The Objective of below-Market Research
The main objective of this market research is to really look into the growth patterns of the US IT industry, analyze its trends over the years, and detect what really impacted its growth.
This research will be focusing on those parameters, criteria, and metrics that will help you to know more about what we can expect in the future, based on past available data on various growth companies.
Selection Criteria of Research Parameters
We are carefully designed selection criteria to help us achieve a deeper understanding of the growth of the above-mentioned sectors. This started with few questions that drove us to the study and the parameter selection.
- Rise and fall of industries during the age of communication, i.e paper to digital(emails, SMS chats, etc)
- Interdependence of the growing companies during the selected period
- What was the impact on migration or no of people in the US to the data? Does more no.of people mean more growth?
- Does more innovation mean more growth? Can we measure innovation?
- Does age ratio or percentage of crowd impact the business / or growth or adoption of certain technology?
- How future predictions for technology can be driven by our past data across various industries?
History of Technology Growth & Adoption
The 1980s are a decade often remembered for its important role in shaping the technology of the future. The release of the Nintendo GameBoy and NES, the rise of the Sony Walkman and Trinitron TV, the Casio calculator clock, and the anticipation of the Video Home System or VHS spanned a decade of events on a grand scale.
- From Telephones To the World Wide Web
- Innovation in the 80s
Today we take for granted the software we use for basic calculation, data manipulation, presentation slides, etc. but in the 80s these were the most advanced software around.
With the increasing computational power and quality came major discoveries that changed the business world and economy.
- The electric pencil was the first-word processor released for home computers in the 1980s. Its major functionality was to word-wrap i.e a basic feature of word processors today that adjusts lines as words are added and deleted.
- Lotus 1-2-3 was a spreadsheet developed by Lotus Software and first released in January 1983. Lotus 1-2-3 was the most popular spreadsheet software until Windows became popular in the early 90s. During this time, many Lotus users switched to Microsoft Excel.
- In the 1980s, Microsoft Word was often regarded as the most popular PC word processing software. It has continued to be the most popular word processor on Windows and MACs.
- In the late 1980s, Excel was selling Lotus 1-2-3 and helped strengthen Microsoft's position as a leading PC software company. To stay competitive and maintain market strength, Microsoft has released new versions of Excel every few years.
- PowerPoint is a slide showcase developed by Microsoft for use on both Microsoft and Apple Macintosh applications. PowerPoint was originally called Presenter and was launched in May 1990 as part of the Microsoft Office product suite. It is one of the most widely used slide shows in the world today.
- Technological Evolution
Wireless Communication via WiFi (Wireless Fidelity) emerged in 1991. Advancements in the Internet paved the way for the rise of online messaging applications. In the late 1990s, wearable technology was introduced, enabling hands-free and portable communication. Sony unveiled the Playstation in 1994. The Tech giant Google, even though it was founded in 1998, project regarding google was initiated in 1996. IBM introduced the first smartphone, the 'Simon', which included basics like taking notes, sending emails, and a touchscreen. It was ahead of its time, and at a very high price of $599.Emails were the mode of communication that was popular in the 1990s. Apple and Microsoft developed word processing software for computers. The mosaic graphical web browser is launched.
Despite being abundantly blessed with boons, the lack of a physical barrier makes wireless communication prone to spoofing, session hijacking, eavesdropping, etc. There are several loopholes in the internet using which unauthorized third parties intercept the data being transmitted over the secure network. Around one-third of the cell, owners have experienced a lost or stolen phone, and 12% have had another person access the contents of their phone in a way that made them feel their privacy was invaded.
Technological advancements in higher dimensions evolved during this decade which brought a major impact on the world. With the arrival of the internet in the 1990-2000 decade, technological advancements were in top priority for each individual. Thus, the main focus was on building networks with the help of a world-widely accepted internet. Humans focused more on technology, as the mode of communication was vast and diverse during the decade.
