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Technology is advancing so rapidly that we will experience radical changes in society not only in our lifetimes but in the coming years. We have already begun to see ways in which computing, sensors, artificial intelligence and genomics are reshaping entire industries and our daily lives. As we undergo this rapid change, many of the old assumptions that we have relied on will no longer apply. Technology is creating a new set of rules that will change our very existence.
Here are Five:
- Anything that can be digitized will be.
Digitization began with words and numbers. Then we moved into games and later into rich media, such as movies, images and music. We also moved complex business functions, medical tools, industrial processes and transportation systems into the digital realm. Now, we are digitizing everything about our daily lives: our actions, words and thoughts. Inexpensive DNA sequencing and machine learning are unlocking the keys to the systems of life. Cheap, ubiquitous sensors are documenting everything we do and creating rich digital records of our entire lives.
- Your job has a significant chance of being eliminated.
In every field, machines and robots are beginning to do the work of humans. We saw this first happen in the Industrial Revolution, when manual production moved into factories and many millions lost their livelihoods. New jobs were created, but it was a terrifying time, and there was a significant societal dislocation (from which the Luddite movement emerged).The movement to digitize jobs is well underway in low-salary service industries. Amazon relies on robots to do a significant chunk of its warehouse work. Safeway and Home Depot are rapidly increasing their use of self-service checkouts. Soon, self-driving cars will eliminate millions of driving jobs.
We are also seeing law jobs disappear as computer programs specializing in discovery eliminate the needs for legions of associates to sift through paper and digital documents. Soon, automated medical diagnosis will replace doctors in fields such as radiology, dermatology, and pathology. The only refuge will be in fields that are creative in some way, such as marketing, entrepreneurship, strategy and advanced technical fields. New jobs we cannot imagine today will emerge, but they will not replace all the lost jobs. We must be ready for a world of perennially high unemployment rates. But don’t worry, because …
- Life will be so affordable that survival won’t necessitate having a job.
Note how cellphone minutes are practically free and our computers have gotten cheaper and more powerful over the past decades. As technologies such as computing, sensors and solar energy advance, their costs drop. Life as we know it will become radically cheaper. We are already seeing the early signs of this: Because of the improvements in the shared-car and car-service market that apps such as Uber enable, a whole generation is growing up without the need or even the desire to own a car. Health care, food, telecommunications, electricity and computation will all grow cheaper very quickly as technology reinvents the corresponding industries.
- Your fate and destiny will be in your own hands as never before.
The benefit of the plummet in the costs of living will be that the technology and tools to keep us healthy, happy, well-educated and well-informed will be cheap or free. Online learning in virtually any field is already free. Costs also are falling with mobile-based medical devices. We will be able to execute sophisticated self-diagnoses and treat a significant percentage of health problems using only a smartphone and smart distributed software.Modular and open-source kits are making DIY manufacture easier, so you can make your own products. DIYDrones.com, for example, lets anyone wanting to build a drone mix and match components and follow relatively simple instructions for building an unmanned flying device. With 3-D printers, you can create your own toys. Soon these will allow you to “print” common household goods — and even electronics. The technology driving these massive improvements in efficiency will also make mass personalization and distributed production a reality. Yes, you may have a small factory in your garage, and your neighbors may have one, too.
- Abundance will become a far bigger problem than poverty.
With technology making everything cheaper and more abundant, our problems will arise from consuming too much rather than too little. This is already in evidence in some areas, especially in the developed world, where diseases of affluence — obesity, diabetes, cardiac arrest — are the biggest killers.
These plagues have quickly jumped, along with the Western diet, to the developing world as well. Human genes adapted to conditions of scarcity are woefully unprepared for conditions of a caloric cornucopia. We can expect this process only to accelerate as the falling prices of Big Macs and other products our bodies don’t need make them available to anyone.
AT&T’s Houston Foundry Chief Morris Talks Connecting Healthcare to Technology
Houston—Nadia Morris, the head of innovation for AT&T’s Connected Health Foundry at the Texas Medical Center, calls herself a “constant tinkerer.”
That penchant came in handy recently when her father-in-law had a few falls and was subsequently diagnosed with early-onset Alzheimer’s disease.
“I cobbled together some very basic devices that they can use, built up some Raspberry pi things so we could help monitor him,” she says. “And then I realized I could not just build a couple of things that would help my in-laws; [I need to] take those ideas and work with a team of experts and bring these ideas to life.”
That’s the goal of AT&T’s Foundry program in Houston: marrying technologies like sensors, connectivity, and data analysis to healthcare. The Houston outpost is the latest in AT&T’s six-year-old network of such programs across the country.
In Houston, the Foundry consists of recreations of different healthcare scenarios within which AT&T’s expertise in mobile communications come into play: at the bedside, a nurses station, a home’s kitchen.
For example, AT&T has developed a remote patient monitoring system that works via a tablet. That’s the sort of device that someone with a chronic disease might use at home, tracking their medicine, logging in their weight, and perhaps, scheduling a video call with their doctors—all while sitting in their kitchen with their morning cup of coffee.
