Last Thursday, I stuck my neck on the block and issued five tech predictions for 2016.
To recap, we discussed how the incredible pace of innovation looks set to continue this year… how virtual reality is poised for a defining year… which tech giant will acquire Twitter… how Nikola Tesla’s dream from the 1800s is ready to become reality… and why this will be another big year for Apple (O:AAPL).
And I enjoyed it so much that I’m coming back for more!
I’m going to wrap up today by listing five more tech forecasts for this year. So let’s get right to it…
Tech Trend No. 6: Declining lithium-ion battery prices spark a surge in storage installations
Mention “batteries” to most people and you’ll probably be greeted by moans about their poor longevity or how fed up they are with buying them.
But as the chart below shows, the cost of batteries, particularly lithium-ion ones, keeps falling. Combined with generous subsidies and third-party financing, the stage is set for 2016 to be a tipping-point year for battery storage solutions and investments. I’m talking about both in front-of-the-meter (power grid-oriented) and behind-the-meter (distributed) systems.
Tech Trend No. 7: Cyber-security vaults from “hot” to “red hot”
We’re all aware of the increasingly serious threats from cyber crime. And TechCrunch’s John Biggs sums up the situation perfectly when he states, “Hacking is now an international sport and the people protecting our data are idiots.”
I couldn’t agree more. In 2015, cyber criminals easily laid waste to antiquated defenses at Target Corp. (N:TGT), Sony Corp (T:6758), and even the federal government’s Office of Personnel Management.
And the world we live in now is a hacker’s dream, given the increasing amount of devices and data we’re putting online. With more targets for cyber criminals, I predict that spending on cyber security defenses and cyber security insurance will hit record levels in 2016.
If I’m right here, the PureFunds ISE Cyber Security (N:HACK) promises to be a standout performer.
Tech Trend No. 8: Semiconductor M&A breaks records (again)
Throughout 2015, I chronicled the insatiable and record-breaking urge to merge in the semiconductor space.
Expect more of the same in 2016. None of the fundamental drivers behind last year’s $110 billion boom have abated, which sets the stage for another record year.
Tech Trend No. 9: Driverless Cars Set for Regulatory Green Light
Like it or not, the future is autonomous. In fact, it’s already here.
By that, I mean the technology largely exists to navigate our roadways. That’s not my opinion, either. It’s an insider’s firm declaration.
Last year, Tesla Motors Inc (O:TSLA) chief Elon Musk said the advancement of technologies to enable self-driving vehicles is a “solved problem.” The only thing standing in the way? Regulators.
Look for federal guidance involving drones and driverless technologies to hit in 2016, thereby prompting states to enact legislation. The State of California is already preparing for the inevitable. Several weeks ago, the California Department of Motor Vehicles released a draft of proposed regulations for autonomous vehicles.
Tech Trend No. 10: “Bluelight specials” rock Silicon Valley
In the tech sector, highly promising and potentially disruptive startup companies are known as “unicorns.” These are private companies that create immense buzz within the sector – both for their technology and/or products and also in anticipation of a stock market launch.
We’ve recently seen a boom among these unicorn companies… but in 2016, the boom is about to go bust. Companies like Uber, Dropbox, and Zenefits, to name a few – will learn the hard way that valuations can fall, as well as rise.
With mutual fund giant Fidelity already revaluing its investments in the best-known startups, leading venture capitalist Fred Wilson rightly asserts that a “markdown mania” will soon hit as VC firms “follow Fidelity’s lead.”
This should lead to consolidation and outright extinction for unworthy unicorns. However, there will be an upside to all the bloodletting.
As I shared in November, so called “down-round IPOs” – private companies going public at valuations below their previous funding round – will become the new normal for VC firms looking for an exit. This trend will undoubtedly give individual investors opportunities to scoop up solid tech companies at bargain prices.
Okay, that’s it for the predictions (at least for now). But over the course of the year, we’ll touch on the 10 trends that I’ve noted over these past two columns to see how they’re faring – and, of course, update you on the investment implications.