While the drama of 2020 morphed into a sustained slog to get business done in the complex new environment, 2021 also revealed the tech-related forces that will increasingly influence our world.

1. The dawn of Web3?

From the volatile and hype-filled world of cryptocurrencies and non-fungible tokens emerged some powerful narratives about what the next iteration of the World Wide Web may look like. Proponents of blockchain technology and distributed ledgers see them underpinning a more open, secure and equitable web, one that’s decentralised by design. It’s a powerful concept that counters the extreme concentration of power and wealth into the Big Tech companies, a handful of which control most of the web. 

But while everyone seems ready for a better user experience and greater autonomy on the web, the technical details of how we get there are still murky, to say the least. A host of start-ups working on layer 1 and layer 2 blockchain initiatives, back with significant venture capital funding, believe they have the answers. However, Meta, Amazon, Google, Apple and Microsoft aren’t letting their grip on the web loosen. The fight for the future of the web is intensifying with regulators baffled at the pace of change and weighty decisions about how to apply oversight without putting a handbrake on innovation.

2. The global tech shortage

The so-called Great Resignation saw people all over the world reconsider their career options as the world started to recover from the pandemic. Nowhere was that more evident than in the tech sector, which has always been an industry where workers have employed high job mobility. They quit and moved to new roles in record numbers this year, often signing on to their new role for a 20 – 30% pay increase. 

Just getting hold of skilled software developers, cloud architects, cybersecurity experts and project managers was a real challenge this year, particularly in New Zealand, where the closed border cut off the supply of skilled migrant workers. That has seen some projects delayed and our tech exporters under real pressure as competitors in larger markets gain easier access to talent. The pandemic has shown how urgent the need is to increase the domestic tech skills pipeline, but will also have given local tech companies pause for thought about setting up offshore development teams to improve their resilience and access to talent. 

3. The global chip shortage

The surge in demand for electronic devices to keep us productive and entertained at home created a headache for the world’s major producers of logic chips. Chip foundries in Taiwan, Japan and elsewhere worked overtime to try and keep up with demand. The result was delayed shipments of some electronics devices, exacerbated by logistics and transport disruption due to labour shortages and freak events, such as storms in Texas and a factory fire in Japan. 

The automobile industry was particularly hard hit. It will produce 7.7 million fewer vehicles this year for lack of access to the computer chips that are increasingly being built into cars. Just as carmakers were ramping up production of electric vehicles, the chip shortage bit. Tens of billions of dollars are now being invested in new chip-making factories all over the world, but the capacity won’t be available until late in 2022 so chip supply will continue to be tight. 

4. Enabling the vaccine passport mandate

Just about every country tapped software developers to design and build vaccine passport systems to allow citizens to prove their vaccine status and travel internationally as the world set about opening back up for business while managing the risks associated with the Delta variant of Covid-19.

Some countries have done this better than others. The rollout of our own vaccine pass system wasn’t without its hiccups, but the centralised nature of the system gave us the ability to deploy it far and wide relatively quickly. The US on the other hand has struggled with a patchwork of state and federal based passport certificate systems that ultimately means citizens who travel across state borders may be required to produce multiple certificates. 

The real test of vaccine passport systems will be when people start travelling internationally again in large numbers. Varying approaches to privacy and security in vaccine passport systems could have implications for trust in such systems. New Zealand took a cautious approach in keeping its vaccine pass system separate from the existing Covid Tracer app, opting instead for a digital certificate that can be transferred to the digital wallet on iOS and Android devices. 

5. Riding Covid’s third wave

As Karl Wright, Datacom’s Chief Information Officer, put it in a BusinessDesk column recently, New Zealand businesses are now trying to ride Covid’s third wave. The first wave, in business terms, was the scramble to adapt to the restrictions of locked down workplaces and borders. The second wave was the emergence of remote work and trying to accommodate that from a technical point of view.

The third wave, according to Wright, is the effort to find a new equilibrium in a world of hybrid work and accelerated digital transformation. Everyone is struggling with how to achieve their business goals in this new environment. Wright says there should be 3 areas of focus – getting the right tools and training in place, underpinning the organisation with a robust cloud infrastructure, and enabling a world-class, zero-trust security framework. 

