The way we communicate, produce, and relate to technology is evolving quickly.
Tell me something I don’t know, you’ll say.
That’s where Benedict Evans, a prominent tech guru from the venture capital firm Andreessen Horowitz ('a16z') in Silicon Valley, comes in. In a recent presentation at the World Bank (Mobile is Eating the World) Evans shared inspiring, and at times, unnerving insights on how technology is shaping our world and how it might impact the global development community. Here are some key takeaways:
Halfway to connecting everyone. There are now 2.5 billion smartphones in the world, for 5.5 billion population of age 14 years and older. This deployment has followed what is known in the tech world as an “S curve” - slow at first, when mobile looked like a crazy idea, then accelerating, and now reaching a plateau. Its economic implications are staggering.
Technology on a new kind of scale. Google, Apple, Facebook, and Amazon are now ten times the scale of Microsoft and Intel in the 1990s, the times when Microsoft and Intel were changing the world. Tech companies went from important to dominant, from giants within their own sectors to giants in the whole economy. And these four giants are now competing, but in entirely new ways.
New ways of computing. Machine learning has changed the performance of computing dramatically. New systems look for data rather than relying on rules. These systems can distinguish commonalities from data points, learning to differentiate one from the other without programming a set of rules. The accuracy at which this process is happening is improving by the minute.
New ways of competing. Think of Alexa. Machine learning builds direct connectivity between user and product – called frictionless computing - and shapes a personal relationship with the machine. Alexa quickly becomes a “sentient being” who responds to your imperious command and curates your dinnertime play list or orders that quirky 2-ply toilet paper with political cartoons printed on it. So companies have a strong incentive to compete to be that one platform that links you up - once and for all - with your purchases. And to do so, the channel becomes the product, with companies going to lavish expenses to make that channel entertaining - making movies rather than ads, for example – to entice you to sign up to their platforms.
Industries are in topsy-turvy. All of this has serious implications for cost structures. When the Wifi-connected Dash soap button, now available to stick on our washing machines, enables you to shop at literally “the click of one button”, brand choice narrows and the entire demand paradigm is fundamentally changed. There is no need for traditional advertisement and no need for branding once the consumer is hooked up to this frictionless purchasing journey. Costs go down but concentration is likely to go up. Other changes are happening, too—just think of what is going on with cars. Moving from gasoline to electric is changing completely how a car gets made – gone are complex engines to make space for commodity batteries. Autonomous (self-driving) cars will change how cars get used and how cities will be structured (the day will come when instead of searching aimlessly for parking, cars will just return home on their own). All of this is moving value towards software, from physical scale to significant network effects, with a whole new set of skills that will be needed for those jobs.
What does this mean for economies? Benedict noted that Silicon Valley is good at making useful things (even things that appear at first to be toys or diversions for the affluent) and then driving the price of those things down very rapidly, so that they eventually become cheap enough to be utilized in some way by almost everyone. As industries change, new jobs are created and new infrastructure and skills are needed for developing countries to be able to compete in new markets, making inclusive growth possible. This is a story of consumers, firms, economies.
But what about governments? New information systems have the power to change how governments can effectively target their services. New technologies - think about drones delivering blood supplies – can create opportunities for governments to reach out to those in remote areas in ways that would have been unthinkable until yesterday. The ways to bring essential services to the poor are expanding, creating opportunities to scale up programs and achieve greater impact.
For the World Bank, this change in the global landscape presents a collective challenge in developing innovations and solutions that can address pressing issues around health, education, and social protection – ensuring that in a world where new technologies can bring huge gains, no one gets left behind.
While we wait for an app that can predict the future, what are your educated guesses on how development will evolve?
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