- Major Observations
The major change in this decade was the rise of social media apps which initially were not accepted by people but later on, they moved as a trendsetter during the end of the decade. Updates in the mode of messages were brought in this era which reduced the cost of messaging and brought the internet as the mode of communication. Network speed also changed with the introduction of 4G with a network speed of 21 Mbps. Initially, security features for applications and internet-connected services were not a major concern but towards the end of the decade due to some sophisticated attacks and issues, cybersecurity was a concern of computer users everywhere but especially to government agencies and large corporations who had the most at stake.
Many major social media platforms launched in this decade are:
- Growth of IT Sectors
Technological involvement for the commercial service exports is shown below using a pie chart in which the major involvement during this decade is computer communications and related services which come under the IT sector which was less involved in the previous decades. From this, we can say the growth of the IT sector had a blast kick start in this decade and which grew positively during this decade.
CCO: Computer, Communications & Other Services,
IFS: Insurance & Financial Services
TS: Transport Services
TvS : Travel Services
During this era, the most influential is the IT sector which holds the major part in commercial service exports.
Technological developments in many aspects are growing exponentially which has a major influence on the IT industry. Our question is in which ways this growth of technology matters and has been responsible for the lifestyle change over the years.
Computational Power of Processors
When it comes to the history of computers, it starts with microprocessors and how much they have evolved in speed, arithmetic and logic operations, data transfer, etc. Undoubtedly, the introduction of affordable integrated computer-based circuits has positively changed modern society. Microprocessors, since their arrival, have been instrumental in the multimedia display, counting, internet connection, text editing, industrial process control, etc. As the quality of microprocessors increased with a decrease in price, it resulted in huge engagement in computer and internet usage.
Consumption Of Internet
The consumption and use of the internet have grown considerably over the past few decades. Here we are going to focus mainly on demographic variations related to internet usage. Not all households are similar when it comes to access, but there are some substantial variations that exist along with demographic and geographic factors. Demographic variations are mainly age groups and ethnicity and we will examine any changes in the trend of internet usage.
An interesting observation on internet usage is for the category of users in the age of 18-29, where early adopters to the internet, wireless, apps and technology products
The figure has shown the internet usage among different age groups and it is very much evident that no matter what it is increasing year by year but the notable point is how prevalent it is among the age group between 18-49 which mainly consists of students and working professionals.
The next demographic factor in the equation is ethnicity.
More than 150 years after the 13th amendment abolished slavery in the United States, many say the country is not progressive enough about racial equality, and there is doubt, especially among blacks, that black and Hispanic people will ever have the same rights as whites.
Here our question is has this affected the minority’s lifestyle when it comes to technology and access. In the above figure, white and black people have similar changes and variations throughout the years. Hispanic people are those who are lacking behind. We can observe their internet usage has doubled from 2010 compared to previous decades and now it's on the same level as other ethnicities which is an indicator that technology has a vital role in community development.
The boom of the IT Sector
Starting in the mid-1990s, the usage of the Internet grew rapidly in the US. This led to an increase in demand for workforces like engineers and computer scientists, and a rise in R&D expenditures for many of the dominant firms. The entry and growth of several tech giants like Yahoo, Amazon, and eBay helped sustain the boom in the IT sector till the end of the century. The U.S. leads in technology innovation. Innovation is a trademark feature of American competitiveness. This feature had always been a trump card for the U.S ever since the post-World War II period.
Digital technologies have risen to prominence as a critical determinant for economic growth, national security, and international competitiveness. The digital economy of a country has a high influence on the stability of the country and the societal well-being of ordinary citizens. It affects everything from resource allocation to income distribution and growth. But how do we measure the digital economy and its contributions to growth? Several experts acknowledge the difficulty of precisely evaluating a digital economy characterized by rapidly changing products and services.
Information and Communication Technology is a sector through which the IT industry contributes to the digital economy. In addition to the positive impact of ICT sectors on the total economy, a transformational shift has occurred from the ICT manufacturing sector to the ICT service sector. This move from hardware to the software-centric level of growth has been particularly observed in developing countries due to wider mobile-cellular networks. Beyond the increasing contributions of ICT services to GDP growth, investments in the ICT sector have significantly boosted labor productivity. In this area, the U.S. economy has maintained its global leadership.
