TMT Predictions 2017

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What the future holds: machine learning, navigating the great indoors and safer vehicles

The Australian cut of Deloitte TMT Predictions

24 January 2017: Deloitte Australia has released its 2017 Technology, Media & Telecommunications predictions, forecasting a year that will see further significant breakthroughs in machine learning, indoor GPS navigation, safer travel in motor cars, more cyber mischief and a growing use of biometric security.

The leader of Deloitte’s Technology, Media & Telecommunications (TMT) practice, Stuart Johnston said 84% of Australians owning a smartphone now have a ‘super computer’ in their hands which is more powerful than they realise. The industry will continue to focus on refining systems, applications, software, security and network infrastructure to meet their needs. ”Machine learning is the megatrend: its application and influence, particularly on our mobiles, will be improving all parts of our lives in 2017,” he said.

Brains at the edge: machine learning elevates the smartphone

Deloitte predicts that globally over 300 million smartphones, or more than a fifth of units sold in 2017, will have machine learning – a capability that allows computers and mobiles to adapt services according to new data without being explicitly programmed.

“Machine learning is paving the way for a unique era in functionality, personalisation and connectivity with other devices through our smart phones,” Johnston said. “It is enabling us to have a personalised computer in the form of a smart phone in our hands, with individualised services provided with or without connectivity.”

“Currently you can already use machine learning programs such as predictive text, suggesting the application you want next and enhancing biometrics (including voice and facial recognition).”

“Emerging technologies powered by machine learning that are likely to shape the 2017 landscape include programs that determine users’ moods and emotions through pressure sensors, make health and life predictions using health data and detect surrounding objects; all using the computing power that is native to the device.1

The final frontier: the Great Indoors

One of the new technology frontiers of 2017 will be “the great indoors” harnessing indoor connectivity, personalising the experience and amplifying navigation.

“Given that we spend over 90% of our time indoors and collectively use billions of objects under a roof, Deloitte predicts that the impact of indoor navigation is expected to be similar or greater to the impact of outdoor digital navigation,” said Mr Johnston.

“GPS has been estimated to have an economic benefit of around 0.4% of US GDP, representing significant opportunities for those in commercial property, retail, workplace, healthcare, manufacturing and supply chain logistic industries, to name a few,” said Mr Johnston.

Deloitte Global TMT Predictions report reveals that by 2022, at least a quarter of all human and machine uses of precision digital navigation will include an indoor leg or be for an entirely indoor journey, compared to less than 5% of all uses in 2017.

“Improvements in the accuracy of indoor navigation technology, an array of positioning data, improved analytical tools, indoor wifi routers and supporting beacons are some technologies contributing to growth. Australian retailers and shopping centre owners have been quick to adopt such technologies, and will continue to do so.

“Indoor technology is helping to redefine the shopper experience to find goods, remove the need for a check-out2, improve real-time logistics and receive broadcast messages as they walk past shops,” said Mr Johnston. “Given their ready adoption, the use of beacons in Australian retail stores might be a useful counter to the technology-enabled shopping experiences provided by retailers such as Amazon in their Amazon GO stores.”

Indoor navigation also provides significant opportunities in workplace design, staff engagement and well-being. One of the world’s most advanced office buildings, Deloitte’s Amsterdam building “The Edge”3, has changed daily experiences at work. The building team has redefined efficiency in building design and encourages the use of a smartphone and app to automate a range of personalised services based on a staff members’ schedule, including directions to a parking spot, locating a suitable desk and adjusting light and temperature according to individual preferences. ‘The Edge’ has now become a strong part of the recruitment proposition.

Autonomous vehicles: the first step in disruption is automatic braking

Deloitte’s TMT Predictions Report forecasts that by 2022, annual US motor vehicle fatalities could fall by 16% from the likely death toll in 2017, and that the single greatest factor in the signficant disruption to the automotive industry will be technology: most notably automatic emergency braking (AEB).

In Australia, the Australasian New Car Assessment Program (ANCAP) says that AEB has been shown to reduce rear-end crashes by more than 38%4, well above US estimates. “Based on current death rate figures5 in Australia, a minimum of 16% improvement in deaths could result in a reduction of over 200 lives a year, as well as significant cost savings in road trauma costs currently estimated at $AU27billion per year or $70million per day)6,” said Mr Johnston.

