Bull Session

Tech Predictions for 2018

December 21, 2017          

Episode Summary

On this episode of The Digital Life, we wrap up the year with some emerging tech predictions for 2018. We discuss the expansion of AI services in significant ways, automated trucks on the road, Target’s online struggles, Amazon’s difficulties in exploiting niche businesses, and the streaming services war as Disney prepares to take on Netflix among other topics.

Jon:
Welcome to episode 238 of The Digital Life, a show about our insights into the future of design and technology. I’m your host Jon Follett, and with me is founder and cohost Dirk Knemeyer.

Dirk:
Greetings, listeners.

Jon:
So our podcast this week is going to be our last of 2017. Wow, that went really, really fast for me. How about you, Dirk? Did 2017 fly by?

Dirk:
Yeah, yeah. We might have even talked about it on the show, but scientifically the older you get, the faster the time passes.

Jon:
Oh. Well, that’s horrible, so I’m glad that’s scientifically proven that that happens because it really feels that way.

Dirk:
It is. It is.

Jon:
So to sort of celebrate the end of 2017 and going into 2018, first we want to give some shout-outs to the people who make this show possible every week. Want to thank Dave Nelson, who is our sound engineer. Thanks, Dave, for eliminating coughs and the occasional siren from the road noise and all the other good things you do. We really appreciate your audio editing. It makes us sound good, and your recommendations for how to put together our sound studio have been much appreciated as well.

To our friend Brian Liston, who puts up the show online every week, each and every week, and works with me on the covers for the show. Thanks so much, Brian. We’ve really appreciated your work. To Eric Benoit, who’s our website guy. Eric, you know, couldn’t do this without you, and lastly to our business partner, Juhan Sonin. We’ve drug you along this far, so might as well try to give you some credit, too.

So lastly want to mention a shout-out to all our great guests. We mentioned some of the fine shows we had in 2017. Our guests have been phenomenal, and we thank you for coming on the show and we look forward to having lots of terrific guests in the new year.

Dirk:
One last thanks too actually to our listeners. Thanks for listening to us yammer on.

Jon:
For putting up with us.

Dirk:
Exactly, exactly. No, we’re trying to say things that we think are useful and valuable, and the fact that there are some people out there who think that they are feels good and hopefully allows us to be of service, so thanks a lot.

Jon:
So for this episode, we’re going to be looking into the crystal ball and making some predictions for 2018 in the emerging tech space that we love so much. We are going to each give you three predictions, which we’re very happy to have you hold our feet to the fire if we’re off in our predictions. So we’re going to do our very best, and I’m going to start this off, and then Dirk, you and I can trade predictions back and forth maybe.

Dirk:
Well, Jon, speaking of feet to the fire, do you remember your predictions from last year, and can we hold you accountable? I didn’t do any. You did.

Jon:
Yeah, that’s right. That’s right. In my preparation for this show, I actually did not go back and verify my predictions.

Dirk:
For shame, Jon. For shame. Accountability.

Jon:
We can do that at the beginning of next year. How’s that?

Dirk:
All right.

Jon:
We can see whether any of our predictions have come true or not. We can even go back more than one year if we want to. That might be fun to kick off 2018. So here we go with emerging tech predictions for 2018. My first one is that we’re going to see expansion of AI services in significant ways, and I’ll give you an example of that. In July of this year, McDonald’s announced it was replacing cashiers in 2,500 restaurants with kiosks, sort of some AI-driven kiosks, so I think, and I’ve also seen call systems set up so you pull up through the drive-through and call systems can be sort of routed anywhere. So I think it’s fully possible that we’re going to see AI systems, whether they’re bots or other systems like that, introduced into our everyday lives, whether it be via some retail outlets or in the fast food industry. Seems like it’s ripe for some automation, a la McDonald’s doing their kiosks, but not even that. You know, you could very well have some kind of AI bot taking your order instead. So I think AI automation starts in 2018 or at least starts to pick up.

Dirk:
Yeah. I think that’s a pretty safe prediction, right? The question is: How quickly will it pick up? I mean, your prediction is going to come true. That’s clear. The question is just: Will it be a dribble? Will it be a geyser? Will it be a gusher? I don’t know, but, no, that’s very safe. I mean, the one thing I will say is I think, I mean, it certainly is a smartware solution, but let’s … I don’t know. Calling it AI is a little bit breathless from my perspective. It’s software, right? I mean, a kiosk that can take an order, that’s not AI really, right? It’s pretty standard software. You can call it smartware, but it’s more about social expectations changing because of our model of what we think AI is becoming, which is beyond what it really is, that enables software to be implemented in these ways from my perspective.

So I think your prediction is correct, but I think like the media framing it in sort of an AI context, which you’re doing as well, I think gives too much credit to AI here, because I think these are actually pretty simple things. Wouldn’t you agree?