Human capital has been the focus of a body of research looking at the relationship between a company’s human assets and its financial well-being and growth. In response, organizations around the world have prescribed best practices for managing human capital.
Traditional growth accounting exercises conclude that changes in human capital contribute to economic growth i.e,
Availability of Human Capital ∝ Growth in Information Technology
But several statistical analyses have depicted that improvements in human capital make a significant impact on innovation. This improvement in human capital can be implemented through various means, which include quality education, better training, work experience, etc.
Migration & Outsourcing
There are several reasons for migration to a country like the United States, ranging from better quality education, better employment opportunities, or even better standard of living. Speaking about the IT workforce in the US, they comprise several communities including the Native Americans and several migrant groups like Asians, Latinos, etc. Different communities have different reasons to choose a sector to work in. The reasons can be remuneration, work satisfaction, community compulsion, and so on.
Fig 5: A graphical representation of the major workforce community in the US IT sector is given below.
As per the graph given above, it can be observed that the native residents (the whites) dominate nearly about 50% - 65% of the entire workforce, and the migrants constitute roughly about 35% - 50% of the same.
This directly and indirectly, states that the majority of the decision-making power in the IT Industry solely lies in the hands of the natives in the US.
R&D and Patents
From this visualization of R&D vs Patent applications, we can clearly say that both are directly proportional when we see them in the long term.
R&D vs Patent applications ∝ Growth in Information Technology
Even though there are some short-term changes in between, there is a positive correlation in the long term. The short-term changes are due to the impact of disasters or specific impacts of a similar kind during those years. When considered as an overall impact, R&D along with patent applications moved positively over the years. That means, as research in R&D increases, it increases the number of patent applications which concludes that patent applications are more filed when research in R&D increases.
Among all countries in the world, the USA has the most competitive advantage from 1995 till 2017. China is looking for a long-term record to come over the USA and if the progress continues, China will reach the top level soon.
ICT Service and Exports
ICT Service exports include computer and communication services and information services which are more related to the growth of IT as a whole. The change in ICT Service exports makes an impact on the growth of several companies which in fact affects globalization and thereby migration as well. It can be seen throughout these decades which can be proved by the pie chart that shows the involvement of each area over the decades in service exports which are shown below:
CCE : Communications, Computer Exports
ICTSE : ICT Service Exports
IFSE : Insurance and Financial Services Export
TSE : Transport Services Export
TrSE : Travel Services Exports
By analyzing the pie charts over the decades from 1970 to 2010, it’s seen that communications, computer exports, and ICT service exports constitute the IT sector. Over the years, the trends of these 2 vary but are not affecting the IT sector as a whole. Therefore, the IT sector will always have an upper hand in service exports.
Major Trends in IT Sector
R&D vs ICT
This clearly shows the positive correlation between ICT and R&D. Research and Development always pave the way for more innovative products and services thereby increasing ICT service exports.
Labour Force vs ICT
The Labour force participation rate is fluctuating over years and there is no influence of the labor force on ICT service exports.
ICT vs Natural Capital (year)
We can see that even if the natural capital reduces across the graph, it doesn’t affect ICT at all. It’s clearly evident from this visualization.
ICT vs Patent applications
ICT service exports when correlating with patent applications, we could come to a conclusion that an increase in ICT service exports increases the patent applications too. The growth of the ICT industry which involves the growth of several technologies requires protection and thus patent applications in ICT increase. Since ICT is the major influencer in service exports as we see above, it influences the number of patent applications as well.
Future of the IT Sector
We have gone through every possible parameter that could bring a considerable change in the IT industry, few parameters stood out that are showing positive results along with the growth of the ICT sector.
- Patent Applications
- Research and Development Expenditure
- Researchers in R&D
These were the variables that were least affected by the economic fluctuations and other factors and kept increasing especially after 2000. They go hand in hand with the ICT sector. In the coming years, they will have an upper hand over every other parameter.
Led by Team Keito, Parinita R