Aug 052013
 
Walmart is the one of the world's leading retail businesses

One of the features of the late Twentieth Century economy was how consumer spending came to dominate the economy – as manufacturing moved offshore, mines closed down and agriculture became largely automated, many developed nations’ growth came from retail spending.

Today’s release of retail spending figures by the Australian Bureau of statistics shows how that economic model too has come to an end. A post on the Macrobusiness blog illustrates the steady, structural decline of retail spending in Australia.

ScreenHunter_10 Aug. 05 11.36

Since 2000, the rate of growth has been declining, only low interest rate policies over the last two years has kept retail sales at a steady level.

Those businesses whose business models are built on the assumption of high growth rates have a big problem – its no coincidence it’s the department and clothing stores are among the loudest complainers about taxes, labour costs and rents as they see their sales and profits shrinking.

Basically the Twentieth Century era of consumption has come to an end as households have maxed out their credit cards. Now that many of those households are now older, they simply don’t need to spend as much anyway.

With the demographic, economic and cultural changes now happening in society it’s a bad time to be planning on massive expansions in household spending and debt as we say in most western countries from the 1960s onward.

It’s time to think different, and be a lot smarter about getting consumers to buy your products. The era of the 72-month interest free deal is over.

Aug 022013
 
lightbulb-in-a-blackout

Cisco gave a media and analyst briefing earlier today on the Internet of everything looking at how various technologies can help with tasks ranging from reducing traffic accidents to improving productivity which I’ll write up later.

One of the analyst’s questions though is worth pondering – “what happens when the power goes out?”

For most of the industrial processes discussed by Cisco and the panellists, this would be a hassle but most of the systems would, or should, be designed to fall back to a default position should the power fail.

On a much bigger scale though this is something we don’t really think through.

In modern Western societyour affluent lifestyle is based upon complex supply chains that get the food to our supermarkets, fuel to our petrol pumps, water to our taps and electricity to our homes.

Those chains are far more fragile than we think and few of us give any thought to how we’d survive if the power was off for more than a few hours or if the shop didn’t have any milk and bread for days.

It’s one of the fascinating thing with the end of the world movies. When the meteorite hits or aliens take over then our power and food supplies probably have only 72 hours before they dry up.

After that, you’ve probably got more to worry about your neighbours trying to steal your hoard than being ripped to pieces by zombies.

Most of us probably wouldn’t cope without the safe, comfortable certainties which we’ve become used to.

One thing is for sure — if the power does fail, then most of us will have more to worry about than whether our smartphones are working or whether our geolocating, internet connected fridge is tweeting our wine consumption.

Jul 242013
 
family-reading

This week’s Royal birth was a curious mix of the old and modern – a cringing fawning by the media over the family and baby which wouldn’t have been out of place of place in a black and white 1950s newsreel  coupled with a modern frenzy on social media.

In the social media world, the Washington Post reports there were almost one million mentions of the royal birth on Facebook in the hour following the news. It’s an interesting reflection of how communications have evolved.

Where once we shared news of life events by letter, then telegraph and later the phone; we now broadcast our own news over social media services, particularly Facebook.

Increasingly for families, Facebook has been the main way people keep in touch with their more distant friends and relatives. Your cousin in Brazil, aunty in Germany or former workmate in Thailand can all keep up with the news in your life through social networks.

The Royal family itself is an example of this, having set up their own Facebook page for the new arrival and it shows of how ‘weak ties’ are strengthened by the social media connections.

Another aspect of social media is the ability to filter out noise. If you’re like me, the royal baby is about as interesting as origami classes but  I was spared most of the hype by not looking at broadcast media and sticking to my online services where it was just another story.

While being able to filter out what you consider ‘noise’ risks creating écho chambers’ it also means the online channels are becoming more useful for both relevant news and family events.

That’s an important change in personal communications we need to consider. We also have to remember those baby photos we post to Facebook, Twitter or Pinterest are now licensed to those services as well.

One of the great challenges for this decade is balancing the privacy and security aspects of these new communications channels with the usefulness of the services.

In the meantime though they are a great substitute for a family newsletter.

Image courtesy of Hortongrou through sxc.hu

Jun 032013
 
Cell phones in use

Last week we had a series of reports on the changing web from Cisco, IBM and Ericsson along with Mary Meeker’s annual State Of The Internet presentation.

One thing all the reports agreed on was there is going to be a lot more data pushed around the net and the composition is changing as business and home users adapt to smartphones and tablet computers.

Cisco’s Visual Networking Index forecast online traffic would triple by 2017 while Ericsson’s Mobility Report predicts mobile internet traffic will grow twelve times by 2018.

What’s notable in those predictions is the amounts and types of data the different devices use. Cisco breaks down monthly traffic by device;

  • Smartphones 0.6 GB
  • Tablet computers 2.7 GB
  • Laptops and PCs 18.6 GB

In one way this isn’t surprising as the devices have differing uses and their form factors make it harder to consume more data. Cisco also points out that data consumption also varies with processor power. As PCs are the most powerful devices, it makes sense they would chew through more information.

Ericsson breaks down data use by application as well as device and that clearly shows the different ways we’re using these devices.

internet data traffic by mobile device

Notable in the graph is how file sharing is big on PCs but not on tablets or smartphones while email and social networking take up a bigger chunk of cellphone usage.