“I’ve noticed something that is unique to Houston; people are very collaborative,” Morris says. “You might go talk to one company and they’ll say you really need to meet this other company. They’ll do that introduction and make that connection.”
So, Morris says she tries to follow that example, even if the project is not something AT&T is working on: “We’re a networking company so it makes sense, right?”
Morris came to Houston in June from the San Francisco Bay Area, where she was the lead product development engineer at AT&T’s Foundry in Palo Alto. She’s no stranger to Houston, though, having lived here as a child when her grandfather worked for Shell Oil.
Here is an edited transcript of our recent conversation:
Xconomy: What made you want to lead the Foundry in Houston?
Nadia Morris: I’m hearing this more and more from everybody I’m getting to know in the healthcare industry. Everybody seems to have a personal reason to get involved. It’s two-fold for me. My father-in-law, about nine months ago, was diagnosed with early onset Alzheimer’s. There were a couple of events we thought were anomalies, and then he had a bad fall. He was brought to the hospital and the doctor diagnosed him; my family’s been struggling with this ever since. They’re recently retired and now this is something that is very overwhelming for them. My mother-in-law had to pivot from being a socialite to being a home health care worker, so to speak. I’m seeing there’s such a gap between the care for seniors and what could be with the technology that we currently have.
There is also a selfish role in this because being a senior citizen is a minority group we all want to be a member of. Everything I do here at the Foundry makes my life better as I begin to age in place. We want to stay in our homes longer
The report “Medical Animation Market by Type (3D, 2D, 4D), by Therapeutic Area (Oncology, Cosmeceutical/Plastic Surgery), by Application (Drug MoA, Patient Education), by End User (Medical Device Manufacturers, Hospitals/ Clinics) – Forecast to 2021″, This report studies the global medical animation market for the forecast period of 2016 to 2021. This market is expected to reach USD 301.3 Million by 2021 from USD 117.3 Million in 2016, at a CAGR of 20.8%.
Browse 86 market data tables with 37 figures spread through 160 pages and in-depth TOC on “Medical Animation Market by Type (3D, 2D, 4D), by Therapeutic Area (Oncology, Cosmeceutical/Plastic Surgery), by Application (Drug MoA, Patient Education), by End User (Medical Device Manufacturers, Hospitals/ Clinics) – Forecast to 2021”
ation by life sciences & medical device companies; entry of start-ups in the medical animation market; growing pharmaceutical/biopharmaceutical and medical devices industries; increasing penetration of smartphones, tablets, and other mobile platforms; and rising geriatric population and growing number of surgeries globally are expected to drive the growth of the medical animation market during the forecast peri
In this report, the global medical animation market is segmented on the basis of type, therapeutic area, application, end user, and region. Based on type, the medical animation market is categorized into 3D animation, 2D animation, real-time imaging (4D animation), and flash animation. The 3D animation segment is expected to account for the largest share of the medical animation market in 2016. However, the real-time imaging (4D animation) segment is projected to grow at the highest CAGR during the forecast period
Based on therapeutic area, the medical animation market is segmented into oncology, cardiology, cosmeceuticals/plastic surgery, dental, and other therapeutic areas (ENT, gastroenterology, orthopedics, ophthalmology, neurology, and gynecology). The other therapeutic areas segment is expected to account for the largest share of the market in 2016; while, the cosmeceuticals/plastic surgery segment is projected to grow at the highest CAGR in the forecast period.
Based on application, the medical animation market is segmented into drug mechanism of action (MoA) and approval, patient education, surgical training and planning, cellular and molecular studies, and other applications (medical simulation, medical legal, forensic reconstruction, and emergency care instructions). The drug mechanism of action (MoA) and approval segment is expected to account for the largest share of the market in 2016; whereas, the patient education segment is projected to grow at the highest CAGR during the forecast period.
On the basis of end user, the medical animation market is segmented into life science companies; medical device manufacturers; hospitals, surgical centers, and clinics; academic institutes, and other end users (medico-legal firms, forensic departments, government bodies, and insurance companies). The life science companies segment is expected to account for the largest share of the market in 2016 and is projected to grow at the highest CAGR in the forecast period.
Geographically, the global medical animation market is divided into North America, Europe, Asia-Pacific, and
The Rest of the World (Latin America, Middle East, and Africa). North America is expected to account for the largest share of the medical animation market in 2016, followed by Europe, Asia-Pacific, and the Rest of the World. The Asia-Pacific market is projected to grow at the highest CAGR, and serves as a revenue pocket for companies offering medical animation.
Prominent players in the global medical animation market include Infuse Medical (U.S.), Hybrid Medical Animation, Inc. (U.S.), Ghost Productions, Inc. (U.S.), Scientific Animations, Inc. (U.S.), INVIVO Communications, Inc. (Canada), Random42 Scientific Communication (U.K.), Radius Digital Science (U.S.), Nucleus Medical Media, Inc. (U.S.), AXS Studio, Inc. (Canada), Visible Body (U.S.), Elara Systems, Inc. (U.S.), Animated Biomedical Productions (Australia), XVIVO Scientific Animation (U.S.), Blausen Medical Communications, Inc. (U.S.), Trinsic Medical Animation, LLC. (U.S.), Viscira (U.S.), Understand.com (U.S.), and Medmovie, Inc. (U.S.).
