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Tuesday, December 21, 2004

The Digital Demographic Revolution

Pip Coburn writes, Digital Revolution we've all been talking about isn't about products. It's about demographics changing from the digitally-averse to 'digital natives'. And its really big effects are going to take a few more years to hit. Excerpts with edits and my comments added :

Paul Saffo at the Institute for the Future has pointed out that in a two-year period, less happens than we would have thought, and in a ten-year period, more happens than we could have ever imagined. That fits here. If you have 10 years, wow, what change ahead. The mismatch is that 99.842% of investors ain't got 10 years to wait around, and the revolution ain't happening inside two years. Then why are we so negative about the short-term 'revolution' of something like the entertainment PC, and so positive about the long-term fate for the exact same thing? Because of changing demographics. This is an incredibly important issue that offers long-term hope for a significant IT spending resumption a little ways down the road. The demographics will change, and the world will change.

Marc Prensky in Games2Train classified two types of people'digital natives' and 'digital immigrants'. It is now clear that as a result of this ubiquitous environment and the sheer volume of their interaction with it, today's students think and process information fundamentally differently from their predecessors." Here we're adding a third, larger group: 'analogists.'
For simplicity, we classify anyone in a developed nation who's under 25 as a digital native. Nicholas Negroponte of MIT Media Labs said "You don't need to teach kids to be digital. They are digital". The next category is digital immigrants. For some reason—perhaps either economic or social—these over-25-year-olds choose to become digital people

Analogists have three characteristics:
• They are over (somewhat arbitrary) 25-year-old barrier
• They are terrified of any whiff of technology, and
• They are abundant

Today, the vast bulk of the purchasing power and of the corporate power reside in the hands of analogists who are terrified of technology. But again, 'So what?' Well, the demographics will change, and the world will change. If you want to sell a lot of something today, you'd better consider how to sell it to the analogists, and not the far smaller crowd of digitalists. Mobile phones have a 640 million run rate—640 million! Whereas iPod has approximately an eight million run rate. There's nothing wrong with 8 million users, but is it a revolution today? Not yet, though it's a great start.
Analogists—contrary to even the analogist-sensitive Walt Mossberg articles in the Wall Street Journal every Thursday—do not view the iPod as simple. They view it as complex and scary. They're thinking, "How do you do this loading of my CDs on to the PC, and then downloading to the thingy, and how are the song titles classified and do I have to spend time labeling and how will I find The Beatles in the music store thingamajiggy...? Help, where's my kid?"The mobile phone has a much lower level of perceived pain of adoption. It was a simpler extension of what folks already did. The mobile phone doesn't represent the digital revolution, but the iPod does. The iPod is irresistible to the media—as are many other items in the digital revolution toolkit. The masses shall use them in large numbers..

Ten years from now, the digital natives will be everyone under 35, so the group's purchasing power will go up. And, less obviously—but perhaps even more importantly—the analogists will be immigrating to the digital world at record rates. Just as it is hard today to find a CRT display in Tokyo's Akihabara electronics district, ten years from now it will be hard to find someone fessing up to being scared of technology. Why? Imagine the perceived social and economic crisis of an assertion like "Poor Joe, he's still afraid of technology." Digital Natives are used to receiving information really fast. They like to parallel process and multi-task. They prefer their graphics before their text rather than the opposite. They prefer random access (like hypertext). They function best when networked. They thrive on instant gratification and frequent rewards. They prefer games to "serious" work.In the all-important enterprise, the 35-year-old types will be running lots of meetings and setting the culture. That will be a big change. Here's a little mental exercise if you wish: Imagine the degree of digital acumen in a typical meeting of eight to nine business folks today. Got it? Okay, good. Now think of the digital acumen in a similar meeting, but 10 years ago. Lot less digital acumen goin' round, huh? A whole lot less. Finally, imagine the digital acumen in a similar—perhaps virtual—meeting 10 years from now. If that difference between now and 10 years ago was 2x (whatever that means), the difference with 10 years from now will be 10x.
Will a 47-year-old looking at a typical life span of 85 years start thinking about becoming a digital immigrant, and the consequences of not doing so? Definitely, to avoid that "Poor Joe got fired, he's still afraid of technology" risk. Back at the shopping counter, ten years from now, will the populace-at-large easily be able to absorb TiVos, iPods, Entertainment PCs, Webcams, home servers, and downloadable first-run movies that are sensitive to digital rights management issues? Oh yeah, and a whole lot more besides. Will there be a 10-year digital revolution? Absolutely, that's the great news.The bad news for investor types is that there probably isn't anything to be done to have this demographic reshaping occur within the next two years.

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