2018 Digital Predictions

Here are my predictions for the ‘digital’ industry for the coming year. I’ve been making digital predictions since 2010 and at the end of each year I review how the predictions fared – see the digital predictions for 2017 and work backwards.

1. Tesla share price to drop significantly

The Tesla Roadster 1 – yes it’s lovely. What will 2018 have in store for the car company? Photo credit: randychiu.

Each quarter, Tesla’s costs keep increasing by hundreds of millions of dollars.

Its profit margin keeps slipping further into the red.

Other companies, both traditional and new entrants, will catch up to Tesla in 2018.

Finally, 2017 was generally a good financial year, and if consumer confidence drops in 2018, people will buy fewer cars. There’s also the debt pile-up in the US car loans industry. Total auto loans in the US have increased 70% in the last 7 years to $1.17 trillion – and much of it is subprime, with some buyers opting for 7(!!) year loans (think about the value of the car at the end of 7 years).

We’ll see Tesla’s share price drop by at least 30% this coming year.

2. GDPR (General Data Protection Regulation)

GDPR is the European Union’s framework for how data should be treated. A lot of it is common sense. GDPR is centred on permission from people, for companies to store, transmit or process their data.

GDPR also has a big stick: there are huge fines for a data breach and non-compliance – up to €20 million or 4% of annual turnover, whichever is higher.

This presents opportunities for cloud technology providers such as Salesforce, Amazon, Google and Microsoft (Azure) to offer data services for companies.

I predict the first few GDPR fines will be close to the maximum levels, to set a benchmark for how companies should treat data carefully.

3. Brexit

We are 15 months away from the UK leaving the European Union. Woohoo – that’s 15 months of dedicated news and social media updates on the subject, running 24 hours a day, plus the inevitable political restlessness and fighting. Great.

We’ll have more white-labelled or multi-tenant services, so that UK and European parts of an organisation can appear to be different systems, but share the same underlying platform.

In digital terms, companies will accelerate their adoption of cloud services to make it easier to store data in appropriate locations once we know what the post Brexit data laws will be.

To measure this digital prediction in 12 months’ time, I expect AWS revenue to be over $6bn per quarter (it’s currently around $4.5bn) and Azure will be over $24bn for 2018 (it was around $20bn for 2017).

4. Much more hardware from the digital big boys

In the last 2 years, Google has launched a whole range of new Wifi routers and appliances. As well as extending its range of laptops, phones and smart speakers.

Google and Amazon are the majority players in the smart speaker industry. Interestingly, 8% of smart speaker users, own both Amazon and Google units. Future formats for smart speakers are difficult to predict, with the Echo Show appearing in late 2017, featuring both a screen and speaker.

I predict a new hardware market segment appearing from Apple, Google, Amazon and Microsoft.

5. Rich new UK Premier League Rights winners

The auction for the 2019-22 seasons is underway.

There are 7 packages, offering 42 more live games than the current contract, bringing the total to 200 out of 380 games. (For international readers – in the UK we are unable to see Saturday afternoon games for some archaic reason). There’s also a new timeslot for Saturday night kickoffs.

I predict the value of the rights will increase by the same level as the last auction. The current contracts (owned by BT Sport and Sky) are worth £5.14bn and increased 70% since the previous one. So I think the new contract will be worth over £8.7bn. I doubt that both BT and Sky will win, and we’ll definitely have one of the larger technology companies (Netflix, Facebook, Amazon, Microsoft, and so on) awarded some of the contracts.

This does means that player wages will increase 70% too (and ticket prices will remain the same).

6. Apple and Google will have a market cap of over $1 trillion

At the time of writing, Apple is already ‘close’ with $884bn, and Google has a market cap of $743bn. Apple will continue to make massive income from its range of revenue streams (stores, laptops, iTunes and iPhones).

Google is launching so many successful new products and services, that by the end of 2018 I think it will have exceeded, or be extremely close, to the magical trillion.

Other digital predictions for 2018

Other digital predictions I considered but shied away from included Bitcoin (I have a separate article on this coming soon), Twitter and Snap stock prices.

Please let me take this opportunity to wish you, your friends and family, a very happy and healthy 2018.

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