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Gen AI, sustainability, monetisation key themes of 2024 TMT predictions

6th March 2024

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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Generative artificial intelligence (AI), sustainability and monetisation have emerged as three key themes in the 2024 edition of advisory firm Deloitte’s 'Technology, Media and Telecommunications (TMT) Predictions' report.

The TMT report outlines 19 global trends for 2024, grouped into four categories or themes, namely generative AI; sustainability; media, entertainment and sports; and telecoms and technology, said Deloitte Global TMT research head Paul Lee.

“The first four predictions all focus on generative AI, and these are four disparate but all intimate themes, and with every technology, our underlying question is, would it monetise and if so, how?”

He noted that, last year, most of the generative AI attention was focused on what the technology could do, while, more recently, discussions were emerging about the costs, who would pay for it, and the implications.

“Everyone’s talking about generative AI, but what will companies do with it? And how will they do it? The answers could indicate how big the generative AI market might get,” the report outlined.

Within the generative AI category, Deloitte grouped generative AI and enterprise software; generative AI chip demand; generative AI training on private and enterprise data; and European Union (EU) regulations on generative AI.

The report predicts almost all enterprise software companies will embed generative AI in at least some of their products during 2024, with a likely mix of pricing models, including explicit per-user-per-month pricing, consumption-based pricing, a hybrid approach and implicit pricing or free.

“We predict that the revenue uplift for enterprise software companies will be at a $10-billion run rate by the end of 2024. That is lower than some estimates, but still notable for the first year of a new market.”

The generative AI chip market, meanwhile, is experiencing rapid growth, with the market for specialised chips optimised for generative AI expected to be valued at over $50-billion in 2024, up from nearly nothing in 2022.

By 2027, generative AI chip revenue could reach $400-billion and, together with other AI-enabling chips, the market could potentially represent half of the value of all semiconductors sold.

Meanwhile, more companies, seeking to avoid the risk of models trained on public data, are expected to train generative AI on their own private enterprise data to enhance productivity, optimise costs and unlock complex insights.

In 2024, Deloitte predicts that enterprise spending on generative AI will grow by 30%, as more companies are expected to develop their own generative AI models.

The report also noted that 2024 is likely to see a balance between regulatory compliance and fostering innovation in generative AI, with two regulations expected to help shape generative AI, namely the General Data Protection Regulation and the EU’s upcoming AI Act, covering various issues, including individual consent, rectification, erasure, bias mitigation and copyright use.

In terms of the sustainability category, Deloitte pointed out that, as more technology devices and faster connections are produced, companies should consider reducing the energy and raw materials required, which requires innovation and commitment.

However, Deloitte predicts that multiple regions will run short of gallium and possibly germanium in 2024 and may start seeing shortages of rare earth elements (REEs) by 2025.

Amid rising trade issues and skyrocketing demand, e-waste recycling and digital supply networks and a holistic approach to supply chain sustainability could help in the medium term.

In terms of semiconductor sustainability, modern, new greenfield plants could help improve the industry scorecard, but manufacturing transformation can help both the greenfield plants and existing brownfield plants do better for energy, water and process gas use.

Although absolute use of energy, water and process gases are expected to grow as semi revenues grow in 2024, Deloitte predicts year-over-year declines in average water intensity and energy intensity, as well as continued shift in renewable energy mix, across all leading chipmakers.

Further, the telecommunications sector, despite connecting 95% of the planet, is not the worst carbon culprit, being responsible for only 2% of emissions, however, more could be done.

The sustainability in the telecommunications sector is surging on the back of four new trends, with telecommunications companies able to reduce their carbon footprint by shutting down copper wire and third-generation wireless networks and transitioning to fibre optics, which can cut energy use by 80%, changing their field service fleets to electric vehicles and switching to fifth-generation radio gear that has a “snooze button”, enabling the network to “sleep” when not use.

In addition, the report predicts that sales of software solutions that help companies track and report on environmental, social and governance (ESG) metrics will likely surpass $1-billion in 2024, as EU and US reporting regulations, along with reporting requirements in Asia, Australia and the UK, take effect and as more investments require ESG disclosures.

Another theme highlighted by Deloitte is sustainable farming driven by agriculture technology (agtech), which is designed to enable producers and farmers to grow more food using fewer pesticides, and less energy, water and resources, enhancing farm yields.

Deloitte predicted that the agtech revenue opportunity, including Internet of Things (IoT) endpoints and connectivity devices for precision crop farming, livestock management and agricultural equipment tracking, will reach $18-billion globally in 2024, with a 19% compound annual growth rate between 2020 and 2024.

The media, entertainment and sports trends, meanwhile, include women’s elite sports breaking the $1-billion barrier for the first time in 2024, as interest from fans, broadcasters and commercial partners drives rapid growth in revenue, while streaming video services are expected to increase their profitability with viewers and are expected to charge more for premium content, fight churn with longer subscriptions and deliver more pricing tiers.

Under the sub-theme, cinematic and interactive universes, games and studios are merging to bring the biggest stories to life amid shifting demographics, innovative technologies and the desire for high-performing IP, while the global audio entertainment market will surpass $75-billion in revenue in 2024, up 7%, as more consumers globally tune in to audio entertainment formats like podcasts, streaming audio services, audiobooks and radio; however revenues could remain modest.

Under the telecommunication and technology category, smartphone authentication can augment the smartphone’s utility, as it is increasingly used to prove identity, using built-in fast and secure biometric authentication capabilities.

As security concerns grow, the need for authentication will likely consolidate the smartphone’s status as the most successful consumer device, with smartphones potentially used trillions of times in 2024 to authenticate across an ever-widening range of actions, including accessing websites, making payments online and in-store, unlocking cars and controlling entry to physical buildings.

Another trend outlined in the report is the direct-to-device satellite phone connectivity boosting coverage, and integrating satellite and terrestrial mobile networks could unlock new revenue for the satellite, semiconductor and telecommunications industries.

Amid a growing ecosystem of satellite and mobile network operators, handset manufacturers and semiconductor companies that are seeking to connect the unconnected, improve safety and emergency responses and expand IoT applications, Deloitte predicts that over 200-million smartphones, containing about $2-billion of special chips, that can connect with satellite services will be sold in 2024.

The 2024 report also points out that consumers potentially have all the bandwidth they need in 2024, and the demand for ever higher Internet speeds over fixed networks, which has been a constant for most of the Internet’s history, may be coming to an end.

The report notes that, in 2024, over 90% of the most used online applications on fixed-broadband networks in developed markets will have the same vendor-recommended bitrate as in 2023.

“We further predict that at least 80% of these applications may see no increase to advised bitrate for the period between 2023 and 2025. Over time, the bitrate for some of the most popular applications might reduce owing to better compression.”

Further, cloud sovereignty is a major focus of the future, as more data, increased cybersecurity threats and geopolitical tensions are expected to increase demand for cloud solutions that can operate locally.

Government cloud, designed for stringent compliance requirements, is expected to surpass $41-billion and distributed cloud, a solution for data residency, could surpass $7-billion.

Lastly, Deloitte reports an expected modest rise, to $14 billion to $16-billion, in technology venture debt funding, after a steep decline in 2023 to $12-billion following four years of $30-billion in US venture debt activity.

In the short term, venture debt deals are likely to become smaller; however, the company expects to see strategic venture capital deals rise in 2024, as cash-rich, mega-cap technology companies could invest or buy out smaller companies that cannot raise capital or debt.

Edited by Creamer Media Reporter

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