Monday 21 October 2019

Adrian Weckler: 'Eight top tech trends to watch out for this year'

Mobile 5G, Amazon, online media subscriptions and the use of coworking offices will all rise in 2019. But it's not such good news for Facebook, cryptocurrencies or venture capital funding, writes Tech Editor Adrian Weckler

In its last major report on the issue, PwC found that 67pc of Irish consumers now shop on Amazon. Photo: Bloomberg
In its last major report on the issue, PwC found that 67pc of Irish consumers now shop on Amazon. Photo: Bloomberg

1 It will be a big enforcement year for Ireland's data watchdog

In 2019, Ireland could become the world's enforcer for putting manners on big tech firms in relation to data breaches.

The Irish data protection commissioner currently has 16 active investigations under way into tech multinationals, including at least two for Facebook alone.

This is largely down to the introduction of a tough new European law (the GDPR) which says that a company can now be fined up to 4pc of its annual turnover. (In Facebook's case, this could amount to around €1.5bn.)

Because so many big tech companies choose Ireland as their European or global headquarters, Helen Dixon's office is responsible for investigating when there is a problem.

The DPC has gradually been increasing its headcount to meet this extra workload and now sits as the second-biggest data privacy authority in Europe (after the UK). Even still, if last year's catalogue of data scandals is anything to go by, it may yet find itself stretched.

Data Protection Commissioner Helen Dixon will have a challenging New Year
Data Protection Commissioner Helen Dixon will have a challenging New Year

 

2 It could be a big year for online subscriptions

In 2018, online subscriptions in media, entertainment and other functions soared. Netflix continued its march in Ireland, as did Spotify, Apple Music and a range of utilities from Dropbox to iCloud.

Even small, indigenous players have gotten in on the act with online-only media companies like ex-Newstalk sports firm Second Captains amassing over 10,000 paying monthly subscribers - enough for its five founders to make a comfortable living.

One striking aspect of the transition away from 'everything is free' to 'I will pay for things I want' is the age demographic. Young people, so often assumed to eschew any paid interaction on the internet, have embraced the payment culture with gusto, especially given access to platforms such as Patreon that typically charge around €5 per month.

Next year promises to see more of the same. More Irish media companies, including Sunday Independent publisher Independent News & Media, are openly touting a greater emphasis on paywalls and subscription offerings for access to content.

New media services are also rapidly coming on stream. An online news offering called Kinzen from Mark Little, Aine Kerr and Paul Watson is set to see an app launch in January, while Dublin-based News Over Audio, from entrepreneurs Gareth Hickey and Shane Ennis, is scaling a subscription service from its current 14,000 users. It's also likely that we will see new online media companies launched by journalists who recently moved on from current Irish newspapers.

 

Coworking spaces such as WeWork will continue to grow in popularity
Coworking spaces such as WeWork will continue to grow in popularity

3 5G will be turned to as a safety net if rural broadband is not rolled out

It seems that every year is a crunch year for rural broadband. But 2019 really is shaping up to be do or die for the State's National Broadband Plan, the pledge to connect 540,000 businesses and homes in rural areas to state-subsidised fibre internet.

On balance, a contract with the current bidder, Granahan McCourt, still looks likely to be given the green light. But if this doesn't happen, the Government has a very serious infrastructural deficit to address, even if a small percentage of those without proper broadband will get it through market sources next year.

Inevitably, attention will shift to alternative options. One such option that is often mentioned is 5G, the next-generation mobile technology that is currently being trialled by Irish operators.

At peak, this can deliver speeds of 500Mbs, several times faster than the fastest Eir 'eFibre' phone broadband.

And some operators are even setting up rural trials, with broadband access specifically targeted. For example, Vodafone Ireland is dipping a toe into rural 5G mobile broadband with trials in Roscommon, Wexford, Tipperary and Waterford, with 250 homes and businesses given roof antennae and equipment that can translate that 5G signal into a speedy wifi connection.

Eir also says that it will look at 5G trials next year, while Three is expected to do the same.

However, don't expect 5G to swoop in where the National Broadband Plan fails to deliver. Senior government and industry personnel have all dismissed the idea, pointing to the need for fibre backhaul for such wireless infrastructure. "It would be complementary," said Vodafone Ireland chief executive Anne O'Leary.

 

4 The boom in Irish coworking spaces will continue

Last month, WeWork announced a big expansion in Dublin with a sixth building, putting the American coworking chain's investment in Ireland on par with ­- or ahead of - any other city in the world outside the US.

It's the clearest sign yet that Ireland's working environment in one of its biggest industries - tech ­is changing rapidly. And the trend looks set to continue accelerating. Indigenous coworking spaces like CHQ's Dogpatch Labs have grown to 400 seats.

It's not just a Dublin phenomenon either. Counterparts in places like Galway (Portershed), Cork (Republic Of Work) and Kerry (HQTralee) are all experiencing expansion or consistent interest.

Why will this continue to happen? Because conventional Irish offices are dull, unattractive places to startups and tech companies. Coworking spaces, in general, are more redolent of the environments that companies like Google and Facebook - and dozens of copycats - have created in Dublin.

They're not perfect, but they're much more in tune with market demand in the tech space than suburban office blocks or conventional Regus rooms.

 

5 Amazon's unchecked rise will unalterably change the main street

Earlier this month, the billionaire UK retailer Mike Ashley testified before a British Parliamentary committee with a stark message. "The high street is dead," he said. "It's already dead. We cannot compete. It's the internet."