Jon:
Yeah, I do think there’s … So, for instance, Amazon has a bunch of AI running its recommendation engines, and I could see sort of simple technology, whether it’s chat bots or recommendation engines being backed into these systems because ultimately when you’re rolling out these things, in say like the fast food context, I think people are going to look for something that makes it better than the human server, right? Otherwise, it’s going to feel like an annoyance, right?
So sort of the self-service checkouts are a good example of where I feel like I’m doing some of the work for the retail outlet for them, right? So when I go to Target and I’m checking my stuff out, I feel like I’m doing their job. They haven’t introduced that novelty, that recommendation, that little bit of added value that I think AI could bring to these scenarios. So maybe it’s a hopeful prediction on my part, but I do think unless you have something that drive values, it just becomes like self service, and then at that point there is no experience there. It’s just me doing the job of the fast food restaurant or the retail outlet for them.

Dirk:
Yeah, maybe there doesn’t need to be an experience. I mean, look I use the Starbucks app. I’m ashamed to admit that I use Starbucks in general, but I use the Starbucks app, and it’s as dumb as dumb can be. I mean, it doesn’t even say, “Hey, this was your last order. Would you like it again?” It just gives me a rolling list of all the last things that I did order. In terms of connecting me with the right store, just a couple weekends ago I’m out with my son and I’m in a part of town I’m not familiar with. I assume it’s giving me the nearest one, which I know is half a mile away. It actually gave me one that was 15 minutes away. There’s no way to cancel. I have to make this long odd drive or else lose the …

So the Starbucks app is from a phone to self service perspective doing the same thing that these sort of kiosks would be doing in a physical capacity, and it’s just stone stupid, so I’m a little bit less optimistic than you about how bright and experience-filled that these things are going to be.

Jon:
Well, I mean, that’s a perfect example of where I would want some level of software smarts to point you to the correct location of the closest Starbucks. I mean, that sort of sucks, right? You wanted coffee, and instead of going to the nearest location, you are now going to the next town or whatever. That seems silly, so.

Dirk:
90-something percent of the time, I have two orders. One is just me ordering for myself the exact same thing. Two is me ordering something that both you and my wife happen to have, so I order mine and yours or hers with it. The dumb thing doesn’t even say, “Here are the two things you do every freaking time. Pick which one you … ” I mean, it’s … Anyway, anyway. We’ve belabored this probably.

Jon:
Right. So AI could help out maybe with these kinds of services, and perhaps in 2018. So, Dirk, what’s your first prediction for the year 2018?

Dirk:
Yeah, and let me preface this by saying, I mean, in some past years I don’t even participate in these because I think predictions for the next year are a little silly. I think they’re silly in general, and for me in particular I’m generally interested in sort of bigger more macro trends, so it’s kind of not my jam either.
So with all of that, with all of that explaining and excuse making aside, my first prediction is I think we’re going to see the AI and the VR hype train slowing down a little bit. It’s already been happening with VR. A couple years ago, the VR was kind of having a moment. A lot of top talent and VCs were running to the space. Started to slow down. AI has been having a similar thing going this year in 2017. I think that’s going to slow down as well. Now, in the longer now, the importance of AI in the context of smartware and where we’re going with technology remains similarly important, and it will again become a media darling as it’s doing things that are more important and effective and varied, but we’re in a moment now where it’s a little fallow.
We’re getting the negative reports on like IBM Watson Health for example, and it was way too much hype. It’s not everything that it was cracked up to be, so the sort of marketing promises are meeting with the reality that’s more humble. From a longer-term view it’s still important, it’s still powerful, but it’s a lot more humble, and I think as a result we’re going to see a lack of sort of the breathless excitement of future life in virtual worlds tamped down in 2018 in comparison to this year and the couples years preceding.

Jon:
Yeah, that seems fully possible. I would say that there always needs to be hype around something. So if you recall a couple years ago, Internet of Things certainly received some of that, and this year for sure AI has been, the drums have been beating very loudly, so I would agree with the caveat that I don’t know what the hype cycle is going to pick up and lift up. Perhaps it’s, I don’t know, space travel, something else, genomics, robotics-

Dirk:
I’ll extend my prediction to say robotics. I’m seeing more and more about … Just this morning I saw this thing about an uncanny value showing sort of a female Japanese robot and saying what the robot faces we pick say about us. I don’t know even know where I saw it, but I’ll pick robotics as the thing that’s going to get more of the hype cycle.

Jon:
All right. So my second prediction for 2018 is a little more adventurous than my first one, which you took apart and rightly so. I think we’re going to start seeing automated driverless trucks on the road. There was sort of the debut from Tesla of the driverless 18-wheeler, and I think that in sections of the country where there are very long highways without a lot of traffic coming on and off I think you’re going to start seeing pilot usage of automated trucks, and that will probably cause some consternation, too.