What’s also interesting in Ericsson’s predictions is how data traffic evolves. It’s notable that video is forecast to be the biggest driver of growth.

ericsson-by-data-traffic

Both Ericsson’s and Cisco’s predictions tie into Mary Meeker’s State Of The Internet presentation at the D11 Conference last week.

It’s worth watching Meeker’s presentation just for the way she packs over eighty slides into twenty minutes with a lot of information on how the economy is changing as the internet matures.

What all of these reports are telling us is that our society and economy are changing as these technologies mature. The business opportunities – and risks – are huge and there isn’t any industry that’s immune to these changes.

May 162013
 
Middle class house

Technologist Jaron Lanier says the internet has destroyed the middle classes.

He’s probably right, a similar process that put a class of mill workers out of a job in the Eighteenth Century is at work across many industries today.

Those loom workers in 18th Century Nottingham were the middle class of the day – wages were good and work was plentiful. Then technology took their jobs.

Modern technology has taken the global economy through three waves of structural change over the past thirty years, the first wave was manufacturing moving from the first world to emerging economies as global logistic chains became more efficient.

The second wave, which we’re midway through at the moment, is moving service industry jobs and middleman roles onto the net which destroys the basis of many local businesses.

Many local service businesses thrived because they were the only print shop, secretarial service or lawyer in their town or suburb. The net has destroyed that model of scarcity.

The creative classes – people like writers, photographers and musicians – are suffering from the samee changed economics of scarcity.

Until now, occupations like manual trades such a builders, truckdrivers and plumbers were thought to be immune from the changes that are affecting many service industries.

The third wave of change lead by robotics and automation will hurt many of those fields that were assumed to be immune to technological forces.

One good example are Australia’s legendary $200,000 mining truck drivers. Almost all their jobs will be automated by the end of the decade. The days of of relatively unskilled workers making huge sums in the mines has almost certainly come to an end.

So where will the jobs come from to replace those occupations we are losing? Finance writer John Mauldin believes the jobs will come, we just can’t see them right now.

He’s almost certainly right – to the displaced loom worker or stagecoach driver it would have been difficult to see where the next wave of jobs would come from, but they did.

But maybe we also have to change the definition of what is middle class and accept the late 20th Century idea of a plasma TV in every room of a six bedroom, dual car garage house in the suburbs was an historical aberration.

Just like the loom weavers of the 18th Century, it could well be the middle class incomes of the post World War II west were a passing phase.

If so, businesses and politicians who cater to the whims and the prejudices of the late Twentieth Century middle classes will find they have to change their message.

Apr 142013
 
understanding data with computers

If you give me six lines written by the hand of the most honest of men, I will find something in them which will hang him said the 17th Century French politician Cardinal Richelieu.

Today those six lines could be written on a social media site or be six disparate points drawn from a database. Without context those six lines could condemn us.

Something that’s missed when we talk about Big Data is the risk of false positives – if you dip into the stream, you can prove anything against person.

The world isn’t black or white, there are fifty trillion shades of gray and that’s why it’s important to think before posting an image on the web, firing someone or calling the cops.

In an era where we’re quick to judge and condemn people, the stakes are very high.

Apr 082013
 
V8 supercars mobile facility at tasmanian launceston grand prix

“We bring in almost everything,” says V8 Supercars director Mark Perry as he guided journalists around Launceston’s Symonds Plains racing track.

Everything Mark showed us – a fleet of trucks, communications equipment, hospitality tents and the racing teams themselves would be packed up on Sunday night, shipped to Melbourne and flown to New Zealand for the next race.

The V8 Supercar management are very proud of their work, and they should be given the massive task they have, but it exposes a weakness in the Tasmanian economy in that almost all the high value employment and equipment has to be flown in.

Quiet times in downtown Launceston

Arriving into Launceston on the Friday before the races, it’s interesting how little hype there is around the event. In Sydney, San Francisco or Cannes there would be banners and flags around the city welcoming visitors, in Launceston there’s almost nothing despite the race meeting being one of the state’s biggest events.

It was also surprising how there were no downtown events to complement the main attraction.

Almost every major sporting event from the Olympic Games and FIFA World Cup to the AFL Grand Final and Australian Open has some inner city satellite venues with big screens for the locals who can’t make it to the stadium.

Having those satellite events adds to the buzz and hype in the host city. Something that downtown Launceston needs at 7pm on a Friday night.

That lack of support by the community is notable, particularly in light of the $600,000 per year the cash strapped Tasmanian government pays in subsidies for the V8 Supercars.

I’m against government support for events like these, but if that money is going to spent it may as well be spent properly to maximise the economic benefits.

Subsidies like this would be even better if they were part of some grander economic plan, but like all the payments given to the film production, motor manufacturing and other industries, they are based more on populism than any strategy – the politicians may as well be giving free beer out in Launceston’s main street.

Why the community support is so tepid for the Supercars event is so tepid is something I’m going to be exploring in the next few days as I meet various business leaders in Launceston and Hobart to hear how the state is positioning itself in the 21st Century.

In the meantime, the V8 Supercars “travelling circus” has moved on, hopefully Tassie will have some more long term jobs to show for it.

Paul travelled to Tasmania and the V8 Supercars courtesy of Microsoft Australia