While it's a different market, the UK is often a bellwether for Ireland and the rest of Europe in terms of ecommerce and its effects on the economy and society.

In other words, what's happening in the UK now is a warning to what is likely (though not certain) to happen here in the next three to five years. Those warning signs are there in big neon lettering.

In its last major report on the issue, PwC found that 67pc of Irish consumers now shop on Amazon.

Of these shoppers, one in six (17pc) are Prime subscribers, meaning that they get free delivery on purchases in exchange for a monthly subscription that locks them in further to shopping predominantly on Amazon.

It's not a small amount of retailing value, either ­- €3bn of the €5bn spent online in Ireland last year went to retailers outside the country.

And in case there's any doubt on the effect that Amazon is having, the same PwC analysis claims that 18pc of Irish shoppers say that they shop less often at other retail stores as a result of Amazon. (This figure may well increase: in America, one in three says the same thing.)

The PwC figures illustrate that almost a third of Irish consumers make significant purchases on their phones at least once a month, a figure that is rising every year.

And the evidence shows that younger people are simply turning away from buying things in physical shops. 38pc of 25-34-year-olds now shop online weekly, according to PwC.

Physical shops may not be doing enough to fight this migration, with just a third of us (36pc) satisfied with our in-store shopping experiences, according to PwC.

 

6 Facebook IS GOING TO have a tough year

In 2018, the unwelcome side of Facebook's business model finally caught up with it.

From the Cambridge Analytica fiasco to allegations of Russian interference and a plethora of data leaks, it's a year that Mark Zuckerberg might want to forget. But it might get worse. A combination of tougher new European laws (the GDPR) and user dismay could finally bite in 2019.

The early months of the year may even bring about a groundbreaking fine from the office of the Irish Data Protection Commissioner, who has at least two serious formal investigations under way into the tech giant under the heavyweight new data law.

So will Facebook fundamentally change anything about the way its service works?

So far, there's little evidence it is intending to do so. Other than patching up discovered leaks in its data-sharing systems, it has largely confined its redesign to a shift away from news and toward 'friends and family' on a typical Facebook feed.

Those who defend Facebook's corner often argue that the media outrage is a little overblown, spurred on by acute resentment among traditional publishers that Facebook (along with Google) has cornered most of the online advertising that publishers were hoping to get themselves as their own print circulation revenue fades away.

This is a fair point, especially considering that Facebook's user figures appear not to have fallen, even after 12 months' non-stop condemnation from virtually every large media outlet.

So it might be said that we, the media, may not perfectly be in step with news consumers when it comes to actual levels of concern over Facebook privacy.

But there is still ample evidence now that company can't afford to shrug its shoulders and disregard its current problems.

Other than regulatory concerns (see the DPC, above), it has a serious demographic challenge that looks worrying: its user base is getting much older. In the US, research shows that just 36pc of teens use Facebook at least once a month, down from 52pc two years ago.

And in Ireland, more pensioners than teenagers now use the social media service here, with younger people flocking to Instagram instead.

Of course, Facebook owns Instagram (and WhatsApp), so it's insulated. Even still, 2019 could be a year where Facebook faces its first real decline in influence.

 

7 The future for cryptocurrencies looks wobblier than it has for years

Cryptocurrency valuations tanked in 2018, led by further falls in the highest profile currency, Bitcoin. While Bitcoin has rallied a little in the last few weeks, its $4,000 price is a long way off the $19,000 reached last year.

Does this mean it was always a bubble set to burst? Not so, say industry stalwarts, such as Dublin-based Circle co-founder Jeremy Allaire. The fundamentals of cryptocurrency, and especially the underlying blockchain technology, are sound, he says. This is a message echoed by other Dublin-based crypto and blockchain specialists, such as Consensys.

However, despite years of trials and encouraging noises from blue-chip industry players such as banks, the use cases for Blockchain continue to be elusive in the real world.

'Coming possibly next year' is still the phrase most used by experts and practitioners who are trying to bridge blockchain with existing businesses.

 

8 Next year will be pivotal for VC funding in Ireland

Up until last year, venture capital growth was soaring in Ireland. The combination of lots of startups, cheap finance and aggressive expansion from international financiers saw the Irish industry attracting an annual run rate of €1bn for the first time.

However, things turned in 2018.

According to figures from the Irish Venture Capital Association, venture funding fell by a third (to €546m) in the first nine months of the year.

The drop-off in cash accelerated during the year, with the amount raised by tech firms and startups in the last three months just half what it was last year. The figures suggested that the largest segment of funding to see a decline was in deals above €5m. These fell in value and volume by around 30pc.

So why is this happening? One reason is that 2018 has not seen the same number of headline-grabbing funding deals as 2017, with the exception of the €110m round landed by Dublin-based Intercom.

But seed funding, which is a quarter of the total funds raised and is typically associated with startups, also fell compared to last year. This was partially because the volume of these seed deals was down by a third.

So why the fall-off? Some founders and Irish financiers have complained that a gap has opened up between UK and Irish tax laws that make it far more advantageous to base a company in England.

Other VC executives point to structural funding limitations that prevent large capital funds - such as the insurance industry - from investing.

And some commentators have suggested that VCs are gradually becoming more interested solely in lower-risk Series B (or higher) rounds, which knocks out some of the market traditionally focused on Irish startups.

However, there is little sign that things will change in the early months of 2019.

Sunday Independent

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