Dirk:
Maximum Overdrive, baby.

Jon:
Yeah. With any luck we’ll get the Stephen King equivalent of the automated trucks, and that will put an end to that, but there’s prediction number two. Dirk, what’s your second prediction for 2018?

Dirk:
Well, Jon, let me be the peanut gallery on yours as always first, right? No, I think that’s a good prediction. I mean, you know, now there’s reports of this company bought in Tesla trucks or somebody else trucks. Like, we’re seeing those stories already, and it seems like a logical next step that we’ll start to see them in the wild in a more meaningful way. I agree with you that it is more likely to be limited, which is to say, you know, you were saying, “Hey, maybe out in the Rocky Mountains far west, open spaces area.” That’s as good a prediction as any. We may also start seeing it in hyper local ways as well. But, yeah, I like that.

Jon:
Cool. Yeah. I could definitely see if I were having some more free time, I could totally see a bunch of geeks going out and trying to spot automated trucks. That seems like something I would have done in college.

Dirk:
Oh, man.

Jon:
To take a trip and see if you can spot one.

Dirk:
Nice, nice. So, yeah, my next prediction sort of ripped from the headlines. Target recently purchased Shipt, which is a same-day shipping company, for about half a billion dollars, and, you know, sizable investment, and it’s part of their strategy for taking on Amazon. The full details of which I’m not exposed to, but my prediction is that to whatever degree Target is planning on competing with Amazon in 2018, it will be judged a failure. Target is not equipped to compete with Amazon. Target for a long time has sold particular products within a certain consumer expectation. There is just no way in hell that they’re going to be able to compete with a company that is selling basically everything and their brand is elastic to the point of selling basically everything.
Target is fighting a losing battle, and maybe they can buy themselves more time, maybe they can buy themselves more relevance, but if their goal is to take on Amazon and win or take on Amazon and really compete in a way that they could be seen as competitors, not a giant and a fading company, it’s just not going to work out for them, so that’s my second prediction.

Jon:
Yeah, I think … So Target has a lot of things that I do like. Their online service is not one of those, and I do like Target for sort of the integrated experience that I have when I go to their stores. I can make one stop and sort of pick up all of the things that I need. If there was a way that they could create an ecosystem where some of that stuff was coming to me, especially the stuff that I forgot, and just sort of showed up, that would be really helpful, and I’m talking about, I mean, I use their grocery like once a month for things. If they could in a smart way identify the things I’m buying and just sort of help me manage that, I think there’s an opportunity there just because Target is, you know, they have a lot of physical outlets, so someone is going to master the digital/physical handshake there.

I think Amazon is trying to do that. That’s why they’re experimenting with all these different kinds of retail outlets, whether it’s grocery or they have that magic bus where you can get stuff from Amazon or any of their other experiments. They even have bookstores, Amazon, right? They have a couple of those that they’re trying out. So someone is going to figure out how the digital ecommerce and physical commerce work together, but Amazon by far is just dominating the digital big time, and if they figure out that handshake then other people are in some big, big trouble.

Dirk:
Yeah, and I mean Target is way behind both Walmart and Costco as two examples for brick-and-mortar retailers. I mean, for them to compete with Amazon is rubbish. I mean, they can’t even compete with the people who are their true natural competitors, so this just has stink written all over it for me.

Jon:
All right. Moving onto my third prediction for 2018 is in a category that I am very much addicted to, and that is around TV watching.

Dirk:
What the hell is TV watching, Jon?

Jon:
Yeah. Well, let’s say screen watching, right? I love my sci-fi shows. I admit it. I love binge watching shows. Always have. So there’s a big potential merger in the works with Disney and Fox, right? 21st Century Fox or what are they? 20th Century Fox? I forget it. It’s 21st century now, so are they-

Dirk:
Are they still even called that?

Jon:
Maybe they’re just called Fox now.

Dirk:
You might have dated yourself, buddy.

Jon:
They were 20th Century Fox at one point.

Dirk:
In like the ’60s?

Jon:
Disney and Fox are potentially getting together, which has a huge treasure trove of content, right? So you’ve got Disney owns Marvel, it owns Lucas Film, and now potentially it has this back catalog that’s enviable. They also own part of Hulu, and this level of content integration is going to make them an able competitor potentially to the Netflix juggernaut. So I could see there being a streaming services war a la sort of the big network competition of the ’80s. There were three networks, maybe four if you count Fox in there in the ’90s, but there’s the potential for a streaming video competition that we have not seen before because nobody has been able to bring it up to the level of Netflix and provide sort of that broad viewership and sort of total membership that would make it a competitor. I don’t know if Disney can really do it because it does also require a certain attention to detail around the technology that I don’t know if they have or not. They might, but-

Dirk:
They’ve got the money.