6. The toxic twins: Ransomware and the return of DDoS attacks

A string of high-profile hacking attacks reminded us of the potentially devastating impacts of data breaches and denial of service. The ransomware attack in May on the Waikato District Health Board was likely months in the planning and sophisticated in nature. With hundreds of its servers locked up, the DHB’s services were crippled for weeks. Unwilling to pay the ransom to have its data and applications unlocked, the DHB had to painstakingly restore its systems from backups and cleanse its systems. 

That’s the approach recommended by the Government, which has a policy of not giving in to ransom demands. But the real answer to such attacks is having better defences in the first place. That goes too for distributed denial of service attacks (DDoS), which returned with a vengeance in 2021 thanks to attackers exploiting newly discovered weaknesses in computer operating systems allowing them to harness more of them for mounting DDoS attacks, which usually also come with ransom demands. Some of our big banks succumbed to DDoS attacks during the year, showing that this old-school approach still has the potential to bring a digital business to a standstill.

7. The underwhelming Metaverse

Facebook rebranded as Meta in an attempt to lessen its reliance on its scandal-plagued social network business. But the name change also signifies founder Mark Zuckerberg’s vision for the future of the company, which is to become a major player in the future virtual world – the Metaverse, as it is commonly referred to. 

With its major investments in AR/VR headsets following its acquisition of Oculus, Facebook sees itself as perfectly placed to deliver the services and user experiences that will comprise the future Metaverse. But big questions remain over how open and interoperable Facebook’s Metaverse will be with those of other companies. 

Will Meta just replicate the problematic data-driven business model that has seen Facebook run into such major trouble? Meanwhile, other players such as Microsoft, Epic Games, Amazon and Nvidia each have their own vision of what the Metaverse will mean for work, play, education and social engagement. None of them looks particularly exciting or game-changing yet. But at some point, we need to move beyond the limits of rectangular screens. A more interactive experience is the future. But is the technology up to delivering it and how much time do people really want to spend in an immersive digital world? 

8. A record year for exits and acquisitions

Investors sprinkled around obscene amounts of money this year in a scramble to buy up the best high-growth tech companies. New Zealand saw a string of high-profile acquisitions, including Vend, Seequent, Ninja Kiwi and Timely. The tech sector here raised what will likely be a record amount of venture capital money for the year. 

What’s driving the spend up? Digital transformation efforts surged during the pandemic, accelerating a shift in every industry that would otherwise have played out over a much longer period of time. Now everything digital-related is in hot demand across every industry. That makes it a great time to be involved in the tech sector, but also gives it a bit of a dot-com bubble vibe, which only intensifies the further you get to crypto and blockchain-related ventures.

9. Tech’s sustainability story evolves

All of this digital transformation is great for business and promises to make life easier for us as we interact with businesses and governments. But at the heart of it is an insatiable demand for computing capacity that requires large amounts of power to be consumed. The big cloud providers, such as AWS, Microsoft Azure and Google Cloud have recognised this and ramped up efforts to move to carbon-neutral status by the end of the decade. 

Getting there involves carbon offsets for many of them, as the switch to renewable energy sources just can’t happen quickly enough. But some tech players are also investing directly in clean energy projects to speed the transition. Without deeply vested interests in fossil-fuel based industry, the tech sector should be a leader in the carbon zero push. But some areas will be harder to transform. Device makers still consume vast amounts of precious metals and chemicals to make electrical components and batteries. Apple’s self-repair service, which will become available next year and make available parts and tools to allow iPhone and Mac users to undertake their own repairs, is a step in the right direction. It means people will be willing to hold onto their devices for longer. But the right to repair movement has a long way to go to make a meaningful impact on the sustainability credentials of the consumer electronics industry.

10. Tech nationalism ramps up

The departure of President Trump has done well to cool geopolitical tensions between China and the US. While the military posturing over Taiwan is unlikely to boil over into outright conflict any time soon, the rivalry between the world’s two superpowers is manifesting itself in ugly ways in the world of technology.

Taiwan’s dominance in computer chip production has shown the world how vulnerable its supply chain is. The US and other countries are now hastily pumping billions into building chip-making facilities in the interests of national security. Trade restrictions have only made it more difficult for Chinese and American tech companies to do business with each other. China has responded by accelerating its efforts to become self-sufficient in key areas of technology, including telecommunications, artificial intelligence, semiconductors and quantum computing. It doesn’t augur well for efforts to work together on a global scale on technological innovation, with allies retreating to their corners through the likes of the AUKUS pack to protect their national security interests.