Three things have happened in the last few years, which are now converging with a fourth inexorable trend to make major changes in consumer behaviour, mostly for the better.
1) September 11, 2001 showed the world the destruction that a small number of terrorists could cause by hijacking unsuspecting passenger planes. The subsequent increase in security almost did not stop 10 other UK to US flights from being exploded above the Atlantic by British-born terrorists disguising liquid bomb ingredients in soft-drink containers. The terrorists will continue to get more and more creative, and will eventually destroy an airliner in an act of terror. This fear now hangs over all passengers. At the same time, security at airports is increasing pre-flight periods to up to 3 hours in duration. Multiply this by the millions of business passengers per year, and the loss of billions of dollars of productivity is apparent.
2) Oil at $70/barrel is making air travel more expensive for cost-conscious businesses. I happen to believe that $70/barrel is the optimal price for oil for the US, where the economic drag is not enough to cause a recession, but the price is high enough for innovation in alternative energy technologies to accelerate. Nonetheless, economic creative destruction always has casualties that have to make way for new businesses, and airlines might bear a large share of that burden.
3) At the same time, globalization has increased the volume and variety of business conducted between the US and Asia, as well as between other nations. More jobs involve international interaction, and frequent overseas travel. This demand directly clashes with the forced realities of items 1) and 2), creating a market demand for something to ease this conflicting pressure, which leads us to...
4) The Impact of Computing, which estimates that the increasing power and number of computing devices effectively leads to a combined gross impact that increases by approximately 78% a year. One manifestation of the Impact is the development of technologies like Webex, high-definition video conferencing over flat-panel displays, Skype, Google Earth, Wikimapia, etc. These are not only tools to empower individuals with capabilities that did not even exist a few years ago, but these capabilities are almost free. Furthermore, they exhibit noticeable improvements every year, rapidly increasing their popularity.
While the life blood of business is the firm handshake, face-to-face meeting, and slick presentation, the quadruple inflection point above might just permanently elevate the bar that determines which meetings warrant the risks, costs, and hassle of business travel when there are technologies that can enable many of the same interactions. While these technologies are only poor substitutes now, improved display quality, bandwidth, and software capabilities will greatly increase their utility.
The same can even apply to tourism. Google Earth and WikiMapia are very limited substitutes for traveling in person to a vacation locale. However, as these technologies continue to layer more detail onto the simulated Earth, combined with millions of attached photos, movies, and blogs inserted by readers into associated locations, a whole new dimension of tourism emerges.
Imagine if you have a desire to scale Mount Everest, or travel across the Sahara on a camel. You probably don't have the time, money, or risk tolerance to go and do something this exciting, but you can go to Google Earth or WikiMapia, and click on the numerous videos and blogs by people who actually have done these things. Choose whichever content suits you, from whichever blogger does the best job.
See through the eyes of someone kayaking along the coast of British Columbia, walking the length of the Great Wall of China, or spending a summer in Paris as an artist. The possibilities are endless once blogs, video, and Google Earth/WikiMapia merge. Will it be the same as being there yourself? No. Will it open up possibilities to people who could never manage to be there themselves, or behave in certain capacities if there? Absolutely.
Related :
I work in the IT field and the changes I've seen in video conferencing and presentations in the last year are dramatic.
- Web seminars combining presentations, video, and documents (webinars) are so cheap that high quality webinars are available for free on most IT topics.
- Instant messengers and web-cams have made video phones a reality, again for free; almost without anyone noticing it. We used to dream about video phones, now no one even mentions that AOL and Windows IM allow the same features plus much more at no cost.
- Video conferencing is seamlessly integrated into the next release of Windows office. You'll be able to include a video into most documents the same way you now do with pics.
All of this is available now, but requires expertise or money and is limited by bandwidth/memory. Within just a few more years people will consider the cost of sharing information via video/web as essentially free, the same as we currently consider paper and pens.
Posted by: usnjay | August 23, 2006 at 09:41 PM
usnjay,
Absolutely. All these advances and cost improvements, combined with air travel becoming unappealing for many reasons (which did not exist 6-7 years ago), is a climate ripe for the classic gales of creative destruction, or at least a partial substitution.
Posted by: GK | August 23, 2006 at 10:52 PM
Good morning GK and usnjay,
True, I mostly come here to read the insights and glory in the incisive debating skills of GK and other posters, but I am just a bit curious and confused. GK, you posit:
I certainly have no problem grasping the reality of dwindling use of airtravel for the obvious reasons. But I don't understand the term 'creative destruction.' I think I grasp your playful oxymoron, but I am at a loss ... are you refering to the destruction of the airline industry due to the current circumstances regarding terrorism and the emerging technology of video webinars and the like, coupled with the creativity in new software and hardware that makes video conferencing accessible, or to some other idea? Please, elaborate on this my friend.
Posted by: Gang of One | August 24, 2006 at 05:15 AM
Gang of One,
'Creative Destruction' is a term from Joseph Schumpeter to signify when old technologies are made obsolete, and replaced by newer ones.
For example, digital cameras replaced film cameras, which put that little kiosk at the grocery store for film development out of business. But consumers are still better off with the new technology.
DVD players put VHS cassette makers out of business, but a download model may eventually put DVDs out of business.
In an accelerating world, these cycles get shorter and shorter.
Vinyl records lasted 5-6 decades. Audio tapes lasted 3 decades. CDs were at the top for 1.5 decades. Mp3s have been around for just 7 years, and the cost of the storage to store a 4 MB mp3 file drops by 40% each year at this point (an iPod has gone from 5 GB to 60 Gb in just 5 years, at the same price).
Posted by: GK | August 24, 2006 at 10:49 AM
Joseph Schumpeter built his work on top of Kondratief who view the new emerging technology during a deflationary depression as the reason that capitalism would always renew itself and not breakdown.
Computers might not be the new technology. It is fairly mature. Perhaps genetics will replace it as the new leader in economics and politics.
Posted by: jeffolie | August 24, 2006 at 05:15 PM
The Impact of Computing goes far beyond merely computers - it is the paradigm of the true long-term trend.
Read : Milli, Micro, Nano, Pico to see how genetics, nanotechnology, and others are predictable within this context.
Posted by: GK | August 24, 2006 at 05:20 PM
GK,
Thank you for explaining the phrase. I read the Wikipedia link.
I'm not an economist nor a mathemetician, but I do recall from my trig class the curve of the exponential function.
Seems like that is what we are looking at.
Posted by: Gang of One | August 25, 2006 at 06:29 AM