What does the future project for investment in new technology?

By Nasareo Lazzaro

Posted: 18th April 2011 21:35

Modern day technology has had a massive impact on the way we live our lives and is constantly developing and changing the world around us.  The people behind the latest technological advancements are usually backed by wealthy investors and high profile institutions.  The ever expanding technology industry requires well informed investors for whom the potential returns can be huge. 

Broadly speaking the technology sector can be divided into several sub sectors for potential investors: communications equipment, computer hardware, computer networks, computer peripherals, computer services, computer storage devices, electronic instruments/controls, office equipment, scientific and technical instruments, semi conductors and software and programming.

The mobile revolution will present some of the best investment opportunities as it is a massive technological advancement, bigger than the previous PC movement.  Many see the mobile industry still in its early stages as there is so much more potential with apps, 3D, increased battery life and maybe even hologram technology, along with much more.  With mobiles turning into PC’s and apps becoming more used than websites, paying through mobile phone apps is also an evolving and lucrative industry.

Apple is the market leader at the moment with its innovation and marketing appeal, creating new categories of devices such as the Apple iPad.  With its massive brand following it has been seen as a good solid investment for many years, however questions are now arising about its future as there are a number of competent competitors on the scene such as Google’s Android.  Some see the Android beating Apple’s technology in the lucrative business market long term, because of its capability, openness and affordability.

Whatever the case consumers love these new smart mobile devices, with popular features such as touch screen and 3D.  Analysts forecast a drop in PC and notebook sales which will have a knock on effect to the whole PC chain, including keyboards, mice etc.  Forecasters also predict that tablet devices will increase their sales in 2011 with many people shifting away from PC’s and notebooks.  Businesses are buying simpler, cheaper desktop machines that run applications and services from “clouds” of data centre servers.  Software is also being affected with people not buying from stores any more instead opting to download relevant apps and services themselves.

Average investors may not have the opportunity to invest in private venture capitalist companies, such as the Facebook’s of the world, until post IPO, by which time the greatest increases in valuations may have already occurred.  However companies like Augme and Glu for example allow the average investor to make money on up and coming technology companies without having contacts in high places.  They have become market leaders in the mobile revolution and shown great returns for investors.  Once financing is complete and capital is there to use, it is prime time to invest in these types of companies.  Recently Betfair and Ocado have been floated on the market, spelling good news for investors as other companies may follow.

British firms such as Sage, Arm and Autonomy are viewed as merger targets for foreign firms.  Arm is the British microchip company behind Apples mobile devices.  It’s currently designing processors for super smart phones and Autonomy is one of the UK’s largest software groups.  The UK technology sector will always be dwarfed by the US with the likes of Microsoft, Cisco, Apple and Google.  So any successful British technology company is quickly taken over by even bigger foreign companies.

With 3D innovation having decades of experiments, failures and broken promises its capability could finally be utilized with modern forms of technology such as in cinemas and home viewing along with games consoles.  This would present ideal investment opportunities and potential great returns as it is a developing technology that is showing much promise.  With no glasses 3D now making a move on smaller hand held games consoles this is another exciting opportunity for consumers and great news for investors.

SanDisk Corporation is currently developing SSD’s for mainstream notebooks and the desktop computer market; it believes they will eventually replace hard disk drives.  Avnet Inc is a large distributor of electronic components for computer related products and is looking to differentiate itself from competitors by customising products to individuals needs.  Nvidia has diversified from being a traditional graphics card maker for PC’s to making processors for mobile devices and Telsa units for high end servers.  So investment in companies that show diversification is important as they need to be able to adapt to rapidly changing consumer preference.

The clean technology sector, also known as bio-tech, renewable energy or green tech is an emerging sector and shows great potential and returns for investors.  It is well known that we are on a limited supply of natural energy and so this area is bound to grow.  Worldwide venture capital invested a total of $2.57 billion in the first quarter of 2011 in green technology, up 52% from the previous quarter.  However, clean energy still represents a small proportion of the world’s power source so investors and venture capitalists are just testing the waters with this technology at the moment.

Technologies such as solar panels are not as cost effective as coal generated electricity yet but are constantly improving.  Wind and hydropower are already an important source of renewable energy but are limited by geography.  Ocean energy involves wave action, tidal movement and temperature differential; believed to be a very good form of clean technology for the future.  Geothermal energy is produced from heat below the Earth’s surface and is also being explored as a future power source.  Biomass energy includes bio-diesel from plant sources, ethanol from agricultural products such as wheat or corn and waste gas from landfills, waste water, animal sewage or coal mines.  Alternatively hydrogen can be used; it releases no toxins into the air and is derived from waste gas or mixed with natural gas.  Most developments are still in the very early stages and can prove to be expensive to generate.  This is just a glance at some of the areas of technology for the future.

An example of a Cleantech investment opportunity is that of Dutch Rainmaker, a water technology innovator.  It is looking to do a deal with the US army to secure funding for wind turbines in off water grid areas that create drinking water from condensing the water vapour in the air.

Other new technologies include stem cell technology, online gaming and explosive detection amongst others.  The fashion meets technology market is also expanding at the moment with companies servicing the fashion industry through e-commerce or logistics for example.

Nanotechnology focuses on using small matter for developing technology; one nanometre is one billionth of a metre.  When matters are this small materials take on new properties.  This holds great promise for manufacturing as nano devices can be designed to self assemble atom by atom.  Nano-powders are also being produced which have a wide range of industrial uses.  Benefits are also bought to the construction industry with implementation in ceramics, where nano particles assemble to make newer stronger particles.  In medical science there is potential for improved drug delivery systems able to target particular cells, or to produce safer biocompatible materials.  Along with improving the quality of MRI scans.  Other uses may include developing carbon nanotubes, which are strong lightweight cylinder shaped molecules consisting of carbon atoms, used as nanowires and active components in electronic devices.  The Japanese company NEC is one of the pioneers behind this form of nanotechnology.  Blue-chip companies like Intel, Hewlett Packard and IBM are also pioneering nanotechnology.  There is great potential growth in this industry and plenty of investment opportunities.  However volatility is expected as it is an emerging science, if patents are secured for these ideas then they give some long term stability.

The broad areas that technology covers in our modern day lives means that there is never ending developments in new forms of technology, and for the investor a rich source of potential investment opportunities to turn to.

 


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