The end of the year is a good time both for reflection and look-ahead, I thought that an article from yesterday’s New York Post, taken from publications by scholars from Stanford and Duke, is worth covering in this blog, though some of this post comes from other sources. Five sectors of the economy are identified for the advent or massive use of “breakthrough” technologies that would dramatically change these industries. The following paragraphs provide a few examples to illustrate the scope of innovation that is taking place in these sectors.
Firstly Manufacturing: Broader use of robots these will allow manufacturing various products at a cost lower than that in China with human labor. Growing applications in agriculture (grape picking, other types of harvesting); in cleaning (floors in garages, warehouses, buildings); in the medical field(simple operations, lifting and moving patients, moving samples, bionics arms and legs.) In manufacturing, robots are already being challenged by 3D printers that allow “additive” manufacturing rather than traditional methods that humans and now robots use.
Secondly Finance: Cardless transactions for purchasing goods are just starting and will be huge. Another disruptive practice is so-called “crowdfunding”, which funds projects or ventures by raising contributions from a large number of people, often on the internet. Crowdfunding “platforms” bring the parties together, with Kickstarter a notable example. Debt-based crowdfunding from non-banks brings prospective borrowers together with pools of investors. Prosper.com had funded nearly $ 325MM in personal loans by 2012.
Thirdly Health Care and Medical Test Data: Apple’s Healthkit will store data fr0m wearable sensors that will be monitoring blood pressure, blood oxygenation heart rhythms and other symptoms. A relatively new firm Theranos founded by a young female genius Elizabeth Holmes, offers blood tests using two drops of blood (instead of needle injection and several vials of blood) with diagnoses carried out by a “lab on a chip” and complex softrware. The firm counts George Schulz, Henry Kissinger and a former CDC director as board members, has a rapidly growing relationship with Walgreen and with several large pharmaceutics firms (clinical trials) and has already been valued at nine billion dollars by investors.
Fourth Energy: Perhaps the most important development (now that fracking no longer has the spotlight as a new technology) is the dramatic drop in the price of solar energy. By the end of this decade, this price will come close to “grid parity”, i.e. electricity cheaper to produce at home than buying from utilities. This envisages economically available storage when the sun is not shining. Another, considerably further out development is in the area of nuclear reactors that will not generate waste that must be stored forever. A number of private companies are active in this area. Nuclear energy must be an important part of fossil fuel replacement, yet concerns about current technology keep it from having a brighter future.
Fifth Communications: The landline businesses of AT&T, Verizon, etc are declining fairly rapidly as cell phones, Skype and other means are increasingly taking their place. This is true for domestic as well as long distance communications. Wifi is taking over in a manner surely not anticipated thirty years ago.
Reflect for a moment what these developments mean for existing leading companies such as banks, utilitities, medical diagnostic firms (e.g. Quest), maufacturers of robots, cloud-based data managers, and many others. For long range investors, a road map is taking shape.