Apple pushes iOS 8.2 / beta 4 to developers
Apple has released the fourth beta version of the upcoming iOS 8.2 software update for iPhone, iPad, and iPod touch. Previous builds include support for testing WatchKit apps for its upcoming Apple Watch release and changes to Apple’s Health app. We’ll update our coverage with what we find in the latest developer beta.
– The update is currently available over-the-air through the Software Updates section of the Settings app, but should be available through the iOS Dev Center shortly (now available)
– Build number increased to 12D5461b from 12D5452a
– Bluetooth section in Settings adds Apple Watch connection link, confirms Apple Watch app for iPhone
– Xcode 6.2 beta 4 with WatchKit (build 6C107a) now available on Dev Center
Gartner Says the Internet of Things Will Drive Device and User Relationship Requirements in 20 Percent of New IAM Implementations by 2016
Gartner’s 2015 Predictions Special Report Examines the Significant Impacts of the Evolution of Digital Business
The Internet of Things (IoT) will drive device and user relationship requirements in 20 percent of new identity and access management (IAM) implementations by year-end 2016, according to Gartner, Inc. The IoT has introduced new concepts for identity management, since every device interacting with users has an identity — and users and devices can have complex, yet defined, relationships.
“IAM, as defined today, will bifurcate, with identity management assuming a broader entity relationship management role and access management assuming a broader relationship execution role that replaces or supplements authentication policy and authorization enforcement,” said Earl Perkins, research vice president at Gartner. “Traditional authentication and authorization for user identities will continue to include devices and services, but will also incorporate expanded machine-to-machine (M2M) communications requirements into expanding digital business moments. Embedded software and systems will make extensive use of the new and expanded IAM architecture to handle the scale and ubiquity requirements the IoT will demand.”
Gartner made three further predictions about IAM:
By 2017, enterprise mobility management integration will be a critical IAM requirement for 40 percent of buyers, up from less than five percent today.
Organizations continue to face challenges in providing consistent, convenient and secure access to enterprise and third-party applications using Web and native application architectures on a wide variety of devices. Today’s enterprise mobility management (EMM) tools can set security policies, provision device identities and isolate applications. However, their access management integration capabilities are nascent and only support internal use cases well.
Present-day EMM tools have limited breadth of support for Windows operating systems and, although Windows endpoints may be on the decline relative to mobile adoption rates, Windows endpoint management is not going away. Given these integration gaps and market opportunities, IAM leaders can expect EMM and traditional Windows PC management disciplines to move through three waves during the next five to seven years, going from diverged solutions to converged solutions with separate management processes, and finally to converged tools and processes. This third phase is called universal endpoint management (UEM), which will better address endpoint diversity and support traditional desktop, laptop and mobile devices. During the next two years, disparate IAM and EMM disciplines will evolve similarly and will be used together to protect organizations from threats that have overcome traditional IAM and EMM controls used in isolation.
By 2020, 60 percent of organizations will use active social identity proofing and let consumers bring in social identities to access risk-appropriate applications.
Digital business is driving the need for organizations to consume social or other reusable, third-party identities. The pervasive and persistent use of social media across the geographies has presented a valuable source of identity information and service delivery opportunity for today’s identity consumers and service providers.
“More enterprises could adopt a bring your own identity (BYOI) approach for allowing customers and workforces to use their social identities, thereby improving user experience and opportunity to leverage social relationships for marketing purposes,” said Anmol Singh, principal research analyst at Gartner. “With low-cost, social identity-proofing services, small and midsize businesses could use remote on-demand verification of identities to grant access to users outside the organization, eliminating the need to manage detailed identity-proofing processes in-house.”
By 2020, new biometric methods will displace passwords and fingerprints for access to endpoint devices across 80 percent of the market.
Biometric technology is not new, but it is now gaining traction in mobile devices for consumers. Within the past year, Apple, Samsung and others began globally shipping smartphones with embedded fingerprint authentication and Gartner expects increased penetration over the next few years.
However, interest in fingerprint methods is expected to peak at around 20 percent of the total endpoint device market in 2017. Biometric implementations in these consumer devices are relatively weak; after all, the feature extraction, comparison and matching have been tuned to provide a good user experience and good performance on a mobile device, rather than to establish high trust.
“Embedded fingerprint authentication does not improve user experience for everyone,” said Ant Allan, research vice president at Gartner. “Furthermore, given the low trust that these methods afford, we expect to see increasing dissatisfaction as people’s devices are compromised over the next few years. The same kind of biometric modes that organizations may soon adopt for authentication from the device will be preferred for authentication to the device in the midterm.”
Gartner projects that endpoint device vendors will invest in face recognition via a user-facing camera, voice recognition via a microphone, keystroke and gesture dynamics via multitouchscreens and handling dynamics — a novel motion-based behavioral mode using device accelerometers and gyros. One of the major advantages of these methods over fingerprint is that not one needs a specialized sensor. Each one takes advantage of inputs that are already available on smartphones, tablets and many PCs. Hence, any or all could be implemented simply by making changes to the endpoint OS, thus benefiting all users, not just those with the latest models.
