6 Digital Trends to Watch in 2013

I’ve long given up the habit of making New Years resolutions.  What’s the point?  The seeds of the next year are sown in the previous one.  So rather than empty vows of change, all that effort can be put to better use by planning for what is to come.

To do so, we need to go beyond simple linear extrapolation.  Principles like accelerating returns and hype cycles help point the way and we also need to keep in touch with the technologists and entrepreneurs that drive events.

As I’ve noted before, blindly following trends is for suckers, but putting serious thought into where things are headed is an essential exercise.  Mapping out what we can expect helps us prepare for the unexpected, be robust and stay on our toes.  With that in mind, here are 6 things we can expect to shape the digital world over the next year and beyond

1. Watson Meets Siri

Two of the most important things we’ve seen emerge over the past few years are Big Data and machine intelligence.  Cheap, low power chips combined with enormous data farms and powerful algorithms are creating an artificial nervous system that has nearly unlimited power to monitor and store information.

A year ago I said that 2012 would be the year of the interface and that’s been true to a large extent.  Beyond Apple’s Siri and Microsoft’s Kinect, Google has launched Project Glass, an interface that’s embedded inside the frames of eyeframes, giving you an instant connection between the real world and all those data centers.

These two trends are about to combine in a major way.  IBM is taking its Watson project, which beat human champions at the very intuitive game of Jeopardy! and applying it to real world applications like medicine. Microsoft just unveiled technology that can listen to English and repeat back in fluent Chinese.

And that’s just the start.  This trend will accelerate.  Systems will get much better, cheaper and more integrated very quickly.

2. Atoms Collide With Bits

I’ve written over the past year about the new industrial revolution.  A confluence of various technologies, such as CAD software, 3D printers, CNC routers, laser cutters, and 3D scanners are democratizing manufacturing and dramatically improved industrial robots are completely reshaping the economics of manufacturing.

As Steve Denning notes, the fact that companies like Apple and GE are bringing manufacturing back home points to a larger movement.  As automation increases, the proportion of labor costs in manufacturing falls, changing the outsourcing equation dramatically.  We could be witnessing the beginning of a vast surge of manufacturing coming back to developed markets.

Yet he also makes a subtler point.  As businesses bring factories back home, they are rediscovering information that they lost from outsourcing – the invaluable interactions between designers, marketers and the factory floor.  It seems that moving all that production overseas may not ever been a good idea in the first place.

We can expect this trend to deepen.  As the informational content of products continues to increase, atoms will become inextricably tied to bits.

3. SoLoMo Makes Way For The Web Of Things

Over the past few years, we’ve seen computing become more social, local and mobile and that is what has driven innovation and user experience.  It seems hard to remember a time when we didn’t use those few extra free moments standing around to tweet and surf or stop to check the online recommendations of a cafe before going in.

That will continue, but the new horizon is the Web of Things, where just about everything we interact with becomes a computable entity.  Our homes, our cars and even objects on the street will interact with our smartphones and with each other, seamlessly.  This will not only change the game, it will change the players as well.

I’ve argued before that the most immediate ramification of this trend is that it gives Microsoft an opportunity to get back in the race.  We may very well find that the Xbox will become as central to their ecosystem as the iPhone and the iPad have become to Apple’s.

However, the larger consequence is that all businesses will become a technology businesses. As Ray Kurzweil has noted, in the future “all technologies will essentially become information technologies, including energy.”  That, in turn, will transform every organization into a potential competitor and collaborator in just about every industry.

4. Operating Systems Become A Three Way Race

Probably the biggest thing to watch in 2012 will be the battle for operating systems heating up and Windows 8 challenging Google for market share.  Apple, strangely enough, will mostly be a bystander.  Their consumer base will likely remain loyal and most probably continue to grow roughly in line with the market.

However, Apple’s market share is relatively small, roughly 15%.  So the major conflict will be between Google and Microsoft, both vying for the loyalties of handset manufacturers. Samsung, the most coveted partner, has about 30% market share, so they will most probably decide how it ultimately all plays out.

As I’ve written before, I’m pretty optimistic about Microsoft’s chances.  Reviews of the Windows phones have largely been positive and if manufacturers decide to split their loyalties, the tie would go to Microsoft.  That simple fact, plus their strength in the enterprise market, gives them the advantage.

In the end, how it really all turns out is anybody’s guess.  Google is building out its own assets such as the Project Glass initiative I mentioned above and autonomous cars.  Plus, you never know what they’re cookingup in Mountain View.  In any case, this 3-way race will certainly be a key focal point over the next few years.

5. NFC Heats Up

Everybody who has ever used E-Z Pass (or for that matter, been stuck in the slow cash lane at a tollbooth) knows the power of seamless machine to machine communication. Near Field Communication (NFC) is the latest iteration.  The advantage of NFC is that the communication goes is two-way.

So we’ll soon be using our smartphones to communicate, not just with each other, but with the world around us; facilitating payments, picking up promotional opportunities from ads and sharing information with retail displays, just to mention a few of the applications being talked about.

In truth  we really don’t know what NFC will bring us, because there are so few phones out there that include the technology.  However, now that virtually every handset manufacturer (except, of course, for Apple) offers a variety of NFC capable models, we’re nearing a tipping point.

Expect to see a lot of action in this area over the coming year.

6.  SEO For Social

I still remember the first time I heard about search engine optimization (SEO).  It was probably in 2005 and an entrepreneur I knew well told me he was starting a new business to optimize search engine marketing.  I have to admit, I didn’t quite get what he meant.

Since then, SEO has transformed advertising and media by optimizing the way machines talk to machines.  That’s been great for direct marketing, but not so good for content. There’s been a constant tension between making content easy for machines to find while at the same time creating the kind of fantastic user experience that consumers enjoy.

Natural language processing will be the key technology for solving this problem. Companies like OpenAmplify and Networked Insights are creating algorithms that can analyze massive amounts of content in very much the same way a human would, except infinitely faster and with greater accuracy.

This analysis can then be combined with standard engagement metrics to point the way forward.  This might take more than a year to play out, but it’s coming fast and it’ll be a real game changer.

The Semantic Economy and Brands as Open API’s

While all of these trends will unfold very differently in terms of detail and impact, there is an underlying theme:  Technology is changing the very fabric of enterprise.

For most of the 20th century, businesses focused on developing proprietary value chains. As they became more successful and added scale, their competitive advantage would grow in terms of quality, efficiency and brand equity.  Even a relatively small advantage could, over time, compound and be parlayed into a corporate dynasty.

What we’re seeing emerge now is a new semantic economy, where competitive advantages are built not through closed proprietary systems, but through creating effective linkages. As search and transaction costs fall to negligible levels, upstarts can not only compete with larger, incumbent rivals, they can put them out of business seemingly overnight.

The upshot is that we need to recognize that brands have a new architecture.  They are no longer mere proprietary assets to be leveraged, but platforms for collaboration and co-creation.  Brands have, in effect, become open API’s.

– Greg