IHS Automotive data reveals 29% of new Australian passenger cars were fitted with AEB in 2015 (up from 14% in 2014): 19% of new Australian SUVs were fitted with AEB (up from 11%)7. At least 13 manufacturers currently sell cars in Australia with some form of autonomous emergency braking8, and Scania Australia is one of the first in Australia to offer AEB for some of their heavy vehicles.

“Australian cars without automatic braking are expected to account for a disproportionate share of accidents in the future, undermining insurance and CTP economics. Deloitte Australia predicts that this will mandate automatic breaking in cars and trucks on Australian arterial or all roads by 2025,” said Mr Johnston. “Forward-thinking insurers that offer reduced premiums for AEB safety features could also have the potential to encourage a wider adoption of the technology.”

DDoS attacks enter the terabit era and Australian IoT devices

Whilst DDoS is not a new thing, in 2017 it is easier and faster than ever and it is intensifying at a time when Australian awareness of the need for cyber-security is at an all time high.

Deloitte predicts that Distributed Denial-of-Service (DDoS) attacks, a form of cyber attack, will become larger in scale, harder to mitigate, and more frequent in 2017. There will be on average one terabit/s (Tbit/s) attack per month, over 10 million attacks in total per year, and an average attack size of between 1.25 and 1.5 gigabits per second (Gbit/s) of junk data being sent.

Cyber-attacks are increasingly common because every-day electronic devices such as CCTV cameras, digital video recorders and other connected devices are being compromised and controlled to facilitate and scale this type of attack. The number of connected devices projected to reach 50 billion by 2020, and as some are relatively easy to target, will continue to be a focus of hackers.

“There are other compounding factors making these attacks faster and easier to implement,” said Mr Stuart Scotis, Deloitte Consulting and TMT Partner. “Historically, you needed to be a skilled programmer to launch a DDoS attack. However in 2017, “how to” instructions and source code can be found online, which can only help to increase attacks. Adding to this is rising uplink speeds (wireless and fixed) increasing the speed and impact of such attacks.”

These attacks have a significant impact on business. Australia has the fifth highest level of web applications attacks of any country in the world9, and according to the Australian Government’s Cyber Security Strategy, cybercrime costs Australia $AU17 billion annually.

Australian companies and government organisations dependant on online capabailty for revenue, service and support will need to implement multi-dimensional and dynamic strategies to mitigate the risk of DDoS now and into the future. “Any defence that is predictable can be specifically targeted by attackers,” said Mr Scotis. “Preparation should include the design of deceptive approaches that establish a false reality for adversaries and can help disperse adversarial traffic.”

Cyber-safety and biometrics

Whilst there is increasing cyber risk, better security is here. Today, one in three Australians has a fingerprint scanner on their smartphone for security purposes, with two-thirds regularly using the feature10. Of those Australians who are aware their fingerprint reader capability, use of the feature is consistently high across all age groups. This suggests that one of the largest barriers to use of this technology is not inconvenience or fear about lack of security, but lack of knowledge that it exists.

Deloitte predicts fingerprint readers usage will increase markedly in 2017 as understanding of the added security and convenience rises. Deloitte predicts the active base of fingerprint reader-equipped devices will top one billion for the first time in early 2017, and that each active sensor will be used an average of 30x per day. About 40% of all smartphones in developed countries will incorporate a fingerprint reader as of end-2017.

Further emerging biometric technologies include facial recognition, finger vein and palm vein systems.

Mr Scotis forecasts that biometric applications and sites in payment or authentication processes will expand into such areas as providing identification for online Australian government services, building security and eWallet payments.

While biometrics offer heightened security measures over a password, they are more secure but not infallible. CIOs seeking to use biometrics outside of a mobile phone environment should ensure that ID theft, privacy and the security of databases remain on the agenda this year.

5G: an evolution revolution, even in 2017

Deloitte predicts that up to 200 global carriers, representing tens of millions of customers, will be able to access 100Mbit speeds this year as the next generation of mobile networks is developed, though change will be felt in a series of interim steps through evolutions of 4G+, namely LTE-A and LTE-Pro, before we see standardisation, deployment and commercial uptake of 5G into 2019/20.

“Australia is one of the global leaders when it comes to high speed mobile networks,” said Mr Scotis. “All our major network providers have rollouts of this technology which are well progressed across major cities. Most of the handets sold in Australia since 2016, include capability to access this type of network enabling high speeds.”

