After the wild ride that was 2017, we have now entered 2018. I feel this year is only going to continue to increase the tension and volatility that we encountered last year. With all the changes and action that will happen this year there will be some big winners and losers. In no particular order, here are my top 5 predicted winners and losers for 2018.
Amazon had a great 2017, its retail arm did better than ever and AWS - its cloud storage and computing software - continues to dominate the industry. Their ‘Alexa’ smart voice assistant has taken an early lead ahead of Google in the new digital assistant market.
I see their fortunes continuing to rise this year. The core elements of the company, e-commerce and AWS will continue to provide steady growth whilst allowing them to continue to take big bets.
A big focus area will be their Alexa products. I expect lots of partnership deals to be announced with home product companies. The goal with Alexa will be to get it everywhere, people will forgive its initial weakness of AI abilities if they can get it to interact with all their items in their house. Once everybody you knew was on WhatsApp, why bother using other IM platforms, its the same situation here. One device to connect to all is a lot more attractive to a consumer than being able to ask harder questions to a box.
This year we will see their acquisition of Whole Foods begin to produce results as it merges with Amazon Pantry. Whilst I cant see an immediate drive to open lots of new stores to rival in the physical world, I can see them going after the home delivery market. Playing to their strengths will be key to getting the acquisition to succeed.
Google had another strong year in 2017, its multiyear push into hardware is starting to pay off after struggling for a number of years. Their AI continues to be the best around, wether it’s in consumer applications or specific industry needs, such as helping NASA to identity new planets.
This year I predict we see a large push to catch up Amazon with the number of third-party products which are integrated with their AI. There will also be significant focus from the advertising department to show consumers how their AI is the best around.
Taking a leaf out of Steve Job’s play book of the best product can only be produced when you control both the hardware and software. There will be a continued drive to become a dominant player in the Android hardware space. This is something they will have to do carefully because whilst there is a lot of upside in becoming a high end smartphone maker, they need to be careful not to alienate existing Android hardware makers. Although this won’t be too much of a problem within the next 12 months, it’s something they should consider for the years ahead.
2017 was the year energy, and specifically renewable energy, entered the political world with more force than ever. This was a big moment, as for the first time it was able to hold its own and be best in class in the areas it was being used.
With the success of projects like Tesla battery bank in south Australia, proving batteries can be used as an emergency temporary back up solution to overloaded grids and Costa Rica running solely from solar for three hundred days. More and more countries are waking up to the realisation that renewable green energy is no longer a pipe dream but a reality.
2018 will be the year where countries not currently heavily investing in renewable energy either have a chance to catch up or risk being left behind. Places like India, China and Saudi Arabia have either already heavily invested or have projects kicking off this year. This is great news because if two of the most populated countries, are committing their long term energy security to renewables, there is no argument to say the mid to long term needs should by fossil fuels.
If you still wanted further proof the future lies away from fossil fuels, Saudi Arabia the world’s biggest oil producer is planning to invest $500bn over the next few years in solar. Well is doesn't seem smart to let their sun drenched deserts go unused.
This will be the year renewables enter the main stream as a genuinely viable solution.
Non Traditional Banks
Banking has traditional been a very tough industry for new companies to enter. However this is starting to change and in 2018 I think its going to the year where a lot of disruption happens.
The UK has just brought in a new law (‘PSD2’) which requires all major banks to provide a set of APIs to their customers data. Don’t worry there is still heavy regulation around who and what you can access to calm any privacy fears. Essentially the idea is to make it easier for consumers to complete financial forms or purchase goods online as they wont need to go through a 3rd party.
Other companies which will continue to rise this year include Revolut, Monzo and Transferwise. Their simple to use, mobile friendly services which don't carry the big fees of banks are proving very popular, especially with younger people and frequent travellers. This year their push into the mainstream will continue as more people seek to find alternatives to slower less tech friendly institutions.
For all the negative incidents that happened in 2017 one positive trend occurred which I believe will continue to grow this year. The dramatic events have caused a lot of people to be shaken from their bubbles and become more aware of what is happening around them. Wether this is in the form of political activism, the fight for equality and justice or just the food they consume. 2017 saw significant changes in public opinion and action.