More detailed analysis is available in the Gartner Special Report “Predicts 2015: Identity and Access Management.” The report is available on Gartner’s website athttp://www.gartner.com/document/2912417.
This research note is part of Gartner’s Special Report “Gartner Predicts 2015” features over 80 reports arming IT leaders with insights and actions to begin exploring the significant impacts of the evolution of digital business. The special report can be viewed at http://www.gartner.com/technology/research/predicts/ and includes links to reports and video commentary that examine how digital business is driving “big change”.
Wearable band shipments set to exceed 43.2 million units in 2015
– Apple Watch to make up the majority of smart band shipments next year
Palo Alto, Shanghai, Singapore and Reading (UK) – Wednesday, 10 September 2014
Wearable band shipments will grow 129% year on year to reach 43.2 million units in 2015, of which 28.2 million will be smart bands and 15.0 million will be basic bands, according to the latest device shipment forecasts by industry analyst firm Canalys. Canalys tracks wearable device shipments and segments the market into smart bands, which are capable of running third-party applications, and basic bands, which are not.
Apple will be the biggest driver behind wearable band shipments in 2015. ‘By creating a new user interface tailored to its tiny display, Apple has a produced a smart watch that mass-market consumers will actually want to wear,’ said Canalys Analyst Daniel Matte. ‘The sleek software, variety of designs and reasonable entry price make for a compelling new product. Apple must still prove, however, that the final product will deliver adequate battery life for consumers.’
Many market observers have questioned why consumers would want a smart band, justifiably demanding compelling use cases. Hoping to address these concerns with its new wearable, Apple has demonstrated a variety of use cases, including health and fitness and personal communication, as well as other areas, such as mapping for walking navigation, workout and activity tracking, and mobile payments. Meanwhile, low-cost Chinese vendors are increasingly playing a role in the market for wearable bands. Xiaomi has attempted to dramatically lower the price of basic bands with its Mi Band. Android Wear is growing a viable ecosystem, though it cannot be used in China. Google must greatly improve its wearable platform over the coming years to better compete with Apple’s new offering. Long-term, wearable bands from all vendors must provide clear value to consumers beyond the existing capabilities of smart phones in order to justify the purchase of an additional device.
‘The basic band vendors, such as Fitbit and Jawbone, will enjoy the advantages of their lower pricing for the immediate future,’ according to Canalys VP and Principal Analyst Chris Jones. ‘Eventually, however, stronger smart band competitors to the Apple Watch will likely emerge and push smart band pricing down, threatening the basic bands. This market will undergo disruption similar to that suffered by feature phones when smart phone prices fell.’
Wearable band shipment data and five-year forecasts are taken from Canalys’ Wearable Technology Analysis service, which provides quarterly market tracking, including country-level estimates. Canalys defines basic wearable bands as devices serving a specific set of purposes that act as accessories to smart devices, are designed to be worn on the body and not carried, and that cannot run third-party computing applications. Smart wearable bands are multi-purpose devices that serve as accessories to smart devices, are designed to be worn on the body and not carried, and are capable of running third-party computing applications. Bands are wearables designed to be wrapped around the body and do not include activity trackers in the form of clips.
Canalys is an independent analyst company that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. Our customer-driven analysis and consulting services empower businesses to make informed decisions and generate sales. We stake our reputation on the quality of our data, our innovative use of technology and our high level of customer service.
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– See more at: http://www.canalys.com/newsroom/wearable-band-shipments-set-exceed-432-million-units-2015#sthash.i3GUO0Wg.dpuf
Going hands-free on kernel counts and image recognition
A farmer walks into a field, grabs an ear of corn and takes a picture with Google Glass. Within seconds he knows the precise kernel count—fast, seamless and hands-free.
IntelliScout, from Farmhouse Networks, the new agricultural arm of Basecamp Networks, is an app that works in tandem with Google Glass and serves as a buildable platform.
In 2012, Craig Ganssle, CEO of Basecamp Networks, was selected for the Google Glass Explorer Program. When he got his first pair, Ganssle believed Glass would be most beneficial in a hands-free work environment. “The hands-free functionality sparked interest in farming, and I could see great advantages for Glass in multiple aspects of farming,” he says. “One that really stood out was crop scouting.”
The IntelliScout application, in conjunction with Glass, is connected via Wi-Fi or a smartphone. It records pictures, video and dictation—all hands-free. Kernel counting, for example, is a quick process. “Take a picture in the display, and it goes into the Cloud, goes through an algorithm and comes back in less than two seconds to indicate how many kernels are on that ear of corn,” Ganssle describes.
A dashboard console categorizes the data from IntelliScout field reports. Location is automatically geotagged each time a picture is taken. The data automatically populates in the dashboard and maps coordinates inside the field. The field reports automatically pull weather data for temperature, wind speed, humidity, precipitation, soil moisture and more when field reports are sent to the Cloud.
