Have we reached peak consumer tech?

ALAN KOHLER
November 6, 2017
The Australian

Last week’s release of the iPhone X was big deal as usual, but it did more than achieve the feat for Apple Inc of relieving its “fans”, as they seem to be called, of the biggest lump of cash yet, sending its share price up 10 per cent in the past month and its market cap towards US$1 trillion.
It suggests that we may have reached peak consumer tech.
Ten years after the release of the first iPhone, the smartphone revolution has become banal, as all revolutions eventually do. The latest iPhone is incremental — an advance, to be sure, especially the facial recognition thing, but this time relatively small. I’m probably going to get one, but the biggest change seems to be the price.
The dominant technical advances of the past decade have been focused on consumers, and in particular leisure — social media, photos, games — and all of it led by smartphones, which are now so ubiquitous as to be a menace, with people wandering into traffic looking at them and getting run over by someone texting while they drive.
But that’s not the point of this column. It is that consumer tech is now giving way to industrial tech, which will be a far bigger deal.
Not that consumer tech is over. We now have to buy smart home devices, Google Home, Amazon’s Alexa, and so on, as well as virtual reality. There will always be some reason for us to give money to Apple et al.
But it’s clear that the next wave of technology is more industrial: the internet of things, the next generation of robots, artificial intelligence, 3D printing, blockchain, driverless cars and, eventually, quantum computing.
The fact that technological advances over the past ten years have been focused on consumer producers and leisure is partly responsible, among other things, for what economists are calling the “productivity paradox” — that is, the mystery of why productivity, and therefore wages growth, has been so low since the GFC, despite the explosion in technology and innovation.
That phase is probably coming to an end. Morgan Stanley, in a recent report, said it expects productivity growth to rebound back to the long-term average of 4.7 per cent per annum, from the anaemic 2 per cent that has prevailed since 2009.
Improvements in convenience (texting, online shopping, voice recognition, Google maps) and leisure (social media, games) are largely not picked up in the productivity data.
But the next wave of innovation will be fundamentally different.
Two years ago, a World Economic Forum survey produced a range of future tipping points for the next wave of innovation, saying that “the world is about to experience an exponential rate of change through the rise of software and services.
“Now comes the second machine age. Computers and other digital advances are doing for mental power — the ability to use our brains to understand and shape our environments — what the steam engine and its descendants did for muscle power.”
Here are some of the tipping points, or shifts, that the 800 executives and experts surveyed by the WEF came up with: free storage for all, 2018; robots, 2021; wearable internet, and 3D printing, 2022; blockchain, 2023; the connected home, 2024; AI and white collar jobs, and smart cities, 2026; bitcoin, 2027.
These sorts of predictions are usually way off, as 2001: A Space Odyssey showed us. But there’s no doubt that tipping points for these things will be reached at some point, as well as electric vehicles, then driverless vehicles, and things we haven’t even thought of yet.
Morgan Stanley concluded: “We believe the economy stands poised to be transformed by a new wave of scalable and industrial focused innovation based on the confluence and maturation of new technologies, including big data analytics, cybersecurity, blockchain, Web 3.0 cloud computing, robotics, 3-D printing, self-driving cars and genomics”.
It’s hard to disagree.
Meanwhile the economic and political classes are fighting yesterday’s wars with interest rates and taxation.
Both the American and Australian governments are attempting to deliver “jobs and growth” by cutting company taxes, and central banks are trying to do it by cutting interest rates, and in each case they talk about little else.
But they’re standing in a gale holding a fan.
There are huge forces at work. It’s not only the second machine age, centred on artificial intelligence and leading both to higher productivity and mass unemployment.
But there are other huge and unpredictable forces at work as well, such as facial and voice recognition potentially spelling the end of privacy, cyber warfare going to a new level against individuals, companies and governments, fundamental challenges to the financial and monetary systems from cryptocurrencies and blockchain, and the transformation of energy production.
One suspects that low productivity and wages will be least of our concerns.
Alan Kohler is publisher of The Constant Investor