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Hello 2007, Good bye 2006

Posted on Monday, Jan 1st 2007

2006 rolled along, into a gorgeous California New Years day to ring in 2007. So, first, Happy New Year to all of you, readers.

A few quick notes on how I see the summary trends of 2006:

– Some sectors of the technology market have recovered. The venture capital market continues to be spotty, although, consumer internet is pretty hot these days. On the other hand, private equity and tech-lbo’s present a very active market, a new development that started last year, and has really taken off this year.

– An instinctive human need to connect and share has blossomed into a full force social-networking boom on the internet. This aligns well with the pre-teens, teens, and twens becoming almost fully “online” in America. These, coupled with the bandwidth and technology developments in online video, are creating rampant online activity. User-generated content has emerged to become a mainstream phenomenon, now.

– Elsewhere, especially in China and India, connectivity growth numbers are staggering. Mobile phones, too, have made a real significant difference in third world cultures. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income—a point when people generally begin to spend on discretionary goods. From now to 2015, the consumer’s spending power in emerging economies will increase from $4 trillion to more than $9 trillion—nearly the current spending power of Western Europe. Much of this consumer spending will include technology – from bandwidth to electronic gadgets – sending the unit sales in semiconductors through the roof.

– Outsourcing and leveraging global talent pools have become mainstream. All multi-nationals have committed Billions to India, China, Eastern Europe, etc. to not only harness the cost advantages, but also to access global talent pools. Startups will continue to have a very hard time attracting talent, as MNC salaries are astronomical.

– Air Travel continues to be super tedious, the experience continually degrading. While Saddam Hussain was hanged, the search for Bin Laden continues. Terrorism constantly disrupts life here and there, and causes further friction in the travel infrastructure. This is unlikely to change, so using technology to reduce the need for too much business travel is highly desirable.

– Awareness about the environment, depleting energy reserves on the planet, and other “clean”/”green” issues have heightened in 2006, and investors have started chasing cleantech deals in droves. Likely, this will cause thinking, R&D, innovation, but will also leave a lot of carcasses alongside the road, as these are not easy investment areas. An example: a water purifier that can work wonders in rural India or Africa may sounds fantastic in theory, but the lack of channels to sell these alarmingly low price-point products to a fragmented, low-income population will not be an easy challenge to overcome. Nonetheless, good things should happen, now that the momentum has been generated. On my wish list is a powerful suction device that filters the entire air above highly polluted cities like Bombay, Calcutta, Mexico City, and others.

Looking forward to 2007, I would like to see Education and Poverty become two “sexy” trends, in the same vein as “Green” has become hot. The fact that Mohammad Yunus was awarded the Nobel Peace Prize this year, bodes well for the future of Micro-finance as a possible economic model to support entrepreneurship at the grassroots level, and elevate millions out of poverty.

And just for kicks, here’s 2005: Year of the Balance of Power

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