Map data can be interlayed into the platform to bring even more precise locators. “Field, plot and row—all of those precise locations are simple every time you take a field report.”
Currently, Ganssle is working on image recognition and phenotyping to enable IntelliScout to identify insects or plant disease by matching photos in a database. “We’re connecting with some large agriculture companies to get access to hundreds of thousands of images taken over decades of archiving,” Ganssle notes.
Ganssle has partnered for further research with Kansas State University and Ignacio Ciampitti, assistant professor in crop production and cropping systems. “ IntelliScout could have particularly great potential for estimating yield and getting grain numbers,” Ciampitti says. “At the moment, we send people into the field to get yield estimations before harvest, and counting rows is a tedious task. An automatic count will save major time.”
IntelliScout presently works with Google Glass but will also work with other wearable devices as they come to market.
IntelliScout presently works with Google Glass but will also work with other wearable devices as they come to market.
“When farmers or consultants go into in a field, they want to try several things at once, and wearable technology could let them take multiple tools into the field,” Ciampitti notes.
Wearable technologies offer a range of potential applications for crop production. In addition to kernel counting, Ganssle is developing cotton node counting and grape counting functions for IntelliScout. Ganssle wants to focus on key facets of individual crops for scouting and identification.
“We don’t want to dictate what IntelliScout will do. We want to collaborate with farmers, consultants and agriculture companies and find out how we can have the greatest impact on farming by learning from them.”
Why the time is < STILL > right for tech
Technology stocks have reached prices not seen since the “dot-com” boom of the 1990s. So are they headed for another crash? Not necessarily. Here’s why Fidelity believes the tech sector is poised for continued growth.
skip to section:
THE MACRO CASE INNOVATION
The Macro Case
A New Era
The tech boom of the 1990s was fueled mostly by speculation about how technology was going to transform our lives. Today, that transformation has already begun. Tech is essential to our lives at home, at work, and on the road. And the tech sector has matured accordingly. In fact, tech is now the largest single investment sector, at 19.3 percent of S&P 500 market capitalization. It offers a wide range of investing opportunities, from huge, mature companies whose products are vital to business worldwide to small, high-growth firms working on the bleeding edge of innovation. Market Capitalization of the S&P 500
Tap on the graph below to change the infographic data.
— and Opportunity
The tech sector may be poised to benefit from the global economic recovery. More of its revenues come from overseas — 55 percent — than any other sector. It sells into developed regions like North America and Europe as well as emerging regions like Africa and Latin America, so its future is not too dependent on any one market. And it goes where the growth is. For example, some foreign markets are on track to expand Internet use more rapidly than the U.S., and are home to stocks that trade at a discount compared with their U.S. peers. E-commerce in the Asia-Pacific region is expected to grow nearly twice as fast as in North America. That’s because more than half the population in Asia — hundreds of millions of people — have yet to buy online.
E-Commerce Growth by Region
SOURCE: STATISTA, EMARKETER. FIGURES ARE FOR 2013.
A Good Point in
At home, the U.S. economy is in what we call a “modest mid-cycle expansion.” We’ve seen economic growth in 17 of the past 20 quarters through September 2014 and improvements in the labor market, credit conditions and manufacturing activity. In tracking the stock performance of industries throughout economic cycles for over 40 years, we’ve found that IT tends to outperform the broader market during this phase.
Typical Business Cycle: Economic Growth
Spending on Tech
During economic expansions, companies historically grow more confident in the economy’s stability. They’re more willing to make big investments to achieve growth. With companies sitting on a record-setting cash hoard of nearly $2 trillion, executives report in surveys that they are preparing to increase capital expenditures on technology. History shows that companies tend to follow through with those plans — and technology firms have benefited.
Business Tech Spending Plans vs. Tech Sector Revenue
SOURCE: NATIONAL ASSOCIATION
FOR BUSINESS ECONOMICS INDUSTRY SURVEY, HAVER ANALYTICS, FIDELITY
The mountains of data being collected each minute by smartphones, credit cards, social networks, electronic sensors and more are being harnessed into insights that will help every industry understand its market and improve productivity. Demand is strong for companies that gather, secure, and unlock the predictive value of this data. An analysis by Wikibon projects that global spending on big data by organizations will grow to $50 billion by 2017.
Big Data Market
By placing more of their computing power “in the cloud” — that is, on the Internet — companies can reduce hardware and staffing overhead and enhance mobility, flexibility and collaboration. Individuals, too, are keeping more of their apps, photos and other personal files permanently online. As costs fall and security concerns are addressed, Fidelity expects the proportion of work done via the cloud to increase significantly. That’s good news for firms that provide software, platforms and infrastructure “as a service.”
Cloud IT Spending
The number of connected devices is growing globally as their prices decline and their functions multiply. In developed countries, smartphone sales growth may slow as markets become saturated. But mobile advertising and apps will continue to grow as people spend more time on their phones than their computers. This should benefit both the big tech players that manage social networks and app platforms and the countless smaller firms that build apps and ads.
