The World Economy and The IT Industry
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Transcript of The World Economy and The IT Industry
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1
The World Economy and
The IT Industry
Presentation to Global Interdependence Center
Trade Prospects and Problems in 2013
Portland, Oregon
January 15, 2013 Paul Thomas
Chief Economist
Intel Corporation
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2 MMBP – Market Sizing & Forecasting
Risk Factors
Today’s presentations contain forward-looking statements. All statements made that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to our most recent Earnings Release and our most recent Form 10-Q or 10-K filing available on our website for more information on the risk factors that could cause actual results to differ.
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3 MMBP – Market Sizing & Forecasting
World Economic Challenges
1. The Great Recession of 2008-09 also known as the Panic of 2007 (Gary Gorton, Slapped by the Invisible Hand: The Panic of 2007). Panics are usually followed by slow, frustrating recoveries (Reinhart & Rogoff).
One worrying scenario says that we’re in the 5th year of a Lost Decade. Japan is the example here; it may be in the 22nd year of its Lost Decade… A more popular scenario says our growth rate will increase and unemployment and deficit fall once we form a new, reasonable policy consensus.
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4 MMBP – Market Sizing & Forecasting
World Economic Challenges
2. The “Advanced Economies” are aging. Social Security and Medicare liabilities in the U.S. are coming due. Discretionary spending shrinks as share of government budgets. On the other hand, the building increase in retirements will help lower the unemployment rate.
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5 MMBP – Market Sizing & Forecasting
World Economic Challenges
3. Slow economic growth and aging populations throw political consensus out the window. Ideological rifts lead to exhausting, and sometimes absurd, political battles in Advanced Economies. Policy uncertainty grows and leads to even slower growth.
www.policyuncertainty.com
Scott Baker, Nicholas Bloom, Stephen Davis
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6 MMBP – Market Sizing & Forecasting
World Economic Growth
• World is caught in a growth slowdown in 2012 and projected to continue in 2013 •Accelerated growth expected in 2014
•2012 and 2013 were originally expected to grow at a moderate 4% rate •Both are now expected to end at about a disappointing 2.5% rate •Expectations for 2014 already falling
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RGDP Growth
RGDP Growth
William Dudley, NY Federal Reserve
NABE Annual Meeting, Oct 15, 2012
“Two aspects of this exhibit are
noteworthy. First, forecasters have
consistently expected the U.S. economy
to gather momentum over time. Second,
with only one exception, the growth
forecasts for each year have been
revised downward over time, as the
expected strengthening did not
materialize.”
Source: IHS Global Insight
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7 MMBP – Market Sizing & Forecasting
Annual Rediscovery of Hope and Happiness Underway?
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8 MMBP – Market Sizing & Forecasting
Source: Joe Weisenthal, Business Insider, Dec 28, 2012
(http://www.businessinsider.com/closing-the-deficit-is-painless-2012-12)
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9 MMBP – Market Sizing & Forecasting
0
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1996 1998 2000 2002 2004 2006 2008 2010 2012
DESKTOPMOBILETABLET
World History from the Modern IT Perspective (Millions of Units Sold)
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10 MMBP – Market Sizing & Forecasting
The Device Category Debate
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11 MMBP – Market Sizing & Forecasting
Another Take on the Device Category Debate
with apologies to vegetarians and unhappy cows …
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12 MMBP – Market Sizing & Forecasting
What’s with this transformation?
• Is it “Creative Destruction” enabled by the Great Panic and the slow recovery in Advanced Economies?
• Is it the Innovators’ Dilemma with OEMs and suppliers resisting the implications of the Cloud and the potential for tablets?
• Is it an example of Someone Else’s Law? My estimate is that Notebook PCs are lately 4x as sensitive to the economy as Tablets. Will Notebook demand surge if the economy strengthens?
• Are Tablets just enjoying the heady benefits of Bass’s diffusion process? Lots of “demonstration effect” and “network economics” with saturation just beginning in the richest markets?
• OR are Tablets just really neat with the challenge to the IT industry being to make PCs neat also?
Someone’s Else’s Law: Demand for durable goods is strongly pro-cyclical, except for NEW durable goods!
(It’s unlikely that I’m the first one to point this out. But even if I am, Stigler’s Law of Eponymy means that Someone Else will get the credit.)
Frank Bass’s model: dx/dt = Ax(M-x) where x is the penetration rate, A is a scale factor, and M is the asymptote. Growth accelerates until penetration reaches M/2 when it starts slowing.
Joseph Schumpeter!
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13 MMBP – Market Sizing & Forecasting
Creative Destruction – Crises May Pave the Way for New Growth Engines
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14 MMBP – Market Sizing & Forecasting
“Routing paths
through a portion
of the Internet as
visualized by the
Opte Project”
http://en.wikipedia.org/wiki/Internet
PCs, Tablets, Smartphones, Software Creating the Information Universe
CPUs, keyboards, displays, form factors, and software enable people to join the Information Universe. This is a virtuous cycle for those designers and manufacturers ready to act.
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