Fast Five from the Valley: Predictions for 2018
“Fast 5 from the Valley” is the Detecon Innovation Institute’s weekly summary of everything that’s going on in the Valley – keeping you up to date with the SV buzz. Breaking news, exclusive events, long-term trends and developments that you wouldn’t believe possible, we bring them all together in this publication for you.
2018 – A groundbreaking year for Artificial Intelligence
Due to the advancements of self-driving technologies and artificial intelligence last year, we expect that 2018 will be the year for in which autonomous vehicles will hit the road and spending by the major car manufacturers increases. General Motors recently announced that it would roll out a self-driving ride-hailing fleet by 2019 following its purchase of autonomous tech start-up Cruise Automation for $1bn. Ford also spent $1 billion to get its own in-house autonomous car tech by acquiring Argo.ai. Daimler intends to refine its “platooning strategy” for self-driving connected trucks in 2018. The second half of 2018 will see a new entrant in this segment, as Deutsche Post DHL starts testing self-driving trucks in Germany. In short, this is the year that the leading global automakers will start putting autonomous cars on the road.
However, the presence of AI is going to be felt well beyond just the field of self driving cars.
- The trend toward humanizing big data and data analytics will intensify in 2018 with new advancements in natural language generation (NLG) and natural language processing (NLP).
- However, we expect that 2018 will be the year in which companies such as Movidius (acquired by Intel in 2016), will build the infrastructure needed for further AI developments, with 2019 onwards being when the AI developments that require this infrastructure come to fruition. The infrastructure being built will be focused on creating the AI co-processors and edge neural networks that can be used for obstacle navigation for drones and smart thermal vision cameras.
- The growth in data is one of the major driver of AI developments as it provides the necessary training data for future AI systems. Major retailers like Amazon have already begun to collect of offline data collected through small digital devices like in-store sensors. Sources of offline data, however, are not limited to grocery stores. Using drones and the internet of things, AI companies will gradually transform the entire physical space we live in into a giant source of data for ML algorithms and models.
What 2018 holds in store for the cryptocurrency markets
Perry Woodin, CEO of Node40, a blockchain governance and cryptocurrency tax compliance company, believes 2018 will be the year of mass public awareness for Bitcoin and cryptocurrency in general. In the last year, the cryptocurrency has experienced lows of $778 in January to record highs of more than $19,000 in mid-December. Meanwhile, the total market value of all digital currencies is above $770 billion, according to CoinMarketCap. However, action by regulators could halt these gains. We already saw this in September last year, when Bitcoin fell by $2000 after China banned the digital currency. Nevertheless, we expect that, as Bitcoin booms, regulation will first start with ICOs before expanding to cryptocurrencies directly. However, it is difficult to now predict if regulation will have a positive or negative impact on the industry. Furthermore, we expect that bodies such as the IRS will begin to address the complex tax issues associated with bitcoin trading.
There will be an increase in the number of people using cryptocurrencies in 2018. It is estimated that by the end of 2018, over 50 million people worldwide will be holding at least one cryptocurrency. However, Bitcoin won’t be the only cryptocurrency that people hold, as most investors’ holdings will include other cryptos like Ethereum, Litecoin, Dash and IOTA. This will lead to investors diversifying their crypto-assets and managing investments the same way that investors look at more traditional assets and investing. It looks like 2018 could be another action-packed year for Bitcoin and crypto currencies.
