The Tech Lull of 2016

on December 18, 2015

By this point in the year, I have a pretty good sense of what is in store for 2016 from a hardware standpoint. Smartphone sales will likely only be in single digit growth. Tablets will likely be double digit negative again. PCs will similarly also be single digit negative YoY again as well. I’ve just listed three core categories of personal computing hardware to have minor to negative growth. The slowdown of these categories can not be overlooked. Each of these is also an extremely mature product segment. Which means, don’t expect any leaps in innovation in any of them this year. There is nothing wrong with this. It simply means it just keeps marching forward relatively predictably. But it also means the excitement has now become more muted.

This period we just went through with explosive growth in smartphones and innovation in form factor, features, performance and more, was extremely exciting. However, I feel 2016 is going to be a bit less of an exciting year, at least from what I’m seeing and hearing so far with regards to hardware trends for the year.

The challenge, as I see it, is the one segment that will be hot in 2016 is wearables but these are also still companion devices to the smartphone. While still interesting, it is not quite the same. I expect the Apple Watch to do some interesting things next year but this category is still working to gain momentum. With the slowdown and more predictable pace of innovation in smartphones, PCs, and tablets, it is likely wearables benefit the most from the lull in personal computer categories.

The other categories that are quite exciting to watch — drones, virtual reality and augmented reality, smart cars, digital home, robots, etc. — are all still early and being fleshed out. They are not ready for mainstream yet as the foundation is still being laid from a technology standpoint. I expect many interesting things to happen in these areas but I don’t see the mass market ramping up yet in 2016.

Early in 2016, you will see me start to talk about the post-mobile world. This is not to say mobile isn’t important or that we have anything immediately ready to shift focus to. However, it is a recognition that much of the industry growth will be on things built on top of the mobile platforms. The hardware and the platforms themselves start to become a piece of the puzzle but less the center of the story as they have been for the past five years. Interesting things on top of mobile are things like financial services (FinTech), mobile commerce, and many of the software experiences and new businesses built on mobile platforms.

Look at the past 20 or so years and much of the tech industry up to this point has been built on the foundation of getting the PC into the hands of workers and consumers. Similarly, the next 20 years will be built on the foundation laid by smartphones but at four times the scale of the PC. Interesting and important growth periods are ahead but, from a pure hardware innovation standpoint, we may be in for more interesting and less exciting.

Granted, I’m saying this all before I head to CES in a few weeks and scour the show for trends and hopefully come across some exciting things. It is entirely possible my perspective could change but from the things I’m hearing will be at the show, I tend to think more interesting and less exciting is going to be the theme.

I’ll have a “key industry theme for 2016” article for subscribers after CES but the narrative changing from hardware excitement to more predictable hardware trends is an indicator of the maturity of these markets. It is an important observation because it tell us what stage of the cycle we are in and helps us plan accordingly.