EnergySMART ConferenceDate: Wednesday, September 28, 2011Time: 9:00-9:45 AM
Today I’m going to talk about how the increasingly hyper-connected world we live in has created a Demand Economy, in which consumers expect instant access to everything---whether that means information, entertainment, commerce---with more choice, at faster speeds from any location and from any device.
Armed with a near limitless amount of information, consumers demand greater variety and immediate availability. They no longer rely on information delivered by suppliers in order to reach a purchasing decision. Now, they have access to a host of other consumers whose experiences and opinions are readily available online. They can get the best fit, at the lowest price, and with the quickest shipping times. Instant but enlightened gratification now extends to the most complex choices.
The result is a quickly leveling playing field that pits established companies against new market entrants on a global scale, creating challenges for enterprises. Today’s customers learn that they do not have to demonstrate loyalty to receive good service from suppliers. In fact, the less loyal they appear, the harder companies work to establish a connection – the level of service and value extended to the consumer is rising all the time. This result is one of the economic realities of a borderless market where companies are exposed to continuous competition. Speed, best pricing and personalization dominate, forcing new challenges to retain brand value and customer loyalty.
And the shift in power from supplier to consumer is fundamentally changing the way businesses operate. The Demand Economy is forcing the disruption of old ways of doing business and sparking the innovation required to keep pace with the ever-changing expectations of consumers. Driven by ubiquitous connectivity, an explosion of connected devices and the increasing expectation for transparency, companies across all industries have had to disrupt their business models.
In the Demand Economy dealer visits are no longer required; consumers have greater access to much more inventory; websites like Vehix and other third party tools provide easy access to information that empowers the car buyer and helps with decision making.
The travel industry is a classic example of a traditional business model being disrupted. The emergence of the Internet has transformed the way people plan their trips. We used to have to pay a travel agent; Now there is easy access to the same information only previously made available to the agents, there are endless options and choices; so much so that companies like Kayak have emerged, positioning themselves as aggregators for aggregators; and obviously mobile options are increasing.
In the retail industry connectivity is making us much more powerful shoppers. The emergence of flash sale sites like Gilt group have made it possible for consumers to have instant insider access to top designer labels. Thanks to new visual tools that mimic in-store experiences we can shop on the go, whenever, wherever and are no longer beholden to store hours and long lines.
In the energy sector, customers are regaining control and encouraging the kinds of adaptations that lead to a stronger overall economy. As companies like EnerNOC have shown, using energy more efficiently is also becoming more important than ever. In the nation’s biggest energy markets, demand response and energy efficiency compete right alongside fossil-fuel-fired power plants, and in some regions, they represent more than 10% of the overall market. It shows that when consumers choose how and when to use energy, they can make a big impact on the market, drive down prices, and reduce our dependence on fossil fuels. (Energate is a residential demand response company and Itron is a smart meter manufacturer).
I mentioned earlier about the factors driving the Demand Economy and when you look at the numbers over time its truly staggering and all indicators clearly show us that the train isn’t stopping anytime soon. What’s really interesting here is the ratio of Internet users to connected devices. Currently we are at a ratio of about 3 connected devices per Internet user but in 2020 that number is predicted reach a ratio of 10:1!
Armed with smartphones, tablets, and connected televisions, global consumers expect that the brands they trust – whether those brands represents Airlines, Automotive Manufacturers, Retailers or Energy Companies – will anticipate consumer needs. To serve the emancipated customer in the Demand Economy companies have to a strategy that enables them to deliver not only the best products, but they also have to provide outstanding communication and an innovative customer experience as a standard part of their commercial offering.
In order to build this strategy its important to understand three key technology-related trends that are empowering consumers in the Demand Economy.
Mary Meeker, the former Morgan Stanley Internet analyst and now Kleiner Perkins VC, forecast last year that mobile Internet users will pass PC internet users by 2014. This shift will make the world a different place. For one thing, mobile network owners will need to get ready for this explosion in mobile data traffic, which is expected to increase 26-fold between 2010 and 2015. Content owners need to think about what they’re doing to optimize for mobile. And retail and commerce companies need to take note of how users are accessing the Internet on the fly.
We used to talk about needing to prepare for a three-screen solution but the advent of the tablet has introduced a fourth screen category that you have to plan for.
And now I’ll talk about next-generation media.
Consider this evolution of online video across some of the peak events on our platform. We went from record viewing of an Apple keynote in 2002 to stunning figures for the World Cup in 2010 and the Royal Wedding got 1.7 million when it was 6 am in the states. Online video is clearly no longer an experiment.
Consumers will continue to demand higher and higher quality experiences for online video, whether live or on demand. They expect fast start up, smooth playback, high resolution, including HD, full screen experiences, and interactivity such as DVR.
And the third trend to master is cloud computing
We’ve all heard the buzz around cloud and if you has five different people what it means you’ll get five different answers. But what you really need to know about cloud is that everything is moving there. Its by far the fastest growing segment of IT and its not letting up anytime soon.
The promise is clear: cloud offers faster implementation, on-demand access, lower cost and reduced carbon footprint
But the reality is that its based on the Public Internet, was never designed to do all that we’re asking of it today. In fact, it was not actually designed at all. A loose network of about 12,000 disparate networks, there is no real oversight, there are competing technologies, many formats and as a result, security threats and performance issues abound.
Realizing the promise of cloud computing is possible, and it can be achieved with The Akamai Intelligent Platform. At any given minute in the day, up to 30% of the overall Internet traffic crosses Akamai’s Platform. And it is marvelous to learn what any one of those minutes might contain. In any 60 seconds, we handle: Almost half a million in eCommerce transactionsThousands of hours of streaming videoAlmost half a million mobile page views and mobile appsAnd more than 300k financial transactions That is a tremendous amount of data, and it represents only a fraction of the trillion+ connections made across our platform every day.
Since January 2009 we’ve achieved a 50% reduction in our network carbon intensity compared to “business as usual”, that is, if we didn’t do any improvements to server efficiency, server throughput or code efficiency (640 million lbs CO2e avoided; annual emissions from ~55,000 autos). Our absolute carbon emissions have increased 85% while our traffic has increased 260% (3.6X) from just under 0.9 Tbps to 3.25 Tbps.
Companies that can master these trends will succeed in the Demand Economy because they will be able to give consumers what they want, when and where they want it.