Jon:
Yeah, they could buy it certainly, and Hulu has been upping its game bit by bit, but I think Netflix has a real potential competitor for the first time, and I think we’ll start to see them butt heads in 2018.

Dirk:
It’s an interesting space that you’re putting your finger on. My wife and I were just talking last night about how Netflix is becoming for us increasingly irrelevant. Maybe that’s unique to us, but we’re finding more value in Hulu or Amazon. We’re looking for Christmas movies for the kids, and there’s nothing. All of the things that the kids would like that are good and hot, none of it is on Netflix. None of it. It’s just all of these old kind of rubbishy things. So I think that this is a space that’s ripe for disruption right now. Once upon a time, it was just Netflix. Now I’m speaking more, I haven’t researched it so I’m speaking more to our viewing habits, but we’re now paying for Netflix and Hulu and Amazon.

There’s another service, I’m not going to remember the name of it, but they’ve sort of taken all of the classic movies and they’ve cordoned those off, and if you don’t want to buy them, if you want to watch them, you have to do this other service. Just out of frustration that they’ve done that, I haven’t subscribed, but I like classic movies, so that’s one I might … You know, CBS is like doing their own thing. You’d have to pay extra for that. I’ve chosen not to. So it’s very splintered, and there’s a lot of very weak services right now in my opinion. More and more I’m just buying things on Amazon, which is kind of a waste of money unless their platform becomes the one to rule them all.

So to your specific prediction, I think it’s interesting. I think maybe the more interesting thing underneath it is that this is a space that’s ripe for big changes over the next few years of sorting this out and either further diffusion of all of these little services, which becomes more like cable TV packaged choosing just on a different delivery platform, or it starts to consolidate more again into some more valuable services, which would be worth paying more for as well. So, yeah, it’s an interesting space.

Jon:
All right. And for your final prediction for the new year.

Dirk:
Yeah. So, you know, not a big one, but, I mean, Amazon, I think a lot about Amazon. My earlier prediction involved Amazon, but Amazon, my prediction is Amazon is going to continue to fail, at least for the next year, competing with niche players. So an example of that is Etsy. Amazon has been trying to compete with Etsy for a number of years now, and isn’t doing a good job of it. The reason is that Etsy is tailored to this very boutique specific small business personal platform, and Amazon is this Goliath of sort of generic … What makes Amazon great is the genericism of it, the universality of it, and when you’re looking to, for example with Etsy, buy something that’s very personal, very custom, very arts and crafts, it’s largely incompatible with the things that would make an Amazon so great.
Amazon has failed to compete with Etsy, failed to compete with like Shopify for allowing small businesses to make websites easily that can handle transactions and in lots of different ways, and so Amazon continues to make these big investments and create these new platforms and trying to smash out these small competitors. They probably should just chill and kind of let it go, or kind of a very different strategy that is more about creating a true competitor, not the Amazon monolith but having something that is branded differently, something that can truly compete while in backend ways leveraging the Amazon platform. In any event, the prediction is in 2018, Amazon will continue to fail competing with these smaller providers.

Jon:
Yeah. It’s interesting because Amazon does have its fingers in a lot of different pies, and it’s really hard to tell what combination of factors make it a good business for Amazon to go into, and so your identification of like, “Hey, maybe this is really a niche thing and it’s therefore going to be served better by a group that cares deeply about that niche,” versus like, “Hey,” I don’t know how well Amazon’s hardware is doing, but I like at least some of it. Like I like their Fire tablets, and I do like the Echo, and they seem to be making headway on the smart home and the sort of content delivery, which the Fire tablet is just a Trojan horse to get you to buy your Kindle books or Amazon video or whatever, but I think in those sort of natural extensions into hardware I think Amazon has found some success, whereas in your example with the Etsy competition they’re not able to replicate it. So it does raise a question for me like, what are the factors that make Amazon’s experiments work? I’d love to dig into that more in the new year, too.

Listeners, remember that while you’re listening to show you can follow along with the things that we’re mentioning here in realtime, just head over to thedigitalife.com, that’s just one L on the digital life and go to the page for this episode. We’ve included links to pretty much everything mentioned by everybody, so it’s a rich information resource that you can take advantage of while you’re listening, or afterward if you’re trying to remember something that you liked. You can find The Digital Life on iTunes, SoundCloud, Stitcher, PlayerFM and Google Play. If you want to follow us outside of the show you can follow me on Twitter @jonfollett, that J-O-N-F-O-L-L-E-T-T. Of course the whole show is brought to you by Go Invo which you can check out at goinvo.com, that’s G-O-I-N-V-O.com. Dirk?

Dirk:
You can follow me on Twitter @dknemeyer, that’s @D-K-N-E-M-E-Y-E-R, and thanks so much for listening.

Jon:
So that’s it for episode 238 of The Digital Life. For Dirk Knemeyer, I’m Jon Follett, and we’ll see you next year.

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