In this blog post, we’ll look at the declining industries and the ones that are taking off and the impact it can have on your business.
Industries in Decline:
Wireline telecom companies:
I was with Verizon when several states of local phone service were sold to Frontier Communications (including me) in 2010. Frontier Communications focuses on rural telephone service. While one would think that rural wired telecom would be a captive market, it’s not the case. The number of wired line subscribers is declining and will continue. The farmer wants to ability to use data when they are on the tractor, figuring out how much fertilizer to put on his crop based on the soil conditions, weather forecast, etc. He doesn’t have time to run back to the house and fire up his computer and use the house DSL. This trend of declining wireline data will continue as the Verizon’s and AT&Ts of the world rollout more and faster wireless data. To give you the magnitude of the impact, in Jan. 2011 Frontier Communications stock was about $135 a share, on Jan. 25, 2019, the stock closed at $1.98!
IT support shops of all Sizes:
These are IT shops that provide IT talent directly to companies and/or support functions such maintaining servers, switches and routers. Why is their business declining? Because IT is moving to the Cloud. First, with Google Docs, Gmail and other free or near free products, there is no need to buy expenses software packages for the business computer. Software updates that had to be managed by the small business owner are now handled in the cloud by Google and other companies. Second, for larger businesses, their IT infrastructure is moving to the cloud. No need to spend millions of dollars on a data center when the vast majority of infrastructure and software can be moved to the cloud. Just look at IBM, a premier software and IT services company. In 2007 they had $98.8 billion in sales and in 2017 they had 79.1 billion in sales. And while there are some bright spots in IBM’s business, losing $20 billion revenue over 10 years says that IT consulting is a dying business. The one bright spot for the IT consulting industry will be for consulting firms that show small companies how they can move to the Cloud.
Data Storage companies:
Related to the IT Services companies are those in the data storage business such as Iron Mountain. While Iron Mountain has other business that have growth, their offsite storage business will likely decline with the advent of moving work and data to the Cloud, there isn’t a need for back up storage (your Cloud provider will provide).
Traditional Universities:
The introduction of Massive Open Online Courses (MOOCs) which are free online courses available for anyone to enroll have changed the learning environment drastically. Any high school student needs to consider whether it is worth the money to spend 4 years of their life and tens of thousands of dollars at a 4-year university degree when MOOCs are available. And the courses are offered by some very legitimate organizations such as MIT and Carnegie. Around 23 million new learners signed up for their first MOOC in 2017, taking the total number of learners to 81 million mooc. In most cases the courses are free, but certificates are paid. While utilizing a MOOC may not be a replacement for a 4-year degree, it can certainly supplement it.
Logistics Work:
My dad was a forklift driver for a manufacturing company. He did the job for almost 40 years and retired with his pension from the company. Today, a robot would his job. In the future, the product will be loaded into a self-driving truck. The forklift operator and truckdriver jobs will disappear along with other logistics work. Amazon’s automated fulfillment centers are more efficient with less workers, Amazon automation.
Auto Sales will Decline, Dramatically:
Three things are coming together that will make auto sales drop off a cliff.
- With the move of millennials and companies to urban areas and with using to public transportation, there is less need for a car.
- Fewer drivers licenses. “in 2014, just 24.5 percent of 16-year-olds had a license, a 47-percent decrease from 1983, when 46.2 percent did”.
- Self-driving vehicles. As stated above, self-driving trucks will have a big impact on employment but will also have an impact on car sales. Recent Predictions state that fully autonomous vehicles will be available in the early 2020s. So, with the car doing the driving while you work or entertain yourself, do you care if the car can do 0 to 60 in 5 seconds? Do you care if it is the “Ultimate Driving Machine”? Do you even care if the car is gas-powered or electric? A car will become a commodity. Something to get you from point A to point B. Fewer auto sales, means fewer dealerships. It also means fewer repair shops.
