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.

Clean Energy: LED lighting market growth (WSJ)

LED Growth Is Making Sapphire Supplies Look Precious

By Sari Krieger
Of DOW JONES CLEAN TECHNOLOGY INSIGHT
NEW YORK (Dow Jones)--The light-emitting diode market is heating up and expected to boom in coming years, but there is already a supply chain bottleneck in the material on which the LEDs are grown - known as a sapphire substrate - which could hinder LED industry growth.

Manufacturers of the substrates, which are synthetic versions of the precious stones, haven't been able to produce enough to keep up with the recently rising LED demand, causing sapphire prices to spike. While this shortage may slow adoption some, or may hurt LED makers, it could benefit the few suppliers that do make this material, which include Rubicon Technology Inc. (RBCN), Monocrystal PLC, Kyocera Corp. (6971.TO, KYO) and Namiki Precision Jewel Co.

Jed Dorsheimer, an analyst with Canaccord Adams Inc., warns that the shortage issue is "severe." He said that in order to meet demand, current sapphire capacity has to grow by two to three times, depending on how much the LED market expands.

When the economy started to revive last year, demand for LEDs grew quickly for use in backlighting, such as for televisions, as well as for general lighting applications. According to the Department of Energy, LEDs are 10 times more energy efficient than incandescent lights and companies are starting to take advantage of these savings. The DOE predicts that LEDs will make up 70% of the lighting market by 2020, up from less than 1% currently.
Similarly, The Freedonia Group Inc., a Cleveland-based research firm, forecasts that U.S. demand for advanced lighting products such as LEDs, compact fluorescent lamps and sodium vapor HID lamps will grow 11% per year to $6.8 billion in 2013.

Dorsheimer said rising demand already has boosted sapphire prices by 50% in the past seven months, but he doesn't expect new capacity to come online until 2011.

He said the industry average price for a two-inch sapphire wafer went from $18 in 2007 to $10 in June 2009 to $15 now. A four-inch wafer, which has been less widely produced, has held steady at $80 to $90, he said.

Bill Weissman, chief financial officer of Franklin Park, Ill.-based Rubicon, said his company saw a 7% rise in the price of its sapphire in the last quarter of 2009 and predicts another 15% rise this year. But Weissman said that the sapphire is only 8% of the material for the LED chip, so it shouldn't affect the price of the final LED too much.

Expanding sapphire production to meet the rising demand can't be done quickly, according to Tom Griffiths, president and publisher of LED industry publication Solid State Lighting Design News.

"Sapphire production is capital-equipment driven, and both investment and credit funding is still being approached cautiously, so getting the money to expand isn't as easy as it may have been in past years," he said.

"Tightened supply will increase the sapphire costs and somewhat dampen the industry growth," Griffiths said. "That will be relatively short lived, as increased profits will make capital equipment expansion easier for existing suppliers, as well as enable new entrants to show a convincing business plan to get funding for equipment."

Companies grow sapphire by heating aluminum oxide to 3,800 degrees Fahrenheit. Then LED manufacturers buy the sapphire wafers and load them into machines that lay on top of the sapphire wafer chemical layers of gallium nitrite, which is the light-emitting material. Compared with natural sapphires, the manufactured versions don't have impurities and are therefore clear.

Dorsheimer said that because companies were hesitant to expand production, waiting to see whether the increase in demand would remain, it will take a year or two for sapphire-makers to catch up with demand. Also, he said that LED-makers are asking for larger sapphire wafers, up from the traditional two-inch wafers, making production more difficult.

"New entrants are starting on four-inch and six-inch [wafers]," Dorsheimer said. "This reduces the number of sapphire suppliers as the specifications change when going to larger wafers - quality becomes more important."

Weissman said his company has ordered more machines to expand capacity. The company is building two new plants, one in Malaysia and one in Batavia, Ill., but they won't be ready until later in the year. Until Rubicon and other sapphire makers can expand, the world's sapphire supplies are tapped, Weissman said.

As well as the benefits of higher prices flowing to sapphire makers, Griffiths said Durham, N.C.-based LED-maker Cree Inc. (CREE) could gain a competitive advantage from the sapphire shortage because it uses silicon carbide as a substrate to grow LEDs.
"[Cree] can therefore presumably keep their cost-saving ramp moving unhindered," Griffiths said. "Eventually every LED manufacturer benefits as there will surely be a period of excess sapphire supply that will tank those substrate prices, at least temporarily while supplies adjust and consolidation occurs."

(Dow Jones Clean Technology Insight covers news about public and private clean-technology and alternative-energy companies.)

-By Sari Krieger, Dow Jones Clean Technology Insight; 212-416-2016; sari.krieger@dowjones.com

LED Companies with Government Funding (Popular Mechanics)

Here's how the U.S. Department of Energy is investing in a future illuminated by light-emitting diodes (LEDs) and organic light-emitting diodes (OLEDs).

17 Projects Shaping the Future of LED Lights