The 5 tech trends that will dominate CES and 2017

Different realities

After the world was introduced to consumer-market virtual-reality headsets such as Facebook Inc.’s FB, +0.74%  Oculus Rift in 2016, 2017 is expected to be the year in which these technologies enter the mainstream, thanks to improved software.

Virtual reality’s related rivals, augmented and mixed reality, are taking the opposite approach. Software had a big breakthrough in 2016 as Pokémon Go took the world by storm and introduced most people to the concept, but 2017 might be the year the consumer market is introduced to the first wave of hardware dedicated to the medium.

Mixed- and augmented-reality headsets aren’t meant to be used to escape the surrounding world, as with VR, but to enhance it. One of the major companies leading the charge in mixed reality is HoloLens maker Microsoft Corp. MSFT, +0.72%  

CES 2017 will have the largest showcase of virtual-reality technology ever, represented by more than 70 companies, a 48% increase from last year. The augmented-reality section at CES will nearly double year-over-year, to a footprint of 8,500 square feet from 4,500 last year, with 20 companies such as Alphabet Inc. GOOGL, +1.29% GOOG, +1.24%  — through its Project Tango partnership with Lenovo Group Ltd. LNVGY, +1.10%  — showing off new AR technologies.

“Technologies that cross the physical/digital divide represent the future of computing,” Forrester analyst J.P. Gownder predicts.

Tom Mainelli, program vice president of IDC’s AR and VR devices unit, said he expects a number of hardware vendors to enter the virtual- and augmented-reality spaces in the next 12 months with head mounts that are both tethered to gaming consoles and untethered stand-alone products. While virtual reality struggled to take off in 2016, with Facebook recently announcing an overhaul of its Oculus unit amid disappointing sales, augmented reality may have better luck as people find ways to more easily integrate it with their daily lives.

“Augmented reality represents the larger long-term opportunity, but for the near-term, virtual reality will capture the lion’s share of shipments and media attention,” he said.

Apple might also finally enter the augmented-reality scene. Apple CEO Tim Cook called augmented reality a “great commercial opportunity” in 2016, and the company made a number of AR-related acquisitions this year, including the purchase of Flyby Media last January, which helps smartphones to identify objects in the real world. AR and VR headset shipments are expected to see a compound annual growth rate of 108.3% from 2015 to 2020, reaching 76 million units by 2020, according to IDC.

“After several years of hype, the operative reality behind virtual, augmented and mixed digital worlds is set to manifest more fully in 2017,” said Dan Wilinsky, a tech analyst with IHS Markit.

Driverless cars

In 2016, Silicon Valley and Detroit integrated or collided, depending on whom you ask. Some tech companies, such as BlackBerry, teamed directly with auto makers, such as Ford Motor Co. F, +0.41%  , to develop autonomous vehicles. Others, such as Tesla Motors Inc. TSLA, -0.48%   and Uber Technologies Inc., continued to poach auto-engineering talent from Detroit and luxury-car makers to build their driverless cars internally.

At CES 2017, more than 200,000 square feet, 20% of the entire show, will be dedicated to vehicle technology, with major brands such as Mercedes, Audi and Toyota Motor Corp. TM, +0.73%  showing off new technologies. The self-driving exhibits in particular will grow 42% year-over-year to 10 exhibitors. Major companies exhibiting autonomous technology include NXP Semiconductor, Nvidia Corp. NVDA, -1.99%   , Mobileye MBLY, +3.07%   , Honda Motor HMC, +0.99%   and Delphi.

Juniper Research expects annual development of self-driving cars to be a few thousand in the coming years, but believes that number will boom to reach 14.5 million by 2025. It expects the market to be initially led by taxi vehicles, which is why everyone is paying such close attention to Uber’s self-driving pilot programs.

Amid the race to be first to market, companies in both Silicon Valley and Detroit will double down on driverless technology in 2017. BlackBerry even recently announced plans to open a center in Ottawa dedicated specifically to enhancing autonomous technology.

