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5 Major Milestones To Expect On The Tech Road In 2016

11/01/2016 8:21 AM IST | Updated 29/08/2016 9:42 PM IST
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I do not claim major predictive powers about the technology sector. But as we turn into a new year, there are a few trends across tech that are now broadly visible and it would be useful to keep a watch on how they evolve. Tech is a vast canvas and while I have tried to touch multiple themes here, there are many segments left untouched. Readers of this blog are welcome to add trends or insights that I might have overlooked.

1. Enterprise cloud

The evolution of cloud services has been interesting to follow over the years. Many tech products start out by being B2B focused (think telephony, computers etc.) before sufficient innovation and evolution simplifies the product and reduces the price to a level where they become viable for B2C.

2015 was the first year Amazon reported its cloud revenues and came out comfortably ahead of rivals Microsoft, Salesforce, Google and IBM.

Cloud, on the other hand, began with greater traction in the B2C space. The likes of Dropbox, Box.com, Intuit and others have been reaching out to retail and SMB customers over the last half-decade. Facebook, perhaps, is today the largest store for individual pictures anywhere in the world. The B2C world, though, is a tough place to survive. Mass adoption takes its own time, early movers are rewarded, switching incentives for users are high and the battle for margins is forever on-going. The enterprise world, on the other hand, offers greener pastures and an opportunity at achieving a stable revenue model.

For a long time, businesses waited to consider two key aspects before cloud adoption -- data security and actual benefits. As we start 2016, it appears that Moore's law is now in effect and mass adoption in the B2B world is well underway. The global cloud computing market is expected to reach $127 billion in 2017. And 77% of B2B customers now acknowledge that cloud gives them a competitive advantage and many believe that the next round of business transformations will be driven to achieve a competitive advantage through cloud-based operations. Security concerns are reducing with the advent of hybrid cloud (where confidential data is stored on more exclusive, on-premise private cloud and routine business operations are carried out on a public cloud) with 75% of customers considering adoption going forward.

The players themselves are gearing up for the opportunity -- 2015 was the first year Amazon reported its cloud revenues ($6 billion per year) and came out comfortably ahead of rivals Microsoft, Salesforce, Google and IBM. Microsoft, which lost the mobile race, seems to be in no mood to let go of the cloud battle and its Azure product has been clocking in good growth and traction. Being squeezed are the traditional software and infrastructure vendors such as HP and Dell. Competition will only get more intense as use cases and adoption increase. HP split in 2015 to focus more on the B2B segment. Dell bought EMC and with it capabilities for making a push into cloud. Cisco has already transitioned in the HaaS (hardware as a service) market.

The fight in 2016 and beyond is about who can pose a meaningful challenge to Amazon Web Services (AWS)... my money is on Microsoft.

The fight in 2016 and beyond is about who can pose a meaningful challenge to Amazon Web Services (AWS). It's still early days, but my money is on Microsoft. Its traditional strength with enterprises is now combined with a solid product suite in Azure and clear direction from the CEO's office.

2. Autonomous cars and the case for adjacent markets

In late 2014, when a professor in one of my business school classes showed us the first video of Google's self-driving car, there wasn't much enthusiasm amongst us students on the adoption prospects. Most of us thought that this was an idea 10 years away from realisation. Yet, it is evidence of how fast technology evolves and momentum builds that 2015 was a year in which talk of self-driving cars became serious. Tesla, which has been leading the change in how an automobile is designed and perceived by customers, announced that its first self-driving car will be ready by 2018. Traditional automakers responded in kind and put out the year 2020 as the target for their roll-outs. For CES 2015, Audi sent a car from Silicon Valley to Las Vegas with drivers sitting hands-off at the wheel.

The auto industry is now in the crosshairs of major tech firms. It speaks to the power of technology to create market adjacencies where none could be imagined earlier.

The auto industry is now in the crosshairs of major tech firms. It speaks to the power of technology to create market adjacencies where none could be imagined earlier. Uber has revolutionised cab hailing, fleet telematics will change the way auto insurance is offered and when it comes to customer experience, the likes of Tesla and Apple already appear to hold far greater promise than Ford and GM. Tesla already has a league of avid early adopters and Apple's announcement in 2015 of an electric car that will hit the road by 2020 should set R&D departments at automakers revving. One of the most dormant industries for decades is now in for a major shakeup in the next few years.

3. Social media - a clear shift

Facebook took a firm and commanding lead amongst social media platforms in 2015. The company now has 1 billion users, is seeing a soaring stock price and remains the player to beat. It appears to have landed on a solid advertising model and user engagement remains high. A conscious effort has been to become a one-stop. Whether it's your status, your pictures or even your information consumption, Facebook wants to be the first place a user goes to. Facebook is becoming to online content publishers what Amazon was a decade ago. The large user base compels publishers to put content on Facebook, but if you are on it, readers have little incentive to come to your site and that substantially impacts publishers' native ad revenues.

Twitter's twin challenges of user growth and greater engagement remain. Will 10,000-character tweets work?

In contrast to Facebook, Twitter faced negative market sentiment and struggled to turn the tide of perception. At 300 million users and 60% year-on-year growth, Twitter should ordinarily be viewed as a sure bet. But such is the nature of Wall Street expectations that the simple fact that the company's user base was stagnant led to the stock getting a beating and the CEO exiting. At its core, Twitter demands high engagement on the platform. Unlike Facebook, it has little to offer to a dormant user. There is only so much that you can read about what your favourite celebrity is up to. Beyond a point a user has to post or follow content. It does though, remain a live event platform and therefore there appears to be logic behind the introduction of Twitter Moments which is almost a newspaper-like live feed of best tweets on major happenings of the day (Interestingly Facebook launched its own "Moments" app which allows users to share pictures amongst their friend network more privately).

Twitter's twin challenges of user growth and greater engagement remain. Will 10,000-character tweets work? That puts Twitter in competition with blogs (this post is at close to 6000 characters as of now). The idea behind making adoption for new users is appealing although I have a feeling that Twitter is flapping around in hope rather than certainty as of now.

4. Virtual reality -- the "in" thing

The wearables market has primarily been defined by fitness products thus far. This year promises great action in the space of virtual reality with a slew of new headsets being announced. Thus far, users were having to do with the barebones of a Google Cardboard. Now, however, comes a ramp up in quality and in experience. Oculus Rift, from the Facebook stable, is now available starting at $600. The likes of HTC and Samsung are getting into the act as well with their own products.

This year promises great action in the space of virtual reality with a slew of new headsets being announced.

It was Microsoft though, that surprised the market with its announcement of the HoloLens that can truly be disruptive in the category. The HoloLens does not need to be plugged into a computer or a phone and runs off a battery. It comes with virtual and augmented reality and will recognise gestures and voice commands. Developer kits are expected to be launched during Q1 2016 and the first commercial release may well happen in the holiday season of this year.

5. Messaging applications -- coming from the left field

Chat applications like WhatsApp and Snapchat are now part of daily lives. As users devote more time and attention to conversations, the apps are working to increase their offerings. WhatsApp now allows you to make calls, effectively providing competition to the likes of Skype. The next step is in-app transactions -- WeChat in China has taken a lead and provided a model by becoming a focal point for user's daily activities (accessing city services, paying for movie tickets etc.). WeChat's average revenue per user is seven times that of Facebook and WhatsApp, and it has now transcended into a platform with a developer community of its own. I won't be surprised if that is the direction the likes of WhatsApp and Snapchat start to follow.

Conclusion

Like every year, tech continues to evolve and grow at a rapid pace surprising analysts and enthusiasts alike. What remains key though is the ability of new innovations to breach hitherto unknown frontiers. Self-driving cars is a classic example. Ex Cisco CEO John Chambers said in 2015 that businesses have no option but to turn themselves digital and that only 30% of them would make the transformation successfully. It is a bold punt but as tech pushes the boundaries of imagination, there is little doubt that traditional business models are under stress, and firms with new ideas are moving in for the kill.

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