In summing up the fortunes of the tech sector in 2015, The Verge’s Walt Mossberg pulls no punches.
The “next big thing” didn’t show up.
There wasn’t a single tech device or service that “captivated and remade the lives of the masses,” he says.
He’s right.
So will one show up in 2016? Doubtful.
Think about it: Has any recent technology changed the lives of so many people in such a profound way more than the almighty smartphone did in 2006?
Nope.
As I’ve contested since 2011, the exploding use of mobile devices promises to be the biggest tech trend ever.
Despite countless innovations and product launches, nothing has surfaced with even the potential to dethrone the smartphone.
But that doesn’t mean there isn’t potential for tech investors. Far from it.
As we begin 2016, there’s plenty to get excited about, as both tech enthusiasts and investors.
Over my next two columns, I’m going to cover my top 10 technology predictions for the year ahead – from the irresistibly obvious to the incredibly speculative…
Tech Trend No. 1: Technology will continue to change everyday life at a mind-blowing pace.
Forget for a moment about epic technological leaps forward, like driverless cars and bionic eyes that restore vision to the blind.
Instead, focus on the pace of technology adoption. It’s never been quicker.
And it’s likely to accelerate further still. From an investment standpoint, this means disruptors can quickly become the disrupted.
Tech Trend No. 2: Virtual reality enters hyper “hype” mode.
The Consumer Electronics Show (CES) promises to be the coming out party for the mega-billion-dollar opportunity in virtual reality (VR).
More than 40 exhibitors plan to demonstrate VR products, a 77% increase from 2015. The list includes tech heavyweights such as HTC, Facebook Inc (O:FB), and Samsung Electronics (KS:005930).
While the reality is that a miniscule percentage of PCs are powerful enough to support VR right now – less than 1%, according to estimates from chipmaker NVIDIA Corp. (O:NVDA) – the hype generated at CES and from initial product launches in the first half of 2016 should translate into profits for the most adventurous speculators.
If you’re not a speculator, though, don’t worry. The future will bring plenty of investment opportunities as the VR market matures.
Hint: Content promises to be king. So start researching VR camera companies.
Tech Trend No. 3: Twitter Inc. (N:TWTR) gets too cheap to resist for Alphabet Inc (O:GOOGL).
Look out below! I expect Twitter to continue struggling mightily to keep up with Facebook and as this plays out, investors’ patience will wear thin with recycled leader Jack Dorsey.
His ambitious attempt at corporate polygamy by also serving as CEO of payments startup Square Inc (N:SQ) is already floundering.
So does that make Twitter the perfect short in 2016? Not exactly!
As I’ve shared before, “The lower Twitter shares go, the higher the chance the company gets acquired.”
But it will take a 30% price decline to around $15 per share – or about a $10 billion market cap – before suitors get tempted.
While Facebook, Apple Inc (O:AAPL), Microsoft Corp (O:MSFT), and even Amazon.com Inc (O:AMZN) are all possible acquirers, my money is on Alphabet taking the plunge in a last-ditch effort to turn its flop of a social network, Google+, into a contender.
Tech Trend No. 4: Wireless charging at a distance becomes a reality, enabling the Internet of Things (IoT) boom.
In the late 1800s, Nikola Tesla hatched a plan to transmit electricity through the air. He even started to build a 57-meter tower on Long Island that he claimed could transmit power kilometers away.
Was he a crackpot? Nope. And by the end of this year, I expect products with embedded technology from Energous Co (O:WATT) or Ossia International Ltd (SI:OSSA) to hit the market and offer wireless charging at a distance of at least 15 feet.
As I outlined last month, such a development would prove to be a key enabler of the Internet of Things mega-trend.
Tech Trend No. 5: The smartphone upgrade cycle accelerates, benefiting Apple the most.
Two-year smartphone contracts are going the way of the dodo bird. Device installment plans are popping up in their place.
The end result?
U.S. consumers will upgrade to a new smartphone sooner – every one year versus every two years.
And since Apple already captures a staggering 92% of the smartphone industry’s total operating income, it promises to be the biggest beneficiary of an accelerated upgrade cycle. As I recently shared on CNBC’s Closing Bell, an investment in Apple is all about the iPhone in 2016.
Go long!
That’s it for today. In my next column, I’ll cover the rest of my top technology predictions for 2016.
Ahead of the tape,