As someone who makes his living spotting economic and technology trends, I find the holiday season a good time for reflection and consideration of the year ahead. The ever-growing interconnections of Washington, technology and the world economy will make this year particularly interesting.
While we enjoy our holiday presents, and wonder if we can safely return that hideous sweater, here are a few technology market trends I will be watching in 2016.
The slow motion train wreck. Venture capital will continue to decouple from the “disruption everywhere” keg party prevalent in Silicon Valley. The valuation of many so-called $1 billion unicorns will fall, as the public offering window and merger/acquisition market remains unavailable to many of them. Because these companies have raised such prodigious sums of money, they won’t fail immediately but will enter a netherworld of pivoting and cash conservation. And, the venture capital world will look for the next “big thing.”
Get ready for a cyber bubble. One big thing for the venture industry will be investments in cybersecurity. The reminders are constant — whether the backdoor hacking in Juniper Network products or the theft of T-Mobile customer data — cybersecurity remains an industry that demands and rewards innovation, and it has the developing dynamics of an arms race. There’s an innovation cycle that rewards agility and small teams, and capitalizes on the U.S. economy’s ever-growing reliance on software, data and interconnectivity. This year the D.C. region received 1 percent of national venture capital. Next year, expect that number to climb.
Virtual reality means never having to leave the house. This will be the year virtual reality arrives as an entertainment medium. Initially, its utility will be most welcome by gamers and consumers of pornography. This is exactly the pattern of adoption of the World Wide Web. By year end, we will start to hear of instances of virtual reality addiction, but these will be drowned out by an accelerating range of games, experiences and entertainment content that will be well-matched to virtual reality headsets. VR will be here to stay, and it will be mainstream. Expect sales of bathrobes to spike somewhere in the fourth quarter of next year.
Whose network is it, anyway? Net neutrality will become ever more relevant as networks are challenged to deliver virtual reality content through pipes already clogged with Amazon and Netflix original programing and cat photos. Early in 2016 the federal government will challenge the determination by wireless carriers to favor certain media content from partners who pay for priority access. It will become apparent that while demand for bandwidth will continue to grow rapidly, capacity won’t … under current regulatory regimes and approaches.
Cars will need drivers after all. The drum beat for driverless cars will slow due to technology that is not-quite-ready for mass adoption. Not surprisingly, a nation where many won’t wear safety belts because it violates their freedom is not ready to give up the steering wheels. Until we have software that will drive cars like a driver texting with a cup of coffee in his lap in the fast lane doing 75 mph, robotic cars will have a hard time coexisting with human drivers. Add to that the reality that software often breaks, and you get a mix of conditions that only a plaintiff’s lawyer could love. Tesla recently withdrew previously released autonomy software – even while reaffirming its commitment to fully autonomous cars. Will our society really embrace a technology that could kill people during its gestation?
This is just a partial list of what I believe will be important technology stories in 2016. Next week: my predictions on the economy. Meanwhile, good luck returning that ugly sweater.
Jonathan Aberman is a business owner, entrepreneur and founder of Tandem NSI, an Arlington-based organization that seeks to connect innovators to government agencies. He is co-host of “Forward Thinking Radio” on SiriusXM, a business and policy program, and lectures at the University of Maryland’s Robert H. Smith School of Business.