Technology Industry News & Trends, October 2017
Below is the technology industry news & trends report for October 2017. You can also check out our latest news & trends report to be in the loop of what’s shaping the tech industry landscape today.
October ended, but October’s news will keep us engaged for a while. Gartner published several traditional predictions for 2018. The IT industry will reach $3.7 trillion next year. AI and IoT remain the most promising technologies. Blockchain and augmented reality (AR) also top the adoption rates, but are currently embraced by only a few industries. Microsoft and Google enhanced their cloud offerings, ranging from supercomputing to new open source tools. Airbnb got closer to the physical business as it settled the partnership with a development firm to build a branded hotel. So, let’s lunge into October’s storm of predictions and trends.
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Airbnb comes closer to physical businesses
Airbnb is entering real estate. The company will partner with a real estate development firm, Newgard Development, to build a hotel in Kissimmee, Florida. Airbnb won’t own the hotel, as some media outlets say. The online rental giant will charge a license fee and provide design assistance for Newgard. Also, Airbnb will get an exclusive right to rental placements in the new property and share the revenue with landlords and owners. The new building will be equipped with keyless entries and powered by on-demand services. The branded hotel will challenge property developers and facility management companies to reconsider their resistance to Airbnb.
But if we look closer, the major interests of Airbnb are more likely to lay in the travel and hospitality spheres rather than in real estate. As home sharing goes mainstream, the company should seek ways to increase revenues before they go for initial public offering (IPO) which will likely happen in 2018. We’ve already discussed Airbnb’s plans to get into flight booking. And now, a chain of branded hotels becomes a good opportunity to enhance positions in vacation, luxury, and business segments, which are more complex than ordinary rentals and apartment sharing.
Fintech becomes an organic part of the financial industry
Nearly 90 percent of industry incumbents have already adopted or are developing their fintech strategies, according to a KPMG survey. Fintech solutions solve a wide range of tedious tasks inside the industry helping enhance customer experience, cut costs, and improve back office functions. Traditional players are more likely to collaborate with fintechs than direct competitors. At the same time, fintech startups look for funding and white labeling opportunities. Startups are expected to fuel the industry transformation over the next 3 years as they remain the main source of innovation.
According to the same KPMG survey, fintech is the leading disruption force in finance (57 percent of respondents think so). It outperforms the impact of growing global regulation (51 percent) and disruptive business models (46 percent). The demand for innovation is also proven by fintech investments recovery: Total funding has reached $14.4 billion YTD compared to last year’s volume of $13.9. The industry recovered from the effect of Brexit and the US presidential election.
AI, intelligent apps, and Internet of Things (IoT) stay on top in 2018
Gartner named 10 technology trends for 2018. The consulting firm believes that AI, intelligent apps, and IoT will drive the technology industry next year. The new trends are edge computing and event-driven technologies. The cloud edge solves the latency processing problem by placing computing centers closer to the sources of information. Event-driven solutions are the systems that quickly analyze events and further respond to changes in the environment.
Trending technologies haven’t changed much since 2017, but VR/AR and AI opportunities become more distinct. The corporate interest in AI is growing: 41 percent of Gartner’s respondents are adopting and piloting AI projects, while the rest are configuring their AI strategies.
Another big thing is augmented reality. We expect the beginning of the AR battle between major platforms and vendors. ARkit and ARCore provide ecosystems for mobile developers to quickly embark on AR engineering. In addition to that, the AR/VR trend will be heated by Oculus Go, a cheap stand-alone VR-set from Facebook. Unlike Oculus Rift, it doesn’t require tethering to a PC, nor does it need a smartphone.
Azure gets into supercomputing with Cray
Microsoft should enhance its data processing toolkit to compete with Amazon in the cloud. The same value offering wouldn’t give a competitive advantage here as Amazon Web Services already dominate the market. AWS revenue is not growing as fast as that of Microsoft or Google (over 40 percent per year), but its market share is $12 billion which is much bigger than Microsoft’s.
Source: Synergy Research Group
In October, Microsoft announced a partnership with Cray, a supercomputing company. Azure customers will be able to run high-performance computing, AI, and advanced analytics on Cray hardware. The system will directly integrate with such services as Azure virtual machines, Azure Data Lake, and Microsoft AI services. The companies have a long history as they have worked on scalable data science tools before.
