Previously on #issue 1, we simplify the key to identifying the next big share with elements of ‘Disruptive Technology’ traits. These are companies which innovate, creating new market products and services to replace existing established companies, have potential to grow exponentially.
In this #issue 2, I would like to share my research and vision of the next successful disruptive technological industrial sectors. This is my Top 5 list which I favour to grow and develop into a successful new industry.
Amazon is the behemoth size it is today because it has disrupted a lot of industries and continuously taking down competitors by making their product and services cheaper and faster. In my previous article on Amazon the ‘Death Star’ who shrinks the market size of their rivals aggressively each time they enter a new market. Some of the industry Amazon have destroyed are:-
That’s enough credit for Amazon.com. Now let’s move on to other industry which is evolving and growing to serve humans and improving lives. Let’s go to my top 5.
Do you still take cash?
My dad still hordes cash and coins whenever he goes out. I leave the house with my phone with my built-in Apple Pay (assuming they take Apple Pay) and not a single penny in my pocket. Time has change and mobile phone is the most important thing you take before leaving the house.
In fact, emerging market countries such as China and India are leading the way with cashless transaction. Do you know that market merchants are already accepting cashless transaction payment from mobile phones and QR code (not credit cards)? AliPay and WeChat pay have expanded rapidly in China and India. In Europe we have Adyen. Over in the States, we have PayPal and Square. The Mexicans have Qpagos.
The list goes on. Cashless transaction is an established and still growing economy worldwide. There is still no clear winner which company is dominating the market. The old-school boys such as AMEX and Visa are still hanging on in the western world collaboration with Google and Apple to create Android pay and Apple pay.
As time goes on these new generation companies can start building their own credit rating system without involving banks and starts giving smaller amount loans. This may grow into a larger amount of loans which disrupts credit card companies. If these companies start giving interest rates to surplus cash in the account this may start disrupting the banking industry.
FIFA World Cup or Fortnite World Cup?
Back in the 90s, the video games business was difficult to capitalise due to severe level of piracy. Following on in the 2000s onwards, video games companies makes money by selling millions of copies of their blockbuster games which was developed at Hollywood movie level budgets. Then following in 2008 onwards, internet and online gaming with friends/buddies started becoming a preferred trend with reward collecting systems. This was then followed by the competition level, live streaming (twitching), emerging gaming professionals and high paying sponsors. This was the birth of the E-Sports era.
Previously I have recommended Activision Blizzard as my next blockbuster share. Yes, I am a huge sports fan myself and understand that tomorrow’s generation will be more interested in video games competition than men running on pitches after a ball. Other headline companies in the E-Sports business are Take-Two, EA, Tencent, Microsoft, Sony and Nintendo. These companies are expected to disrupt traditional sports with live streaming tv, filled out stadiums and grabbing advertisement endorsements.
However, until the end of 2017, these established video games companies were disrupted by smaller cap (non-public trading) company called EPIC who developed the infamous Fortnite sensational online multiplayer battleground game on a small budget scale. The low cost was mainly due to portable mobile phone gaming.
Other beneficial companies from E-Sports industry are Nvidia and AMD who are responsible for the performance hardware elements. Sports apparel companies such as Nike, Adidas and Under Armour can be diminishing market companies if the ratings for traditional sports starts falling.
We all know about the BitCoin phenomenon in 2017. Apparently, there were claims of overnight millionaires and billionaires made in 2017 from the exponential rise of these virtual cryptocurrencies. Behind the BitCoin was the blockchain technology where a trackable decentralised database was established. The blockchain technology was capable of finite contracts. Converting this technology to financial sectors can be very powerful.
A country/continent/Union of countries can establish a database to be managed from a decentralised system for various application. This decentralised system can be used as credit rating systems, a high valued virtual items, migration passport system, peer to peer mortgage lending system and many more. The advantage of the blockchain technology is the finite elements database where an item cannot be duplicated.
Banks and Financial sectors who are not investing in BlockChain fintech today will not be able to survive in the future. Its similar to previous media/media companies evolving from Analogue to Digital systems.
It is still too early to call which fintech company with blockchain expert will standout. This needs to be monitored closely. One thing is for sure; before you invest in any financial related companies, make sure you check their investment in the future of their fintech area.
AI Robots take over?
Hollywood has portrayed A.I wrongly with robots battling against the human race and taking over the world. Artificial Intelligence is basically non-human performing the complex task of decision making. The A.I related industry is still in its early stages of evolving into a profitable business model. I would break the industry down into different sectors.
2016 really open up grounds of Artificial Intelligence when Nvidia and AMD demonstrated that their high-end graphics cards are capable of performing multiple parallel complex task routines faster and more affordable. The concepts of A.I. have evolved from machine learning to neural network Deep Learning.
Cloud & Internet A.I.
Companies like Google and Adobe are taking advantage of the enormous amount of data from the internet to develop photo and video recognition by self-developing tasks and routines in multiple layer process. Do you know Google A.I. programme is responsible for blocking and filtering all the junk mail we in our inbox? Do you also know that the A.I. programme has taught itself how to recognise pictures and faces from our google photos?
Amazon and Facebook are using the vast amount of available data to predict and anticipate human requirement and next spending. Why do you think Facebook and Amazon seem to know what you need to buy on a daily basis.
Tencent and AliBaba, are using the amount of data collected from their customers to study their behaviour. Both companies are launching credit rating system of their clients via their activities from their spending, social network and other online activities. These deep learning A.I. can break down and quantify each individual client’s financial status. Furthermore, these two great Chinese companies are starting to provide small and medium-sized loans to overtake from banks.
With the drive to modern electric vehicles to combat greenhouse effect. Companies are also pushing self-driving cars on roads. This will take jobs away from human taxis, trucks, buses and other logistics companies. Tesla is leading the likes of Toyota, Volvo, BMW and Nissan.
Ocado, Amazon, AliBaba are some of the leaders in whom have developed amazing smart factory robots to sort out warehouse without the need of human interactions. Some of these robots are capable of self-repair when required. With the demands in online shopping, cost of employing humans where performance is hindered by fatigue, robots have been deployed to work round the clock.for
How to be everywhere?
Virtual Reality is simply an artificially created space by stimulating our senses (vision, smell, sound and touch). Currently, we have hardware like advance wearable googles with instrumentation to mimic our physical movements and interactions. Facebook has been developing and researching this area.
Augmented Reality is the reverse where we dropped artificially created objects and items into our real world via powerful hardware simulation. For example; beaming (looking through the iPad) the whole Jurassic park with a miniature dinosaur on our work desktop table. Apple has been pushing the A.R route.
VR versus AR. Facebook versus Apple. We should not let this slip us. These two companies tend to be best at polishing their product and applications. VR offices by Facebook or AR workroom by Apple.
Both companies have the same common goal of reducing office floor space, office equipment and carbon footprint of office workers by allowing virtual or augmented processing.
These are my current top five favourite areas of disruptive technology for 2018. As a personal investor, we always need to understand the sustainability of the business we invest in. How can a company stand the test of time through decades if one cannot disrupts its own technology? Amazon introduced the Kindle reader to kill its own online bookstore business to ensure the longevity of its business.
By selecting companies with new disruptive or innovative technology helps to secure a place in the future to allow financial business growth. Have you found a new company with huge potential, please do share in the comments below?
See you in #issue 3.
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