Gaming stores and DVD rental stores:
Once it was the dream of many entrepreneurs, to open their own video or gaming store. In the case of the video stores, they are dead with Blockbuster going bankrupt in 2010 and gaming stores are following quickly behind.
Retail in General:
Many well-known retailers filed for bankruptcy in 2018, including Toys R Us and Sears. In 2017, major such as The Limited, Payless ShoeSource, and Radio Shack filed for bankruptcy. In 2018 Toys R Us liquidated its assets and ceased all operations.
Trends that are Taking Off:
Personalized service:
Personalized Service will become more important as large companies use more and more technology as the interface to their customers. With your small business, you can take advantage of this trend and give your customers a personal touch. You use technology to make yourself more efficient but talk directly to your customers whenever possible, engage them how they like to be engaged, whether through text, email, chat or a simple call. And be as prompt as possible. No response within 48 hours can means a lost customer.
Artificial intelligence (AI):
The first prime time AI for the consumer was the iPhone’s Siri (from Apple) and for Android users it was the Google assistant (from Google). The AI systems respond when key words are used to get their attention, such as “Siri” in the case of Apple or “Ok Goggle” or “Hey Google” for the Android system and these systems can be used to answer verbal questions.
Personal Assistants:
The next step in personal AI was personal assistants for the home. Amazon has brought out its own AI system called Alexa, that can take on various tasks such as playing songs, dimming your lights and adjusting your thermostat. Amazon uses the Echo Dot, a smart speaker system that you connect your house devices to and the Echo Dot controls them through voice commands. Google Home smart speakers can do similar things. The natural progression is for these devices is to conduct voice searches on our behalf. For example, the ability to tell Alexa, “Alexa, find me the most highly rated snowblower under $1000 and tell me when I can buy it”. Alexa would search the web for snowblowers based on the criteria you provided and verbally give you the answer. If the snowblower was available on Amazon, Alexa could order it for you.
The Internet of Things (IOT):
Related to Google Home and Alexa in the Internet of Things (IoT), basically smart devices that connect over Wi-Fi and provide data to a central system. Lights need to be Wi-Fi enabled so Alexa can give the command to dim the lights upon request. Your washer/dryer, frig, thermostat and other devices are already Wi-Fi enabled or will soon be. There are many things (devices) that will be connected to the Internet that you will be able to control via voice command.
Big Data:
As more devices become Wi-Fi enabled and provide data, there will need to be something to manage that data. The Alexa and Google systems are basic today but will be able to process far more data (become smarter) in the future. More devices will connect over the Internet and the quantity of data will increase significantly. These devices will be able to do much more complex tasks. I can see in the not to distant future that your health stats are continually sent to your AI system and it warns you if you blood pressure gets too high or will contact emergency services if your symptoms indicate you are suffering a heart attack.
Mobile Pay:
Mobile banking/transactions will increase as well as online banking. Two different things are taking place. More people are using their phones for making transactions whether it be Apple Pay, Google Pay (redesign Google Wallet), Visa Checkout, MasterCard Master Pay, Square Order and others.
Second, more and more people are banking online. My wife, who takes care of our finances, sets up items for auto pay on our bank account. When we go to the bank, which is seldom, it is to get cash from the ATM. We do very little person to person interaction with the bank. The number of brick and mortar banks will decrease.
Telecommuting:
More people will work remote. While there is a trend for companies to move back into urban areas. See Core Values Study and Companies move downtown, the telecommuting that started in the 90s, will continue. With more people being at home during the week, but with limited time away from their computer, it opens opportunities for businesses that can deliver their product quickly to busy workers.
So, what does this all mean to you?
Actions:
- If you are looking to start a business or have an existing business, it would be a good idea to evaluate the future of your target industry and adjust your idea or your business based upon these trends.
- Technology can be your friend, not your enemy. Look for ways to utilize technology in your business to better serve your customers. Just remember, technology is an aid, not a replacement for the personal interaction with your customer.
Leave me a comment, I’d love to hear about other trends that are taking place in the business world.
Alan