By common measures of profitability, tech has been outperforming the broader market. In the past 12 months ending Sept. 30, technology has exceeded the S&P 500 in earnings per share growth, return on equity, EBITDA (earnings before interest, taxes, depreciation, and amortization), and free-cash-flow margin. Historically, sectors displaying strong and improving fundamentals have performed well over the medium-term.
Past performance is not a guarantee of future results.
Despite such powerful growth drivers, valuations for tech companies have been better than the historic average. As of September, the ratio of the sector’s average stock price to its available “free cash flow” is at 17, about half its 10-year average. Free cash flow is a good gauge of company value because it focuses on the cash available to companies to grow the business or benefit shareholders or creditors.
Tech Sector Price to Free Cash Flow
SOURCE: HAVER ANALYTICS
Soaring — But
Technology firms are disrupting industries including retail, media, telecom, finance, manufacturing, and healthcare — often stealing market share in the process. Meanwhile, companies know that efficient use of technology can set them apart from competitors. Maybe that’s why the tech sector is leading other sectors in growth. But unlike during the last boom, that leadership is based on value — not speculation. As this chart shows, the tech-heavy NASDAQ index is outperforming the S&P 500, but at a much more measured pace than in the dot-com era.
Past performance is not a guarantee of future results.
NASDAQ vs. S&P 500: Then vs. Now
Learn More About the Tech Sector Get details on performance and gain insights into opportunities, trends, and risks.
SECTOR OVERVIEW SECTOR VIEWPOINTS FUND MANAGERS SPEAK BUSINESS CYCLE UPDATES.
© 2014 The New York Times Company
I believe GoPro has done this well for this long – soaring more than 180% since its June initial public offering – because it is the poster child for a market sector that is set for a major boom. According to the IDC forecasters, wearable tech will grow 78.4% through the end of 2018. If we want to get on the road to wealth that tech provides, then this is a sector we must cash in on. But I don’t want us to get hurt by messing with a risky stock like GoPro.
That’s why today I’m going to show you how to invest in wearable tech – the entire sector – with a single investment that offers both safety and big profits…
Way Beyond Action Cameras
Don’t get me wrong. I love GoPro Inc. (Nasdaq: GPRO) as a company. I like its story and I’m a fan of its technology – wearable cameras that “extreme” cyclists, surfers, and skiers use to capture and post their incredible stunts. In this market, however, we just can’t justify paying 80 times forward earnings. And besides being a risky stock, GoPro is just a start to the world of wearable technology.
That became abundantly clear Sept. 9 when Apple Inc. (Nasdaq: AAPL) introduced the Apple Watch. Due out next year, the smartwatch can be integrated with the iPhone, used with the new Apple Pay mobile-payments system, and loaded up with dozens of goods from the App Store. More to the point, I think it will be a huge success.
Morgan Stanley agrees, saying that the Cupertino, Calif.-based tech giant could sell 30 million to 60 million Apple Watches in the first year alone.
According to the researchers at ON World, consumers purchased just 4 million smartwatches last year. But ON World predicts shipments will hit 330 million in 2018 – a stunning 8,150% increase in just five years.
And that’s only one segment of the wearable tech market. Wearables also include medical devices, fitness and health monitors, GPS trackers, and virtual-reality headsets.
Google Inc. (Nasdaq: GOOG, GOOGL) has several fingers in the wearables glove. You know Google Glass. Worn as eyeglasses, the system displays text messages and maps, takes notes, records video, takes pictures, and displays video.
And Google is using its Android operating system to make an ecosystem play. Android Wear is designed to work with wearable devices from several developers and makers. As much as I like GoPro, Apple, and Google, there’s a much better way to play wearable tech, as I’ll explain. You see, it’s important to note that we’re still at the dawn wearable tech.
It’s a bit early to try picking the winners from the losers. What we’re looking for now is a way to capture as much upside as possible from the whole sector.
That’s where the Vanguard Information Technology ETF (NYSE Arca: VGT) comes in. It’s an exchange-traded fund composed of 90% technology stocks, most of which are based in the United States. Vanguard Info Tech has some 413 holdings, but more than half of its assets are in the fund’s top 10 stocks. For instance, Apple and Google make up 22.6% of the ETF’s holdings. That right there gives us two major wearable plays. But Vanguard Info Tech holds at least four other wearable leaders. Take a look…
Wearable Tech Vanguard No. 1:
After nearly striking out on the mobile revolution, VGT holding Intel Corp.(Nasdaq: INTC) wants badly to sell its Edison semiconductor chips to wearable developers. And to bolster and promote the entire sector, Intel is sponsoring the Make It Wearable contest, with a $500,000 grand prize for the most innovative product. Besides selling chips, Intel is also making some moves into consumer products.
Earlier this year, the world’s leading semiconductor firm acquired Basis Science Inc. That $100 million play gives Intel a line of wearable fitness devices. Intel plans to further expand into wearables with a line of MICA smart bracelets. The fashion-centric line is the highlight of Intel’s recent partnership with watchmaker Fossil Group Inc. (Nasdaq: FOSL) and clothing retailer Opening Ceremony. The Santa Clara, Calif.-based company also offers Jarvis, a smart headset that functions similarly to digital assistants like Apple’s Siri and Google Now.
