28 October 2010 - Speech By RADM(NS) Ronnie Tay, Chief Executive Officer, Infocomm Development Authority of Singapore at Infocomm Industry Forum, Grand Ballroom, Orchard Hotel
Speech By RADM(NS) Ronnie Tay, Chief Executive Officer, Infocomm Development Authority of Singapore at Infocomm Industry Forum, 28 October 2010, 2.00 pm at Grand Ballroom, Orchard Hotel
Ladies and Gentlemen,
1. On behalf of Ms Tan Yen Yen, Chairman SITF and the organisers, I bid you all a warm welcome to this second Infocomm Industry Forum that IDA and SITF are hosting. I am pleased to see so many of you here, during what has been a very busy month for our industry with a number of significant conferences, awards and networking events. This year, the theme for this forum is 'Developing Capabilities For A New World' and we have invited luminaries and experts to speak on some of the key technologies and trends that will drive innovation in the future. I am sure we all look forward to hearing their perspectives.
Infocomm Industry Update
2. Infocomm continues to play a key role in driving Singapore's economy. In 2009, the infocomm industry contributed 7.7% to our GDP. Revenue for the infocomm industry has also continued to grow, reaching $63 billion in 2009, keeping pace with the economic recovery we have seen in recent months. Globally, Gartner has projected total infocomm spending worldwide to continue to grow at an annual growth rate of about 4%. Compared to the numbers we were seeing during the downturn just a year or two ago, I think many of us can heave a sigh of relief that there has been a turnaround, and prospects are looking good despite remaining uncertainties.
3. As the economy recovers however, many companies and organisations are seeing that they are emerging from the crisis into a new global context, one that has been evolving, and continued to evolve even through the economic downturn. Indeed, the continuing developments in technology, changing business models and consumer needs have created a new normal, or a new world, that they now find themselves in. As we make new plans to ride on the economic recovery and take advantage of new opportunities, we would do well to keep in pace with these changing trends.
"A Brave New World, Again."
4. When Apple launched the iPhone 4 earlier this year, the phrase used to market the phone was "This Changes Everything. Again.". I was struck that while the iPhone 4 boasted many new features for its users, the experience remained very consistent with the characteristics that we have come to associate with the iPhone. The new features, like multi-tasking and better camera capabilities, were implemented in such a user-friendly and almost intuitive manner.
5. Similarly, the brave new world that is emerging shares many characteristics that are very similar to the changes wrought by the Internet in the 1990s. Just as in the days of the Internet boom, connectivity remains a fundamental enabler of the transformation. Companies have benefited from the improved speeds and reach of broadband. Singapore, following early adopters countries like Japan, Hong Kong and Korea, will benefit from the ultra-high speed broadband services available over Singapore's Next Gen NBN. Another significant development over just the past year is the reach of broadband services to mobile users. As an illustration, Cisco's Visual Networking Index 2010 indicated a 160% growth of mobile data worldwide in the last year. It also forecast that global mobile data will grow nearly 40 times between 2009 and 2014. These developments are game-changing, and will continue to drive the key technology, business and consumer trends going forward.
6. In the area of disruptive and innovative technologies, the development of capabilities like cloud computing and business analytics will change the way that businesses can operate and leverage on infocomm. The inherent benefits of the cloud delivery model to business agility, including its low start up costs, low fixed costs, and faster time to market will become increasingly valuable to companies even as customer needs change even more rapidly. In Singapore, with the Next Gen NBN coming online, more companies will be able to leverage cloud-based services over the ultra-high speed fibre connectivity. At CloudAsia earlier this year, we launched an Open Call for cloud computing proposals, and we're pleased to announce that we've awarded compute resources to a number of industry, research and government players who will be working on cloud projects. Given the encouraging response, we will be launching a second call next month, and more details will be provided soon.
7. The rising amount of data being exchanged also creates exciting ways for companies to use the data generated by human beings in their ordinary usage of the web. Based on IBM's estimates, 1,200 exabytes will be generated globally in 2010 alone, which is the equivalent of 48 Billion Blu-Ray Discs worth of data, and all this in just one year. More than 80% of this data will be generated from social networking activities like blogging, using Facebook, and through mobile data usage. Gartner has projected that by the end of 2010, which is just a couple of months away, there will be more than 1.2 billion mobile handsets and other mobile devices such as iPad, slates, and other consumer tablets connected to the Internet, capable of applications, mobile commerce and providing a rich platform for developers and operators to reach customers. This "exaflood" of data is a gold mine of consumer and business information that can be tapped to create new business opportunities and business models.
8. Other than from human activity, system-to-system communication, in the areas of transport, health, education, safety, security, energy, and so on, can be tapped on to enable a city-wide, or even nation-wide communications grid. This will enable administrations to build higher levels of intelligence to first make sense of, and then to act on the data available from sensor systems and ultimately to enable new and innovative services for the intelligent or smart city. Networked capabilities like IP-cameras, sensors in mass transit systems, smart energy meters that are being built today, are examples of what can be leveraged on as infrastructure layer assets that will be the foundation for smart cities of the future. Increasingly, we are beginning to see pilot deployments of such infrastructure in a number of countries in the world. Solutions providers and systems integrators are partnering city authorities and taking part in pilot projects to put some of these systems in place.
9. Ultimately, the new world is not only about the development of technology because technologies are simply tools which businesses and consumers use to change their behaviour, the way they conduct their operations or the consumer services they offer. Looking at some of the key consumer trends that have driven the behaviour of retailers and businesses like social networking, real-time reviews, corporate blogging to increase brand awareness and identity, we can see that all these developments are fundamentally driven by sophisticated use of infocomm by both businesses and consumers.
How Organisations and Companies are Responding in the New World
10. An interesting example of a company that is leveraging new technologies and consumer trends in an old business is a diamond seller called Blue Nile, based in the US. Blue Nile brings a unique web enabled diamond shopping experience, especially to the tech savvy generation of consumers. Unlike typical brick-and-mortar jewellery retailers, Blue Nile sells its diamonds purely online, leveraging web technologies to cater to the needs of its chosen segment of customers.
11. By maintaining only an online presence, Blue Nile significantly lowers its costs by avoiding expenses like rental and sales staff costs. Blue Nile's virtual marketplace can also hold an infinitely larger selection of diamonds than the traditional retail shops. At any moment, Blue Nile maintains an online database of 60,000 individually certified diamonds, that can be sorted by the 4Cs, I understand the 4Cs to be, Carat, Clarity, Colour, and Cut) and browsed by potential buyers. Because these diamonds are certified, online shoppers can be assured that they are getting the quality of the diamond that they purchased. Blue Nile has also secured the exclusive online rights to showcase those diamonds, without having to actually buy the diamonds before selling them on. In a sense, Blue Nile acts as an online broker between customers and diamond producers, hence saving a lot of cost in the transaction.
12. In this age of customisation, Blue Nile's web interface allows the customers access to any information about the diamond they are purchasing, selecting any setting that they like, and putting the customers firmly in control of the purchasing process. Blue Nile is about giving the customers exactly what they want and is congruent with developing consumer trends. While no one business strategy is unique nor groundbreaking, the combination of those capabilities creates a unique market niche for Blue Nile and other companies like it. Blue Nile has been successful, seeing its revenue grow from US$120 Million to US$320 Million from 2003 to 2008, and I know of people in Singapore who have bought diamond rings or earrings from Blue Nile and other online diamond vendors as gifts.
13. Recently, I visited a number of companies in the US that are focussed on data analytics. They believe that organisations will be putting a lot of focus on how data from the burgeoning social media and social networks spaces can be analysed to derive value for their customers. To achieve that, they are developing capabilities in sentiment analysis and using social media data for fraud detection, security and marketing research. One example is SAS, which forecasts increasing demand for such capabilities in Asia, particularly from the banking, manufacturing and logistics sectors. One of SAS's newest initiatives is the integration of BA with high performance computing infrastructure. The objective is to make transformational analytical performance gain at a fraction of the hardware cost required. SAS's innovations include memory analytical processing that reduces input-output transfer time, the use of multi-processor parallel processing and so on.
14. Of course, the use of Business Analytics delivers value for adopters and I am sure many of you would have heard of interesting examples or even experienced it yourselves. For example, a large department store in India was faced with increasing competitive pressure for customer wallet share. Here BA was deployed to leverage its rich transactional data to generate insights to help it better compete in the market. The company was able to analyse its historical customer and transactional data, in multiple formats, to help harness valuable understanding of customer churn and share-of-wallet for more targeted marketing.
15. IDA is also heartened to see many local infocomm enterprises begin to harness these new world capabilities in their business. The National Infocomm Awards 2010 we announced a couple of weeks ago featured a few of such companies. Examples are GTW Holdings, the creators of HungryGoWhere, which invested in cloud technology to optimise business operations and improve service provision, and Brandtology's Business and Brand Online Intelligence Service which employs intelligent analytics to help companies monitor their brand and reputation in the realm of social media. Innovative solutions or their innovative use by local players featured at the NIA 2010 include a pocket-sized ECG device from EPI Life that doubles as a mobile phone, a medication management system that ensures the right dispensing of medication at two hospitals and a customer management system that enables guests to have a seamless experience at an Integrated Resort.
Thinking Anew in the New World
16. Infocomm is an enabler and facilitator of innovation. We would want to encourage our industry to think of how they can leverage infocomm to create new business models to cater to the new world.
17. Today, we have invited speakers who are experts in their areas of business innovation to share their experiences and thinking. These speakers will cover various areas of interest including the infocomm opportunities in Asia, the economics of cloud computing, the potential in mobile data services, how to leverage social networking for business and also how business models are changing in the new networked environment. I believe their insights will be useful to all of us who are continually looking for new ways to create value through innovation in the new world.
18. I hope that, like me, you are looking forward to an afternoon of fruitful discussion. Thank you all again for your support and I wish you an enjoyable time at this year's Infocomm Industry Forum.