spread evenly across advanced and developing economies. With the exception of cloud and renewable energy -- which are expected to deliver 70% and 80% of their impact, respectively, to the developing world -- the other disruptors skew at least a little toward advanced economies.
This massive global shift to mobile Internet platforms will require companies to adopt fresh approaches to reach the new customers, the report states. The budgets of these mostly Third World consumers are smaller, and their tastes and styles substantially different, from those of the developed world. "Business leaders will also need to identify employee functions that could be performed more efficiently or effectively on a mobile platform," the authors said. The same job displacement that occurred in developed countries when brick-and-mortar businesses moved to the Internet could happen in the new markets. There's an upside, though: McKinsey estimates that 3.2 new jobs will be created for every job lost.
The authors do an excellent job illustrating how the technologies depend on each other. "The mobile Internet might never live up to its enormous potential without important advances in cloud computing to enable applications -- including tools for automating knowledge work -- on mobile devices," they wrote. Apple's Siri voice recognition, which reaches up to the cloud for its processing power, is a prominent example. The growing use of HTML5 web scripting could move even more processing off devices and into the cloud, the authors suggested, which in turn will support smaller devices -- thin clients, in essence -- that can run apps in browsers instead of downloading them.
Disruptive technology or hype?
Here's one final, fascinating metric. The institute measured hype by counting articles in major general-interest and business publications, placing it opposite an axis of potential economic impact. The rankings along both axes varied so much that McKinsey had to use a logarithmic scale, which basically means the numbers accelerate as you move up the line.
Renewable energy is the biggest pretender of the bunch, hovering just below the 10,000-article level, but with an economic impact of $300 billion -- hardly chump change, but less impressive than the biggest world-changers. Advanced oil and gas and energy storage fare little better.
Want to guess which technology McKinsey named as the only one with hype that matches its potential?
You know how this story ends: mobile Internet.