The rise of foreign investors into US tech companies in 2018
Leading Chinese institutions are going to increase their physical footprint in Silicon Valley this year, mirroring the moves made by Middle Eastern investors in recent years as countries other than the U.S. look to capitalize on the U.S. tech boom. For instance, China’s tech gians Baidu, Alibaba and Tencent, also known as the BAT, are leading the surge of Chinese investment in US technology start-ups and are even planning to invest in assets/ companies outside the U.S. this year. Specifically, we expect more Chinese investments into fast-growing young companies in a range of sectors, including virtual reality, fintech, social media, video games and mobile apps. Investments into Snapchat, Lyft and the virtual reality player Magic Leap are just few examples which give us a first-hand insight into how Chinese companies are going to influence the US tech market in 2018. Interestingly, we also see the clear potential for China to get ahead in many fields that are revolutionizing tech and that Chinese businesses will begin to compete with US tech companies more than ever before: Baidu with Google, Alibaba with Amazon, Facebook with Wechat, and Huawei with Apple…
However, Chinese aren’t the only investors that see great potential in Silicon Valley. The Japanese technology group SoftBank raised a significant amount of cash from funding rounds it completed last year and invested in everything from insurance, ridesharing, co-working, robotics to even dog-walking! Just one of SoftBank’s investments — a $3 billion round in WeWork — counted for 17% of all investment in venture-backed companies in the third quarter of 2017. And Softbank continues with its giant investments: At the end of 2017, the Japanese bank acquired about 18% of Uber Technologies Inc. We are curious to see how Softbank is going to continue its investments in this year.
Amazon Predictions for 2018
2017 was a great year for Amazon. The stock rose by 55% and it is now one of the most sought after stocks on Wall Street. In addition, the consensus on Wall Street is that Amazon still has plenty of room to run: Combined with its booming retail business, Amazon’s cloud arm AWS, Prime subscriptions, and advertising segment could help make it a $1 trillion company this year, according to Morgan Stanley.
Furthermore, we expect that 2018 is the year where the biggest retailers truly harness the power of omni-channel: Amazon is convinced that “the future of retail is a mix of mostly online and some offline.” and thus, will grow its presence in the physical retail world significantly. The $13.7 billion purchase of Whole Foods last year has already offered clear evidence of its strategy. We are already waiting to see which companies are going to be acquired by the tech giant this year. Some already speculate that top candidates could be Macy’s, Kohl’s, JCPenny or Lowe’s, as all offer sizeable real estate assets and could help the various tech giants grow their empires.
In addition, Amazon Web Services will continue to experience more growth as large enterprise migrate to its cloud services platform this year. The platform has become a $13 billion business that not only powers the likes of Airbnb and Netflix, but handles the cloud of Workday, Zendesk and Box. This year we expect that the numbers of companies who decide to shut down their data centers and migrate to AWS is going to increase strongly. Amazon has already announced large deals with Disney and Expedia and we are sure that there will be many more deals over 2018.
VR & AR – What is the technology for 2018?
VR proved itself in 2017 and the industry is expected to generate $2.2 billion this year. Currently, there are three mainstream headsets on the market. Sony is leading the pack when it comes to tethered headsets: The company has sold 2 million PlayStation VR devices since its launch in fall 2016, significantly surpassing the combined estimated sales of the HTC Vive and Oculus Rift! However, these numbers can not compete with sales of mobile VR headsets like Google Cardboard, Daydream View or Samsung Gear VR. Google has sold between 2 million to 3.5 million Daydream devices in 2017 alone and Samsung has sold more than 6.7 million Gear VR headsets last year.
However, other companies like Microsoft are also interested in the development of AR solutions, as demonstrated by its focus on HoloLens. Since its launch in 2015, Microsoft’s HoloLens headset is now available in 39 countries and used by companies including Ford and Thyssenkrupp. Magic Leap has also successfully developed its AR headset which it revealed at the end of 2017. The AR headset will be launched this year and will be a worthy competitor to the Microsoft HoloLens. However, we do not see a huge adoption for AR wearables beyond specific business applications in 2018 due to the high price tag – Magic Leap One will be priced in the range of $1,500 (Google Glass) to $3,000 (Microsoft HoloLens).
Nevertheless, there is one device which will be critical for the AR development in 2018: The smartphone. The release of iOS 11 on September last year included an ARKit, a framework for developing AR experiences for the iPhone 6S and above. Google also recently introduced ARCore, bringing AR to selected Android devices. With over 223 million iPhone sold in 2017 alone, it places AR in the hands of an audience that the HoloLens, Magic Leap One, and other AR devices will struggle to reach. In short, we expect that the mobile VR and AR technology will be of great importance in 2018 but even greater importance for consumers in 2019 and onwards.