I believe this trend is only going to get stronger, especially with the increasingly vocal younger members of society. This is positive as the world is changing and we are entering a pivotal cross roads where it is only right that younger generations are listened to and valued.
YouTube had a tough 2017 with plenty of controversy. 2018 didn't start smoothly for them either with the now infamous video from Logan Paul.
I think this is going to be another tough year for them to navigate. There is a growing unrest from their creator base, where many people feel they are prioritising making big companies and advertising agencies happy at the expense of the small channels. I can understand their position, as the entire platform does depend heavily on advertising to keep profitable. However with a lack of transparency and their AI engine not yet perfect at detecting which videos should be demonetised its enough to anger the community.
2018 will be pivotal, because unless they get a good grip on the situation and correctly manage the influx of TV show related channels and their associated Hollywood connections. I can see another competitor entering the space which focuses on the very thing that makes YouTube successful, the creators.
Whilst Facebook is still continuing to dominate and print money, the last few years have been challenging. Mainly from the accusations of allowing racist and violent content to go viral whilst also not identifying and stopping the politically motivated moves from other countries.
Mark has said himself, that his new years resolution this year is to clean up Facebook. This is positive as the first step to fixing something is accepting the problem exists. It wont be an easy job and I expect there are some more negative stories to emerge along with the possibility of action or intervention from the US government.
Whilst all this is going on there is still the big tasks of attracting a younger audience to counteract the ageing demographic which use Facebook the most and to make more successful progress in getting their services allowed in countries like China.
Overall I see this as a tough year but not necessarily bad, I just don't seem them having the run away success that other companies are likely to have this year.
IBM is a tough one because as a primarily B2B company they don't enjoy some of the same press and advertising as similar consuming facing companies. However the last few years have been tough, as they struggle to change the core direction of the company away from ‘Mainframe’ systems. This is in response to the arrival and success of enterprise grade cloud and computing services from the likes of Amazon, Microsoft and Google.
Their initially publicly lauded AI ‘Watson’, has struggled to gain much success or attention in the years since it wowed the world by winning the game show ‘Jeopardy’ in 2011. I know they’re more consumer facing but Google and Amazons AI’s are making steady progress as the two solutions which are changing public perception and acceptance of these services. They are also actively looking at ways to integrate their services into 3rd party products like cars and fridges. Could this not have been an option for IBM to explore a new revenue stream in a brand new market whilst still being able to utilise their great B2B sales skills to secure clients?
Overall I see this being a key year where they need to arrest the decline of some of their services and make strong progress with others. This is to protect their reputation and avoid long term damage from the perception they’re in decline and cant adapt.
Large Retail Stores
Sadly this is an easy one to make the list. Retail stores have been in decline for a long time since the explosive growth of online shopping. I see 2018 being the year where several big traditional names which are just hanging on either merge or go bankrupt.
Many factors have contributed to this, the rise of companies like Amazon and individual companies selling their own products directly, mean you don’t need as many 3rd party stores. Another key factor is many companies invested too late or unwisely and through poor leadership weren't able to turn it around. A counter to this is Walmart in the US, they initially felt the pressure of the likes of Amazon destroying their non food related sales. However they have since invested heavily and wisely, and are now considered to be one of Amazons main competitors in the US.
There will always be a need for physical retail locations but the days when there was the same store every few blocks are over. A significant restructuring is taking place and those who aren't able to achieve an efficient number of stores and return to overall company growth will go out of business.
The prevalence of conducting business online for customers has been universal for many years now. However there are still companies which consider IT to be an afterthought and not a core function of their business. This is a mistake. Every company should have quality IT, wether its a decent website for a local cafe or a large insurance company allowing customers to manage their products and agreements through a mobile application.
Investing in customer facing solutions is key but its just as important to invest internally. 2017 saw a record number of cyber attacks against corporations. If you are not protecting your data, through adequately trained staff or the right tools it will have a much bigger impact than you think. IT is ubiquitous these days so if you get defeated by a simple to stop method it will affect your reputation which will impact your finances. Its 2018, customers and regulators no longer accept poor IT infrastructure.
Once again, thank you for reading and if you've got any questions or comments please let me know.