“The race is on to bring self-driving, electric-powered, connected vehicles to customers,” Forrester’s Gownder said. “CES will be a significant checkpoint for the next several years to see who in the industry can bring this future to fruition.”

Wearables

Smart wearables suffered from slower adoption in 2016, with the smartwatch category tumbling 52% in the third quarter, according to IDC. Apple’s share of the wearables market declined sharply ahead of the company’s launch of the Apple Watch Series 2, while Fitbit Inc. FIT, +2.73%  knocked out a major player by scooping up former Kickstarter star Pebble in December.

But wearables aren’t dead, as evidenced by a double-digit increase in basic wearables, such as fitness bands, in the same quarter that smartwatches declined. In 2017, there will likely be a major reconfiguration in the industry, with devices becoming increasingly invasive and more capable at analyzing data to more proactively help users lead healthier lives. Companies will work to untether smart wearables from smartphones in hopes that more independent wearables increase demand.

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At CES 2017, wearables will double to 82 vendors, taking up 17,000 square feet. A new focus this year will likely be on medical-device wearables, which promise distinct health benefits.

Juniper Research, which tracks consumer technology trends, expects world-wide wearable shipments to reach 420 million by 2020, more than four times the 80 million shipped in 2015. A similar surge is predicted for medical devices, with shipments projected to triple to 70 million over the next four years.

By 2020, a third of health/life sciences and consumer product companies will begin to develop the first wave of products that integrate the human body with technology, according to recent predictions published by IDC. IDC has started to refer to this industry as “augmented humanity,” and predicts the concept will go mainstream by the middle of the next decade.

Artificial intelligence

Facebook and other Silicon Valley companies began showing off their artificial intelligence capabilities earlier this year with a wave of “chatbots,” which are expected to perform similarly to personal assistants like Apple’s Siri and Amazon.com Inc.’s AMZN, +0.95%  Alexa.

In 2017, expect “even bigger, more profound changes” in the way in which human control is ceded directly to AI, IHS’s Wilinsky said. That may continue to occur in bot-like scenarios through social media platforms, but it will also be further extended into cars, drones, the Internet of Things, and entire new industries, such as health care and agriculture.

Put another way, software that can learn and adapt on its own will make hardware smarter.

In November, Goldman Sachs called artificial intelligence the “apex technology of the information era,” and predicted that advances in machine learning and deep learning will develop a new niche market of the technology industry: AI-as-a-service. This, it predicts, will “usher in a resurgence in productivity” as both menial and complicated tasks are handed off to powerful machines.

At the heart of this is the compilation of massive amounts of information being produced by the billions of internet-connected devices that are now in circulation. The ability to structure the data and learn from it will be core to this market’s development. Tesla, for example, has aggregated more than 800 million miles of driving data this year, giving it data about human behavior and information about the way people drive.

Annual data generation is expected to reach 44 zettabytes by 2020 — that’s trillions of gigabytes — according to IDC, expanding compound annual growth rate to 141% over five years. Goldman Sachs said we’re just at the beginning of discovering the use cases to which these AI technologies will be applied.

The cloud and IoT

Cloud computing and the Internet of Things continue to work together to enhance the way everyday objects connect and interact. Low-power technologies are expected to extend the reach of IoT devices in 2017, according to IHS, with Wilinsky predicting that the first batch of low-power, wide-area networks will go live next year, offering an alternative to short-range wireless technology powered by standards like Wi-Fi and Bluetooth.

This advance will allow even hard-to-reach devices to connect to the internet, while improving the efficiencies of the devices already on the market. It will also enable telecom providers to support low-bit-rate apps, making way for a much bigger pool of objects to be embedded with chips and be connected. That could run the gamut from devices on buildings to devices in deeply rural natural habitats.

To power the increasing level of connectivity and bandwidth needed to process the data, cloud computing, data centers and lower-power-high-power chips will continue to be a large area of investment in 2017. Amazon Web Services, Microsoft and IBM Corp. IBM, +0.78%   are among the companies supporting cloud computing. By 2020, IDC predicts that the vast majority of all enterprise IT infrastructure and software spending will be for cloud-based offerings.