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What to Expect in the Tech Sector in 2020 | ITEK & SKYY

The technology sector will be playing a more important role than ever in 2020. Like the advent of the motor industry in the early 20th century, it is already starting to change the lives of nearly everybody on the planet.

Underneath the growth of technology stocks generally, however, there are also exciting investment stories that are enjoying massive expansion, both here in the United States and further afield.

Cloud technology is a priority area for Amazon and Google

Three of the world’s four largest companies are in the Cloud sector, namely Amazon, Google and Microsoft. Amazon now derives nearly 60% [1] of its profits from Cloud Services, not from delivering books. Amazon is in the business of helping small and medium companies with their secure data storage activities.

The secure storage of data on servers that could be miles away from your office, maybe in another country, is just the beginning for Cloud services.

An ancillary to that is the Internet of Things (IoT), the connectivity of ordinary devices like kitchen appliances and cars, to the Internet. This technology will make machines smarter as it will allow manufacturers to monitor the performance of devices and recommend changes or upgrades.

Companies like Tesla have been leading the way in the development of IoT technology, using it to help them change the way their cars consume fuel, for example. But they are the early adopters – soon we will be taking IoT for granted.

The telecoms sector will be driven by 5G roll out

You will also be reading a lot about 5G in 2020: the roll out of 5G mobile networks is already underway in much of the developed world, including in the UK. Many large telecoms companies are involved in this, among them AT&T, Ericsson and Huawei. 5G is about more than just getting better coverage on your phone – it will enable a much higher level of interactivity between the individual and his or her environment – paving the way for the creation of smart cities, for example.

Data, and the way we manage is going to be another prominent theme in 2020: artificial intelligence and machine learning is changing the way companies deal with data, introducing more speed, scale and convenience into the corporate world.

AI is one of the most transformative tech evolutions of our times. Most large companies are exploring how they can use AI to improve customer experience and streamline their business operations. For now, many AI applications will continue to be provided via as-a-service platforms.  This allows smaller businesses to simply feed in their own data and pay for the algorithms they require.

With more data comes Big Data – if you’ve not come across this before, think in terms of the new oil. Data is becoming a very serious competitive edge for larger companies. It helps brands to improve the way in which they process information and isolate the inefficiencies in their operations. But while we see the use of data expanding, we are also seeing enormous consolidation in the corner of the IT sector that focuses on data management. For example, in 2019 we saw Salesforce acquire Tableau in order to enhance its own Big Data offering.

Advertising companies are changing the way they work

Technology is also changing the way the advertising world functions: most Americans under 30 spend more time on their mobile phones than they do watching television [2]. One of the advantages of mobile devices is that they can also provide advertisers with a lot more information on the habits of their owners than a television can. 

Digital advertising is now dominating advertising spend. Political campaigns are focusing more on social media than on television advertising as it helps them to target the constituencies which could swing an election more specifically, drilling down into the electorate using granular demographic data. If politicians see the digital opportunity, so do big companies – I expect to see digital advertising agencies grabbing a bigger piece of market share in 2020 from television advertising.

Health technology and cyber security – the unsung heroes

2020 will also see further breakthroughs in the field of health medicine. We don’t see many banner headlines from companies in this sector, but technologies like DNA editing and CRISPR our building the platform for some truly revolutionary breakthroughs in the future. Smart devices and wearable technology are delivering new insights on patients to the medical profession. Artificial intelligence is being used to help to sift this data and there are obvious additional benefits from the enhanced screening procedures technology can provide.

Another significant area of development is cyber security. We hear a lot about data breaches when they happen to a large company, but we see little of the battle going on behind the scenes between the security specialists and the bad actors, which these days include some governments. Cyber security is in a boom phase as both governments and corporates turn to the professionals for help.

In 2019 we saw plenty of M&A activity in the cyber security arena: according to Momentum Cyber there were more than 150 deals totalling more than $23 billion, including deals as large as $4 billion [3]. This is evidence of the size and scale of some of the companies already dedicating themselves to cyber security.

It is still a young industry, estimated at about $131 billion in size, according to Fortune Business Insights. They estimate this sector will grow to $289 billion by 2026 [4]. This growth is being driven by a mixture of existing and growing threats, and regulation.

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Article Date: 6th February 2020.

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