Wearable Tech Vanguard No. 2:
Meanwhile, Microsoft Corp. (Nasdaq: MSFT) is focused on the software aspect of wearables. Like Intel, Microsoft largely missed the mobile revolution, but it has no intention of making that mistake with wearables.
Microsoft recently released a software suite for wearable devices, primarily smartwatches. OneNote, a free app designed for Android Wear, is being offered through Google Play.
At the same time, Microsoft will soon release its own smartwatch. The sensor-laden device will serve as a fitness tracker and will sync with iPhones, Android phones, and Microsoft’s own Windows Phone system.
Wearable Tech Vanguard No. 3:
Primarily known for navigation devices, Garmin Ltd. (Nasdaq: GRMN) is not only leveraging off its GPS expertise. With wearables, it’s also focused on fitness and health, which is the company’s fastest-growing division. For instance, Garmin’s fitness bands allow users to track their physical activity, including daily number of calories burned and steps taken as well as sleep patterns.
The company clearly picked a growth segment. According to market forecaster Canalys, we bought 1.8 million smart bands like those made by Garmin last year. That number will likely climb to more than 45 million by 2017. Garmin also makes several sport watches that feature GPS tracking and fitness monitoring. And its Forerunner watches feature touchscreen technology that helps swimmers improve their stroke.
Wearable Tech Vanguard No. 4:
Ambarella makes the video-processing chips that make GoPro’s cameras such a success. And the company goes well beyond the wearable market. It makes video-processing chips used in just about every digital camera we own – auto backup cameras, surveillance cameras, smartphone cameras, TV broadcast cameras. And that, in turn, reinforces one of the great selling points of Vanguard Info Tech – diversification. This ETF not only gives us a broad play on wearables, but also covers a wide swath of other technology, including software, semiconductors, cloud computing, Big Data, and mobile.
Trading at roughly $98.50 a share, Vanguard Info Tech is well ahead of the overall market. Over the past six months, it has doubled the S&P 500‘s 3% return, and it’s nearly 40% ahead of the market over the past year. With its lineup of top tech names – and a concentration in tech’s fastest-growing sector – this is a great long-term play. Vanguard Info Tech is an investment that captures the quick profit potential in wearables while still helping you build a solid investing foundation.
Throw in market-beating performance and you have a real winner on your hands.
by DAVID ZEILER
Wearable Tech Stocks 2015:
Expect a lot of major developments in wearable technology this year as the big tech companies fight for turf in this rapidly growing market.
BI Intelligence estimates that sales of wearable tech devices will rise from about 33 million units shipped this year to over 50 million in 2015. From there, BI says the wearable tech market will nearly triple by 2019, to 148 million units. But getting there will come in fits and starts. Much experimentation will mark the 2015 wearable tech market as companies try to figure out what customers will wear – and buy.
We’ve already seen Google Inc. (Nasdaq: GOOG, GOOGL) stumble with Google Glass.
Critics slammed the pioneering device as too expensive ($1,500) and just plain dorky. Worse, those who wore the device in public were often harassed by people afraid it could be used to secretly record them.
Likewise, most of the smartwatches so far have flopped.
Customers were unimpressed by bulky devices with poor battery life that offered hardly any benefit over smartphone capabilities.
But companies are determined to succeed as there is much money to be made. Juniper Research has forecast that sales will reach $19 billion by 2018. Most of the first wave of wearable technology has failed because the devices didn’t solve any unmet need, or create a better way to deal with all the data that swamps us every day.
That will start to change in 2015…
PricewaterhouseCoopers LLP put out a report in October with several great tips for how to succeed in the wearable tech business. It’s a blueprint for success in the wearable market.
PwC asked 1,000 consumers not just what they thought of wearable tech, but what they want it to do for them. What they found is that people want wearable technology to do more than just provide more data. They want devices that make it useful.
“[Consumers] want wearable devices that not only turn data into insights, but also help them turn insights into decisions and actions,” the PwC report said.
“This is the opportunity for wearable tech makers, and for enterprise. If they learn to equip consumers with the right information at the right time, yielding actionable insights that can be integrated into experiences and become part of the solution, they can radically alter – and improve – the landscape of business, entertainment, health, and more.”
Business is a huge opportunity.
In retail, for example, a wearable device for employees could negate the need for checkout lines as well as improve customer service. In fields like manufacturing and medicine, wearable devices could serve as specialized tools to streamline procedures and provide ready access to data.
The companies that best address these needs will win – and reward their investors.
Here’s a breakdown of the top contenders in wearable tech and what they will deliver in 2015…
Wearable Tech Stocks 2015: What to Expect from the Tech Titans
While smaller companies like Pebble, Fitbit, and Jawbone have had some success in wearable technology, in the long run the tech titans will dominate. If the big players can’t figure out how to make winning products, they’ll buy up the smaller companies that do. The major tech companies also have the advantage of brand recognition.
The PwC report asked consumers to rate how excited they’d be to buy wearable tech from each tech company.
- Apple Inc. (Nasdaq: AAPL) topped the list, with 59% saying they’d be very or somewhat excited.
- Google had 53% and
- Microsoft Corp. (Nasdaq: MSFT) 51%.
Here’s what they’re working on:
Apple Inc. (Nasdaq: AAPL):
The Apple Watch is expected to be the product that ignites the wearable tech market because, well, that’s what Apple is known for. Announced in September but unavailable to buy until sometime in 2015, the Apple Watch will start at $349. But fancier versions (like one with a gold band) will cost thousands of dollars. If anyone can make wearable tech useful and desirable to consumers, it should be Apple. Between its own design expertise and the brain power of several freshly recruited top fashion executives, all signs point to Apple Watch success. UBS analyst Steven Milunovich estimates sales of 24 million Apple Watches in its first nine months. He forecast that will grow to about 68 million by 2018, creating a powerful catalyst for Apple stock.
Google Inc. (Nasdaq: GOOG, GOOGL):
The folks at the Googleplex are working hard on Google Glass 2, which should arrive around the middle of 2015. This despite sluggish sales of the original Google Glass, which debuted in 2012. Presumably Google Glass 2 will reflect the wisdom gained from the first version’s failures. One promising sign: a program called “Glass at Work” aimed at encouraging use of the device in industries such as healthcare, construction, and manufacturing. Google has no plans to stop pushing Glass as a consumer device, however. Deal-happy Google is also likely to make a big acquisition in the area of wearable tech. For instance, CSS Insight recently predicted that GOOG would buy red-hot wearable camera firm GoPro Inc. (Nasdaq: GPRO) in 2015.
Microsoft Corp (Nasdaq: MSFT):
It went mostly unnoticed, but Microsoft beat Apple to shipping a wearable device with its “Microsoft Band” in early November. Following CEO Satya Nadella’s philosophy of platform neutrality, the $199 fitness band works with Android and iOS devices as well as Windows Phone. MSFT also introduced Microsoft Health, a cloud-based platform to store and interpret personal health data. For 2015, Microsoft is expected to deliver a wearable device that integrates with the Xbox One. The big question, though, is whether MSFT can get any traction in this market. With a wretched track record in the closely related mobile market, Microsoft’s only shot is to wow consumers with unique, standout products. Is Nadella up to the challenge?
Intel Corp. (Nasdaq: INTC):
The world’s biggest chipmaker jumped into the device side of this market this month with a $495 gold-plated bracelet called MICA (“My Intelligent Communications Accessory” – catchy, eh?). But Intel knows that to succeed in wearable tech, it must get its chips into other companies’ devices. That’s why it’s been pushing its wearable-specific Quark chip and Edison “computer on a card” introduced earlier this year. INTC got a big win by elbowing out
Texas Instruments Inc. (Nasdaq: TXN) to supply the main processor in Google Glass 2. But smaller chipmakers are also hungry for this market.
A Crash Bigger than 2008
Facebook Inc. (Nasdaq: FB):
The dark horse of wearable tech, Facebook is approaching it from a different angle. Its $2 billion purchase of Oculus Rift has given Facebook a wearable tech platform that in the long run could prove more significant than anything Apple or Google is doing. CEO Mark Zuckerberg loves gaming, but that’s not what he has in mind for the Oculus VR platform. He sees it as a tool to extend social media in new ways. Imagine attending sporting events or visiting a doctor via virtual reality. We probably won’t see those things in 2015, but Facebook will likely tease us with more details.
Many other tech companies, including such Asian giants as Sony Corp. (NYSE ADR: SNE) and Samsung Electronics Ltd. (OTCMKTS: SSNLF), are also contenders in the wearable tech fray. But as we saw with mobile devices, only a few real winners (that is, companies that can turn a profit) will emerge. The U.S. tech titans, with their vast cash reserves and name recognition, have the early edge.
Wearable Tech Stocks to Buy in 2015
Any of the big tech companies are good bets for investors looking for wearable tech stocks to buy. Over the past few months, Money Morning’s experts have recommended all of them to readers.
But investors seeking to catch as much of this growth market as possible may want to cast a wider net with the Vanguard Information Technology ETF (NYSE ARCA: VGT).
An exchange-traded fund makes sense in this case because wearable technology is at such an early stage. It’s simply too soon to predict the winners and losers.
The Vanguard Info Tech ETF is 89% tech stocks. The tech titans in the list above are all among the fund’s top 10 holdings. So are a lot of chip companies likely to play a big role in wearable tech, such as Qualcomm Inc. (Nasdaq: QCOM) and Ambarella Inc. (Nasdaq: AMBA).
The Bottom Line
Wearable tech is a nascent market that will come of age in 2015. Right now the tech titans are scrambling to build wearable devices consumers will line up to buy. These companies all have strong brands and lots of cash, making this race too early to call. But investors can profit no matter who wins.
Google Is Inventing the Future: Wearable tech is just one area of interest to Google. The company has a wide range of projects under way aimed at improving how we live and work. Here are five amazing innovations we saw from Google in 2014…