Microsoft is striving to turn its cloud ecosystem into a large AI powerhouse. The giant announced field-programmable gate arrays (FPGAs), the technology that will simplify natural language processing and solve computer vision tasks for developers.
Travel technology startups fuel innovation in 2017
CBInsigths claims that there’s an upward trend in travel tech funding in 2017. Startups have raised over $13.5 billion in the period 2013-2017. The leading travel tech destinations on the global map are the US and China. Their shares account for 38 and 26 percent respectively.
Source: CB Insights
In October, Tnooz submitted their overview of the travel tech industry. While the research is interesting in its entirety, we would like to highlight three important insights:
- Ground transportation is an attractive area for new travel tech businesses. The online taxi boom confirms the hypothesis, though these companies are often excluded from the travel industry. The segment keeps growing with bus and railway tickets booking platforms. And the product development is strongly supported by ground transport APIs from Amadeus, Sabre, etc.
- The industry is sensitive to local trends. For instance, the Indian market is dominated by companies that target local traveling, while China travel techs deal with outbound tourists.
- AI in travel is undervalued. Only 30 percent of funding goes to B2B startups, which are more likely to deal with AI. The B2B product life cycle is longer, so they need more time to reach maturity. It’s expected that AI in travel will grow rapidly. AltexSoft believes that personalized customer experience and revenue management will be the core areas of AI applications. Olexandr Medovoi, CEO of AltexSoft, discussed the trend at EyeForTravel North America this October where he spoke about personalization solutions for hotels and OTAs.
Source: CB Insights
People want more AR experience in retail
The recent research shows that customers want the AR experience in the retail. Nearly half of the respondents expect retailers to implement augmented reality tools in the next 6 months. As main mobile brands introduce their AR capacities, customer expectations are fueled. For instance, 20 percent of retail customers expect to see AR products launched right away as Apple released the new iPhone enhanced with AR tools.
The study also claims that 64 percent of customers want AR solutions to be complemented with personalized suggestion systems. Thus, users will be able to follow personal recommendations and see how one or another item fits them or their homes. While it looks like it’s budding in retail furniture (as shown by Ikea), it will be interesting to see if such applications work for other retail segments.
Electronic health records (EHR) is the future of healthcare bottlenecked by bad UX
EHR systems seem to be a route to the digital transformation of healthcare. EHR technology is widespread across the industry, and average physicians have been using it for more than 6 years now. But healthcare remains a poorly digitalized industry. Strong legal limitations, the lack of investment, and low digital culture at hospitals slow digitalization down. While 84 percent of US medical specialists already use health record software in their practices, the level of satisfaction is low. The main reasons for this are complexity and bad usability. The current systems usually require too much time for data entry, they disrupt the practice workflow, and don’t have enough interoperability with other systems.
Source: Medical Economics
Self-driving rally: Google and Lyft aren’t competitors
Lyft raised $1 billion in funding from Google in October.
We discussed earlier this year the company’s decision to enter the self-driving cars competition with its own project. It’s worth mentioning that the Google/Lyft collaboration is going beyond investment relationship as Google will support Lyft with its Google Maps and other navigational technologies.
Generally, Lyft has been generating its own buzz for quite a while. The cab startup has IPO potential because of 50 percent growth in operations volume over 3 quarters in 2017. Uber’s problems and the $87 billion opportunity of the self-driving technology market positively impacted the brand, says Lux Research.
The results of Q3 and forecasts say that next year’s leading trends won’t change: AI, IoT, and intelligent applications will be in the business spotlight. The growing demand for personalization and general efficiency fuel the proliferation of these technologies. Subsequently, the digital transformation of businesses will accelerate: Traditional business models will be replaced by the innovative ones.
Travel is close to the personalization revolution, which is hard to imagine without AI and IoT. Customers require personalized emails, recommendation systems, and customer-centric design. Smart sensors allow for getting insights about the offline behavior of customers, so navigational push notifications at airports or voice assistance in hotels will soon become common practice.
Businesses should change operational models through digitalization. The trend is proven by widespread use of EHR across healthcare, virtual experience in retail, and Airbnb that blends information technology with brick-and-mortar real estate. The rental service illustrates for hotels the way to transform their business. Airbnb’s branded hotel will be equipped with modern hospitality solutions and a disruptive business model. Finally, property owners have seen the rental platform as an equal player in the real estate market. The border between digital and physical business models gets more blurred and technologies are now must-haves for successful competition.