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Find incredible gains at the cutting-edge of technology
The next few years will see a host of investment opportunities on the back of some seriously exciting advancements in technology, says Tom Bulford. Here, he lists the top ten developments of the next decade.
I was hopeless at science at school. After I failed both my chemistry and physics 'O' levels, the school decided that I should repeat the chemistry exam to get at least one science subject under my belt. But I got an even worse mark the second time around. They finally gave it up as a waste of time.
Now though, I am fascinated by science. We saw in the nineties how advances in internet and digital communications led to stock successes such as Google, eBay and Nokia.
And the good news is that technology has continued apace since then. Over the next few years, I think we could see a host of remarkableinvestment opportunities on the back of some seriously exciting developments in technology.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
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Today I'd like to talk about ten of those developments. It's a list that was put together by technology specialist Walter Price. And it points to some of the most exciting opportunities you'll find for some time.
The PC will be transformed into a consumption device for information and entertainment. The explosive growth in traffic from online videos will only gather pace. Recommendation engines will grow significantly in importance and media content will be freely available over the internet. That's bad news for journalists like me, but it's bound to produce a host of exciting new opportunities.
2. LED technology
LEDs offer 90% energy savings and a significantly longer lifespan in comparison to regular light bulbs. Over the next few years, LED technology will replace much indoor and outdoor lighting. According to Dialight (LSE: DIA) "by 2020 the adoption of LED lighting will have saved as much energy as is generated by six hundred power stations, equivalent to the emissions of all the passenger cars in the world today".
3. Cloud computing
This is the biggest trend in enterprise computing since the late 1980s. In it's simplest terms, it is the idea of IT as a service. So instead of maintaining huge rooms full of computers in-house, you can rent computing power from a third party who owns vast server farms. It is already enabling businesses to move to a more efficient IT model, as it offers cost savings, 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. The 'smart grid'
The electrical grid is the world's most complicated machine. Even so, it can no longer adequately balance future supply and demand without huge investment. Neither higher penetration of renewable energy, nor large-scale electric car deployment will be feasible without investment in the smart grid. Billions will be pouring into this sector in the future.
Access to computing resources was for a long time the domain of the desktop computer and later the laptop. But now, it 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 power
Prices are falling every year in this smart renewable sector. In the foreseeable future, solar power systems will likely come much closer to delivering electricity at grid parity, even in challenging environments.
7. Display technology
A transition to OLED (organic light emitting diode) displays in the coming decade has started. This will provide thin, low-power, better-picture, bendable and low-cost displays.
8. Rechargeable batteries
There's one thing that mobile devices, hybrid cars and power plant electricity storage all have in common. They require rechargeable batteries that can store a huge amount of energy. Growing energy storage capability is a priority, in addition to the progress currently underway to increase energy density of storage systems.
9. Gesture recognition
Right now, you're probably controlling your computer through a mouse. But the Windows-icon-mouse-pointer-based user interface has been around for almost forty 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.) is revolutionising this area. Expect a complete refresh cycle of hardware, software and peripherals. The iPad is just a first step in this direction.
10. Global connectivity
In ten years time, there could be 50 billion devices connected to the internet. This incredible tenfold increase in wirelessly connected devices requires a massive growth spurt in production. It will continue to be one of the biggest drivers of technology this decade. And think: the next billion first-time users will come via smart phones, not the PC.
Successful businesses of the future must harness these technology trends, using cloud computing to cut costs, for example. Smart technology will offer a competitive advantage. The smartest technology will quickly destroy slower, less functional alternatives. There is a fortune to be made here for investors.
The really big stock market winners in the next few years will be the successful pioneers of some of these innovations. These will be the companies that actually do the science, hold the patents, and take the great ideas of the research lab to the market.
This article was first published in Tom Bulford's twice-weekly small-cap investment email The Penny Sleuth.
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Tom worked as a fund manager in the City of London and in Hong Kong for over 20 years. As a director with Schroder Investment Management International, he was responsible for £2 billion of foreign clients' money, and launched what became Argentina's largest mutual fund.
