2017 Technology Trends
The haves are breaking away from the have-nots.
The trends and innovations that will shape the technology industry over the next several years came into sharper focus in 2016. Cloud computing has gone mainstream for many enterprises, and the Internet of Things (IoT) is changing how both industrial and consumer-oriented companies do business. Drones and autonomous vehicles, blockchain, augmented and virtual reality, increasingly sophisticated digital assistants, machine learning (artificial intelligence, or AI) — the list of technological megatrends just keeps growing.
The Big Five are actively branching out into new businesses.
At the center of this continuing wave of innovation is the technology industry, and in particular a set of U.S.-based supercompetitors we call the “Big Five”: Alphabet (Google), Amazon, Apple, Facebook, and Microsoft. Already dominant in their own fields — high-end devices, digital content distribution and app stores, online search and advertising, social media, e-commerce, cloud services, and productivity software — they are actively branching out into new businesses. And they have substantial advantages in doing so: positive network effects inherent in their hyper-scale platform businesses, formidable innovation capabilities, and massive financial muscle.
And yet the Big Five have competition. Many other technology players are making strong efforts to recover (if they have fallen behind) and to build sustainable businesses. These are exemplified by the “Next 20”: the largest U.S.-based technology companies after the Big Five, based on enterprise value: Adobe, Analog Devices, Applied Materials, Broadcom, Cisco Systems, Dell Technologies, Hewlett Packard Enterprise, HP Inc., IBM, Intel, Intuit, Micron, Nvidia, Oracle, Qualcomm, Salesforce.com, Symantec, Texas Instruments, VMware, and Western Digital. Each in its own way is shifting from pure hardware to software-defined hardware and from products to services, managed services, and solutions.
Further disruption will come from five other companies, all of them based in China: Alibaba, Baidu, Huawei, JD.com, and Tencent. Highly successful in their home market, these companies have been expanding their scope around the globe; Huawei, for instance, has been active outside China for more than 10 years. The competitive struggle within and among these three groups of companies — the Big Five, the Next 20, and the Chinese Challengers — will define the technology industry for the foreseeable future.
One final arena of competition should be mentioned: sectors such as industrial operations, financial services, and healthcare, where battles are being fought for dominance in the IoT and related fields. As GE CEO Jeffrey Immelt has pointed out, established companies in many traditional fields have no choice but to become more like software companies. For example, with its Predix platform, GE has recast itself as a digital and software-driven company and is developing a leadership position in the Industrial Internet of Things. A few healthcare chiefs, most notably Aetna CEO Mark Bertolini, have begun to create technology platforms for taking costs out of and transforming the overall system. Telecommunications firms, including Verizon and AT&T, are investing in 5G, the IoT, content, advertising, and emerging distribution technologies. In other nascent areas, such as blockchain and augmented and virtual reality, no clear leader has emerged, but here too, companies in financial services or media may compete.