Back to Market commentary

Too Late for the Gold Rush ?

January 18th 2019

A recent report by Counterpoint Research showed that after growing annually by an average of 16% up to 2017, shipments of smartphones actually declined in 2018 – that’s the first time smartphones have ever failed to attract an increasing consumer spend.  Reasons are many, from global trade jitters to higher prices and a lack of new buyers. 

2018 was also a bad year for social media, with Facebook’s shareprice tumbling from a $218 high to $123.  Mark Zuckerberg’s fortune has fallen by $17.4 billion as he faced criticism over governance and Facebook’s handling of fake news, election meddling and corporate critics.

Perhaps the gold rushes are over.

So if same-old is losing its shine, what are the new, sustainable trends that investors should be looking out for?  Respected analysts Gartner put together their thoughts.  “The future will be characterized by smart devices delivering increasingly insightful digital services everywhere,” said David Cearley, “Blockchain, quantum computing, augmented analytics and artificial intelligence will drive disruption and new business models.”

Yes, but the problem is we’ve heard about these things before and there’s just a hint of hype about some of them.  For example, blockchain still remains a solution looking for a worthwhile problem outside of cryptocurrencies (“2018 was a terrible year for blockchain” according to Forbes).  Analytics has been around for many years.  And almost every other business looking for investment manages to include AI somewhere in it’s proposition.

Perhaps the insight is to work out what’s missing from the conventional outlook.

So, for example, hidden within the Gartner report is the concept of the “empowered edge,” where computing will extend well beyond centralised facilities to the “edge” of the network where data can be stored, processed and displayed. This brings together Internet of Things, connectivity, AI data management and, according to Forbes, “This is a really important trend that’s not as obvious as it might seem. Gartner’s got this one just right.” And it’s the ability to bring together these services – called “microservices” - that may separate the winners from the losers.

Another underlying trend is the growth of the …AaAService segment.  So, Blockchain As A Service, Virtual Reality As A Service and so on.  In fact, quantum computing – which looks like a safer, albeit long term growth sector – may well be provided As A Service.

So it might be worth remembering that in the real gold rushes, very few of the miners made any money, it was the service providers (owners, merchants, transporters and bankers) that made the large profits.

If you’ve liked this commentary why not link to it and see further articles

Share this: