VCs Predict 2006’s Tech Trends
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Green technologies, innovation from China, and time-saving tools are among the top 10 trends VCs see this year.
January 15, 2006
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redherring.com
The video iPod, consolidation of the software industry, and the mainstreaming of Internet technologies like blogging and wikis topped 2005’s list of technology trends. So what to expect in 2006?
Just ask five of Silicon Valley’s most influential venture capitalists, who gathered last week in Palo Alto, California, to pontificate on what they see as this year’s top 10 trends. The list built on some of the same themes covered in Red Herring's list, which was published during December, but also pointed in several new directions (see Red Herring’s Top 10 Trends for 2006).
Among the VCs' predictions? Green technologies that will improve quality of life without harming the environment will become even bigger in 2006, said John Doerr of Kleiner, Perkins, Caufield & Byers.
“Green is the new red, white, and blue,” said Mr. Doerr, whose firm is investing in more energy, environmental, and public health startups, echoing comments made by New York Times writer Tom Friedman in a recent column. Kleiner Perkins has invested in some of the world’s best-known tech companies including Amazon.com, AOL, and Google.
Agreeing with Mr. Doerr was Steve Jurvetson of Draper Fisher Jurvetson, who said there will be a “biological renaissance” in the coming year, with biological sciences becoming more popular with college students as a major.
“All the breakthrough development in science and technology will increasingly come from bio-derived or bio-inspired origins,” Mr. Jurvetson said, citing examples of the Human Genome project, cloning, and cleantech technologies.
The two VCs were joined by Roger McNamee from Elevation Partners, Joe Schoendorf from Accel Partners, and Ann Winblad from Hummer Winblad Venture Partners. They all took part in a colorful debate hosted by the Churchill Club—a gathering spot for Silicon Valley’s movers and shakers.
Tony Perkins, founder of Red Herring and currently editor in chief of AlwaysOn magazine moderated the panel, which spoke before an audience of valley entrepreneurs, VCs, and lawyers.
Communications Trend
Within the communications industry, Mr. Jurvetson forecasted that voice communications will become free within data networks. The popularity of VoIP and Wi-Fi networks will make voice the next “killer app” and open up the communications market for services making the landline phone bill obsolete.
“Ten thousand landlines are cancelled every day in the USA,” Mr. Jurvetson said.
Similarly, Mr. Schoendorf predicted wires will disappear from the networked home. Power lines in the home will become the new home network, carrying content, data, and voice, he said.
“The next big industry to go away will be consumer electronics,” he said, which triggered negative responses from the other panelists.
“Apple is going to be the next Sony,” Mr. Doerr quipped.
Design Will Rule
Ms. Winblad speculated design will count more than ever in tech. If that MP3 player or laptop does not look as good as it works, you probably won’t buy it, she said. Apple has become a pioneer in design with its aesthetic iPod, iMac computers, and iBook laptops, she said.
But not everyone agreed. Mr. Schoendorf said the next billion technology customers won’t be able to afford the iPod.
“[It won’t work] in global markets, where getting basic functionality for a very low price is important,” he said.
Making Time
Mr. McNamee predicted the most compelling technology-based business opportunities in the coming year will either help individuals squeeze more time out of their day or help them make better use of their time. The BlackBerry PDA, which lets you check email on the go, is an example of the type of area that companies will focus on this year, he said.
Yet some panelists argued against the point, saying that most technological innovations were made with the aim to save time.
Turning to the business software industry, Ms. Winblad forecast that giants like Microsoft, SAP, and Oracle will lose their dominance in the $100-billion applications software market over the next 36 months.
With the advent of Internet-based software, web services, new pricing and business models, open source, and open standards, Ms. Winblad said proprietary software will have a hard time staying on top (see Is Enterprise Software Dead?).
“Yesterday’s leaders will be tomorrow’s laggards,” she said.
But not everyone in the audience agreed.
Mr. McNamee said these companies’ dominance is not going to wane and that CIOs in corporations are stuck with their software.
China’s Innovation
When it comes to regions, the panelists agreed that China will continue its march toward being both a low-cost producer and a low-cost innovator, threatening the United States’ position as a tech superpower. To keep up with China’s fast growth and its 300,000-strong pool of science graduates who are minted every year, the U.S. will have to collaborate and not compete with China, Mr. Doerr said.
The China prediction was a common trend featured in predictions this year and last.
At a similar event last year, panelists had predicted trends such as the reinvention of web services like Google search, personal electronic health records, and the growing popularity of text messaging in the U.S. Some other trends were growth of consumer technology and content, IT’s utility model, and the open-source media revolution.
2006 Top 10 Tech Trends
Trend
1.
More investment in green startups
2.
Voice becomes free within data networks
3.
Electronic technology changes from a growth engine to a commodity
4.
China to become low-cost world innovator
5.
Microsoft, SAP, and Oracle will lose dominance in software
6.
U.S. on path to following the third-world
7.
Biological sciences become popular in colleges
8.
Most compelling technologies will help save time
9.
Wires will disappear from the home network
10.
Design will count more than ever |