IT-as-a-Service

Deloitte Global predicts that by the end of 2018, spending on IT flexible consumption models for data centres, software and services will be just under $US550 billion worldwide. This represents a rise of more than 50 per cent from a forecast 2016 level of $US361 billion.

Deloitte Global predicts for 2018 is that this will grow to 33% of total IT spend at $US547 billion out of $1,552 billion and reach 50% by 2022. The Australian experience is consistent with the global trend: Asia Pacific IT consumption models are also growing, but appear to lag US models by around 12 months. Recent Gartner11 reports show a 4.3% increase in IT spending in APAC over the past year to be $US 751,617 million.

“Technology as a whole is increasing its spend across industries in Australia, and further growth is expected,” according to Mr Scotis. “2017 will see the continued movement to the consumption based models as CIOs continue to see the speed and flexibility together with the potential cost savings become increasingly attractive. to a widening technology landscape.

“We expect a hybrid model to remain for some time both in Australia and globally but the trend will be towards flexible consumption,” says Mr Scotis. “This will be driven by growth in consumer and small-business adoption of flexible models increasing pressure on large-enterprise to use/offer it as part of their product set.”

TV advertising revenues

The Deloitte Global prediction that US TV advertising revenue in 2017 will be remain in line with revenues in 2016 is positive in the context of a disrupted media market and the changing way we consume TV. In Australia, forecasts for advertising revenues are similar with advertising revenue in the USA in that they are expected to hold flat in 2017.

“TV holds its own, particularly among retailers, automotive dealers, insurance and food sectors because of the large audience reach and impact on brand awareness and long-term perceptions said Ms Clare Harding, Senior TMT Partner. “For Australian consumers, this influence is dropping.”

“The most recent Deloitte Australia Media Consumer Survey shows that whilst TV remains one of the most influential forms of advertising in Australia, we have seen a signals of the rising influence of social media on consumers. TV’s influence fell for the first time in four years last year, and social media recommendations have surpassed TV ads for the first time in their influence on buying decisions. Changing consumer behaviour will likely see this decline continue in the future as streaming and internet TV gain viewers.”

TV audiences are fragmenting, especially across younger generations. Trailing and leading Australian millennials now consume more streamed programming than live TV (33% and 30% respectively for streaming verses 28% and 29% respectively for live), and more than half of Australian households now pay for some form of TV content12.

“The challenge for Australian broadcasters will be in capturing and maintaining the value of an older audience, as younger Australians grow their use of streaming services such as Netflix, Stan and Amazon Prime Video,” she said.

Tablets may peak

While figures are yet to show any change of trend, 2017 may bring about the first decline in Australian tablet sales given that the global TMT Prediction report expects a 10% decline in tablets globally in 2017. Deloitte Global predicts that 2017 sales of tablet computers will be fewer than 160 million units, down by about 10% from the 178 million units sold in 2016.

“While Australian data collected in March 2016 is yet to see any fall in the sale of tablets, the 2016 Australian Media Consumer Survey did mark flat sales over the last three years (between 66-63%) as well as a declining interest in using tablets, in part attributed to improvements in mobiles and computers,” said Ms Harding.

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1 https://arc.applause.com/2016/05/10/qualcomm-machine-learning-zeroth-intelligence-engine/
2 https://www.amazon.com/b?node=16008589011
3 https://www.bloomberg.com/features/2015-the-edge-the-worlds-greenest-building/
4 http://www.abc.net.au/news/2015-08-12/calls-for-automatic-brakes-to-be-standard-in-all-cars/6693120 
5 https://bitre.gov.au/statistics/safety/fatal_road_crash_database.aspx 
6 http://www.abc.net.au/news/2015-08-12/calls-for-automatic-brakes-to-be-standard-in-all-cars/6693120
7 https://www.fcai.com.au/news/index/index/article/405
8 https://www.whichcar.com.au/car-advice/aeb-is-not-the-safety-net-you-may-think-it-is
9 https://www.akamai.com/us/en/multimedia/documents/state-of-the-internet/q3-2016-state-of-the-internet-security-report-infographic.pdf
10 Source: Australian Cut, Mobile Consumer Survey, Pages 40 and 41
11 http://www.gartner.com/newsroom/id/3490317
12 http://www.adnews.com.au/news/svod-overtakes-foxtel-as-pay-tv-spreads-to-50-of-households

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