Right now it is particularly difficult to see the future. It’s 2010 and everybody is ready for a fresh start. The entire year of 2009 seems to have been a waste. The global economy finally stalled out at its worst, and it’s not clear what will really pull industry back to robust activity. Right now, the best we can do is spend while the values for goods and services are better than what they will be in the coming years. That act of spending will really spur the economy back to life.
Over the last year, the financial markets became politicized and paralyzed. Close scrutiny makes what little money might be available extremely difficult to free up, even if borrowing rates are low. So for business to expand or invest in its future—be it capital expenditures, strategic investments, or research—it almost always has to do it out of its own pocket. This limitation will continue to slow overall growth. For the most part consumer, housing, and business sales have slowed across the board and have stayed lackluster even in the last quarter. Any real lightening in the economy is more a matter of “not getting any worse” rather than really getting better. 2010 is going to be better than 2009 mainly because things couldn’t get much worse.
The stock market may appear to be a second-order measure of the health of business, but it is heavily influenced by factors that disconnect it further from reality. Portfolio managers craft unnatural trades to make products look their best for closing out a quarter, or more importantly, closing out the year. So what will they do to end the decade? Therefore, watch for the head-fake from the stock market that can give false impressions that a recovery is well underway.
THE DOLDRUMS
Right now, it’s difficult to really identify any break-out electronics products. Oddly, there seems to be a lull across many markets. Incremental improvements seem to be the norm for new product releases. Revolutionary? Not so much.
There are no major product cycles about to turn over. There is no new generation of video games. The digital television transition passed its prime about a year ago (at least in the U.S.) so TV sales aren’t as exciting. The wrestling over television, network, telephone, and wireless access is in a familiar, set pattern. Digital TV added $10 to the monthly service, but that is now mostly over. 3G and early 4G wireless is edging into play, but no major overturn of consumer behaviors is expected. WiMax still has a lot to prove.
Alternative energy is a lively, altruistic topic, but traditional methods of electricity generation and gasoline-powered automobiles are still the overwhelming majority and “Smart Grid” is really just an idealistic buzzword. My wife isn’t going to do the laundry at 3a.m. because I tell her the electric rates are cheaper at that time any more than I’m going to drive to the office at 4a.m. just because the freeways are clear.
PCs are pedestrian and Windows 7 is well-characterized by the recent Macintosh advertisements. If Windows7 spurs significant PC sales, it is only because XP is now nearly ten years old and IT departments are being lead by the nose ring. netbooks and mobile internet devices (MIDs) have exciting potential, but the mighty Intel has to keep careful watch over its traditional market while playing down in the $200 product area. HP and Dell must step lightly too. Now that printers are all-in-ones, ink seems to be about the only thing moving in computer peripherals. Flat screen monitors are fairly standard and it’s hard to fill up the gigabyte hard drives you can buy for $100.
The automobile marches forward with new applications of embedded control, navigation systems, and more exotic entertainment. These improvements actually contribute substantially to the cost—and value—of the vehicle. Unfortunately, job insecurity has made far too many people realize that skipping the new car for a couple more years is a good savings on the second-largest consumer purchase item, even if they have to hold off on some of the fancy upgrades.
The industrial sector is stalled out along with manufacturing, although it does become more automated every year. The slow economy may have accelerated the move of manufacturing to “emerging countries,” raising demand there, but a good deal of industrial electronics will stay in the local economies as well. Electronics’ influence in the diverse medical world continues to blossom and tends to move steadily forward in spite of economic woes.
THE MOST PROMISING
There is no doubt that “green” technologies are at the top of the news, and that is good. Advanced electronics can contribute a lot to lowering power consumption. Make an electric motor that uses half the energy to start up and run, and it will make a real impact on electrical needs. Drop server and PC power consumption by a third and save even more in air conditioning costs. Working smart and reducing waste are key to these gains. Across the board, lower-power electronics is better and a natural progression of the industry. Even greater focus has been given to power conservation in the last couple of years and this will continue.