Top 10 Technology Trends : 2010 to 2020 (Allianz)

Top 10 Tech Trends of the Coming Decade
Ba
10/22/2010

Walter Price, portfolio manager for the Allianz RCM Technology Fund, discusses the key themes that will drive growth in the technology sector over the next decade.


When the market evaluated the internet’s potential in 1999-2000, it enthusiastically anticipated robust tech earnings growth but it was too early and too extreme. Ten years on after numerous adjustments, we are about to enter a new secular growth era in the technology industry, as a number of key developments are coming together to provide the potential for positive change. The technology sector will continue to evolve over the next couple of years, setting the stage for what we believe will be an extended extraordinary growth in corporate profitability.

Walter Price, portfolio manager for the Allianz RCM Technology Fund, comments: In today’s world of short memories and short–term focus, it is easy to overlook the continued rapid fundamental changes that have taken place over the last decade in the technology sector. When looking forward to the next ten years, while there are a number of key areas we have already seen growth in, such as the LED TV, there are also some brand new developments in this sector which are still yet to be widely adopted. Therefore, these are the areas to watch for future investment opportunities as they will be the products which will potentially have the most rapid and increased growth over the next 10 years. The top 10 technological trends that we believe will play a key part in this growth over the next 10 years are:

1. Internet TV / video
The function of the PC will transform, primarily, into a consumption device for information and entertainment. We expect recommendation engines will grow significantly in importance and media content will be freely available over the internet.

2. LED technology
LEDs can offer 90 per cent energy savings and a significantly longer lifespan in comparison to regular light bulbs. Over the next few years, LED technology will likely cross quality and cost thresholds for widespread replacement of indoor and outdoor lighting, starting a considerable investment cycle.

3. Cloud computing
This is the biggest trend in enterprise computing since the late 1980s, and it is enabling businesses to move to a more efficient IT model. Cloud Computing offers large cost savings and a great amount of scalability and flexibility. For most large companies this will be a two part journey moving to an internal cloud of fewer, large data centers before eventually moving to external cloud vendors

4. Smart grid/energy infrastructure
The electrical grid is often referenced as the world’s most complicated machine, yet it is hopelessly outdated, and it can no longer adequately balance future supply and demand without huge investments. Neither higher penetration of renewable nor large scale electric car deployment will be feasible without smart grid investments.

5. Proliferation of access points and democratization of computing
Access to computing resources, for a long time the domain of the desktop computer and later the laptop, is fast being complemented by many others, such as smart phones, tablets, TVs and navigational devices. Interaction is moving away from keyboards to a variety of touch, voice and gesture–aided access.

6. Solar
Prices are falling every year so that within the foreseeable future solar power systems will likely come much closer to delivering electricity at grid parity in even challenging environments.

7. Display technology
A transition to OLED display in the coming decade has started, which can provide thin, low–power, better–picture, bendable and low-cost displays.

8. Rechargeable batteries
Significant growth in storage batteries will be required for mobile devices, hybrid cars and power plant electricity storage. This is in addition to the progress currently underway to increase energy density of storage systems.

9. Gesture recognition and the evolution of the user interface
The Windows-icon-mouse-pointer–based user interface has been around for almost 40 years. The introduction of motion-based technologies from game consoles and the evolution of user-device interaction (gesture recognition, eye tracking, speech-to-speech translation, etc.) may lead to a complete refresh cycle of hardware, software and peripherals—the iPad is just a first initial step in this direction.

10. Global connectivity: 50 billion connected devices in 10 years’
time The vision of a tenfold increase in wirelessly connected devices over the next ten years, we believe, will continue to be one of the biggest drivers of technology this decade, with the next billion first-time users coming via smart phones, not the PC world.