Top 5 technology trends of 2018

02 May 2018
GlobalData’s Cyrus Mewawalla identifies the major themes driving technology investment

One of the most challenging aspects of technology investment arises from the sheer number of tech trends taking place. Most companies are impacted by multiple themes, many of which are in conflict with one another.

At GlobalData, we track the performance of the top 600 technology, media and telecom stocks against the 50 most important themes driving their earnings.

This generates more than 30,000 thematic scores that our algorithms are able to use to identify the overall thematic leaders in each sector.

Despite this, it is still possible to identify the major themes shaping technology investment in 2018. Here are my top 5 technology themes for 2018:

1. Machine learning

Deep learning will be the most important artificial intelligence (AI) technology in 2018 with emphasis on voice-driven, conversational computing via digital assistants such as Amazon’s Alexa AI engine.

Deep Learning uses artificial neural networks that are modelled on the human brain, to self-teach a machine, using a technique called back propagation.

There will be a growing number of media stories in 2018 about the ‘dark side’ of AI as unaccountable algorithms increasingly determine which individuals get jobs, credit cards, insurance, college admission or jail time.

And a major ‘flash crash’ or even a multiple asset ‘splash crash’ is increasingly likely due to a rogue algorithm.

Public debate about the ethics of AI and the imbalance of power between the tech giants and governments will rise to the fore. Firms will stress that they are taking ethical matters into consideration in the use of AI. New university courses on ethics in AI will spring up.

Led by Google, the tech sector will strive to make deep learning systems less dependent on huge training data sets and power-hungry computing power, while the drive to develop AI application specific chips will intensify.

Large industrial companies and banks will bump up their AI research and development.

The losers in this investment race will be companies operating in the non-tech sectors.

Incumbents in every industry whose chief executives fail to make AI a core competency will be particularly vulnerable.

2. Voice

Voice will start to replace touchscreens and keyboards as the digital user interface of choice in 2018.

By end of the year, many branded manufacturers will have introduced a range of ‘conversational’ machines and apps, primarily using voice APIs from Amazon, Google, Microsoft, Baidu, Nuance and iFlytek.

By 2020, 50 per cent of online search will be conducted by voice, compared to 20 per cent in 2017.

Amazon’s Alexa, a voice-activated AI engine, will remain the leading voice platform in 2018 as its machine-learning algorithms have collected vast amounts of training data by operating for longer and in more homes than its rivals.

For voice to become ubiquitous, speech recognition platforms need to reach 99 per cent accuracy, but this will not be achieved in 2018.

Google admits to a 4.9 per cent failure rate in speech recognition and Microsoft to 6 per cent.

While understanding speech is about 94 per cent accurate, understanding its context is several years away.

Many voice platforms are focusing on narrow verticals, such as intelligent speakers for the home, where the user can ask questions only within a limited domain.

Chatbots will further enhance the customer experience while cutting out human customer service agents, not only from call centres, but also from physical retail outlets.

3. Cyber security

The threat is growing for a Lehman-scale cyber event, for example, a take-over of a bank, nuclear power plant or securities exchange.

Cyber security leaders will move away from passive detection of cyber attacks towards active hunting of threat actors using intelligence-led solutions.

AI and unified threat management will be key cyber security technologies in demand in 2018.

Cyber insurance premiums will rise because cyber security presents an almost totally asymmetric scene: attack and infiltration are easy, while defence is difficult.

Both factors are compounded by the ever-increasing “attack surface” generated by new tech cycles such as the Internet of Things (IoT).

Law enforcement agencies will accelerate their drive to force tech companies to offer them access to messages and data on encrypted devices and apps.

Trade wars in the telecom equipment space will continue. The US will discriminate against Huawei, and China against Cisco and other US technology companies, on national security grounds.

Facial and voice recognition and biometric access technologies will take off, with banks such as Santander taking the lead.

Since most cyber breaches are, to an extent, ‘inside jobs’, behavioural analytics will become critical.

State-sponsored cyber attacks, quite probably on utilities or in pursuit of IP theft, will rise.

There will be growing discussions about the use of blockchains, with encrypted distributed data base blockchains starting in banking and healthcare, as effective defences against cyber attacks.

READ MORE: Cyber crime is emerging as one of the greatest threats to the Middle East’s stability

4. Virtual and augmented reality

Augmented reality (AR) will be hugely disruptive because, ultimately, AR glasses (or contact lenses) with voice activation and AI will displace the smartphone as the consumer’s main digital user interface.

For this reason, all the leading technology companies will increase investment in this space in 2018, with Microsoft, Apple, Google, Sony, Samsung and Facebook all improving their virtual reality (VR) and AR software.

VR will not meet investor expectations in 2018, plagued by a lack of content.

Google will go all-out in AR in 2018 with products ranging from the Tango AR platform and ARCore to Google Lens, an AI-powered app designed to bring up relevant information when viewing images through a camera. It will relaunch Google Glass, initially in factories and warehouses.

Most AR will run on smartphones and tablets, but it may also start to appear on car windscreens and in glasses within industrial settings via Osterhout, Vuzix, Daqri, China Mobile and Google Glass.

The race is on to find ways of mediating AR in slim, chic glasses instead of clunky headsets. It will require marked progress in the micro-miniaturisation of cameras and chip sets.

This year could see the first lightweight smart glasses powered by smart phones and connected via a high bandwidth port to wireless ear wear.

5. Blockchain

Blockchain is a shared, digitised, decentralised ledger that allows transactions to be recorded, verified electronically and encrypted over a distributed server network.

In 2018, many blockchain technology platforms will move from development phase to pilot phase in the banking, media and industrial sectors.

Some will adopt smart contracts – digital contracts enabled by blockchain technology that can monitor the fulfilment or breach of contractual conditions and trigger associated payments without human involvement.

Over time, many parts of the global supply chain will be targets for cost cutters using blockchain technology, including electronic patient records, retail payments, money transfer services, consumer lending, crowd funding, data relating to IoT devices, accounting records and real estate transactions.

There will be a raft of announcements about the creation of public and private blockchains, even in China, where cryptocurrencies are illegal and private blockchains heavily regulated.

Leading Wall Street banks are seriously considering how blockchain can be used to reduce back office costs and help in capital markets.

Financial institutions and technology firms will lead the emergence of blockchain – which will also provide a platform for startups – but payment processors and logistics companies will lose out.


About the author

Cyrus Mewawalla, GlobalData

Cyrus Mewawalla is a technology strategist at GlobalData. He advises investors and CEOs on how to invest in the global technology, media and telecom sectors.
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