Hyper-Inflated Tech Stats Grow 217% Crazier - InformationWeek

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7/31/2013
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Hyper-Inflated Tech Stats Grow 217% Crazier

The tech industry is rife with over-the-top, groundless predictions and estimates. Try these on for size.

Every year we're treated to the baseless boast that "up to a billion people" -- one-seventh of the Earth's population -- watched the televised Academy Awards ceremony, even though this U.S.-centric event is lucky to draw a Nielsen-tabulated U.S. viewing audience of about 40 million. Where the other 960 million people are viewing from is anyone's guess. Perhaps Oscar pools are all the rage from Rangoon to Rio, but common sense suggests otherwise. Yet that billion-viewers number makes it into press coverage of the event annually.

Hollywood and its cheerleaders were never much for truth telling, but the IT industry is also prone to spreading its own statistical lies and damn lies, or at least presenting specious extrapolations and wild exaggerations as if they're fact. Several cases in point:

-- A group of computer hackers, four of them Russian and one Ukrainian, inflicted "hundreds of millions of dollars" in financial harm on more than a dozen major companies over several years, according to an indictment announced on July 25 by the Justice Department, which characterized the alleged criminal enterprise as the largest of its kind ever prosecuted in the U.S.

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While the feds cited a number of corporate victims -- 7-Eleven, Dow Jones, Euronet, Heartland Payment Systems, Hannaford, JCPenney, JetBlue, NASDAQ and Wet Seal among them -- they never did break down how they arrived at their multi-hundred-million-dollar cost estimate. They did, however, go out of their way to emphasize the Absolute Bigness of the information security threat in the most general terms.

"Those who have the expertise and the inclination to break into our computer networks threaten our economic well-being, our privacy and our national security," said U.S. attorney Paul J. Fishman in a statement. "And this case shows there is a real practical cost because these types of frauds increase the costs of doing business for every American consumer, every day. We cannot be too vigilant and we cannot be too careful."

As one commenter put it on The New York Times' online story about the indictment: "Prosecutors often make grand, wildly high estimates of damages in hacking cases. It's to convince judges that, if left free, the hacker will bring down the economy and end civilization as we know it." It's also to convince the taxpaying public to support government funding of these (generally worthwhile) cybersecurity efforts.

-- The Business Software Alliance's most recent Global Software Piracy Study estimates that such piracy cost ISVs $63.4 billion in 2011. Indeed, software piracy is a huge industry problem, particularly in poor countries. But you can't assume -- as the industry group BSA does -- that every time someone in China, Russia, Brazil or some other country illegally copies a version of Windows or Word that he's taking one or two hundred dollars out of Microsoft's pocket.

Much of that purloined software, even in developed countries where users can afford to pay for it, would never be purchased otherwise. It's impossible to say how much of it, but it's also misleading to suggest that the number of illegal downloads or copies multiplied by the market price of that software equals total industry losses.

-- General Electric estimates that the "Industrial Internet" -- its name for the world of interconnected, sensor-equipped, data-generating machines and other "objects" more commonly known as the Internet of Things -- will deliver as much as $15 trillion in economic value in the next 20 years. Cisco, perhaps having learned the lesson that round figures don't convey precision, puts that number at $14.4 trillion -- but it sees that economic value coming within just seven years, not 20.

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As contributor Art Wittmann notes in his excellent InformationWeek digital cover story on the Internet of Things, Cisco does break down its $14.4 trillion estimate, into the following buckets: $2.5 trillion in increased asset utilization, $2.5 trillion in increased employee productivity, $2.7 trillion in increased supply chain and logistics efficiency, $3.7 trillion in increased customer loyalty and thus spending, and a tidy $3 trillion lumped into the broad category of "innovation."

But such gargantuan numbers, projected out years and decades, can't be anything more than shots in the dark. To put those numbers into perspective, Wittmann notes that total U.S. GDP in 2011 was $14.9 trillion and the entire U.S. national debt is about $16.7 trillion. IoT isn't a market opportunity as much as it is an economic vision bordering on fantasy at this point in time.

-- Business Insider's BI Intelligence research arm engages in a bit of its own fantasy forecasting when it posits that Google Glass, the computerized eyewear Google is positioning for a variety of consumer and business applications, will generate $10.5 billion in sales by 2018. The product, by the way, isn't even out of beta yet; it's set for commercial rollout next year.

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Lorna Garey
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Lorna Garey,
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8/1/2013 | 3:34:52 PM
re: Hyper-Inflated Tech Stats Grow 217% Crazier
I think journalists have to take some responsibility for marketers' tendency to attach numbers (crazy and otherwise )to trends. It's easy to get someone to repeat a digestible "x will be a $4.2 million market by 2015" - not so easy to get them to dig into nuance.
ChrisMurphy
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ChrisMurphy,
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8/1/2013 | 3:23:05 PM
re: Hyper-Inflated Tech Stats Grow 217% Crazier
Mobile payments is another example I just saw. I just read Gartner's prediction that mobile payments will hit $721 billion by 2017. It's the obligatory crystal ball effort that I think takes away from the very solid work in the same report just getting at the reality of what's happening right now: an estimated $235.4 billion this year.

http://www.gartner.com/newsroo...
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