USAToday Column

November 17, 2016
Trump election likely to drive new tech investment priorities

By Bob O'Donnell

FOSTER CITY, Calif. — While much of Silicon Valley and the tech industry is still reeling from an election outcome that none of the best data analytics models predicted, there’s another important question that’s starting to be asked: How might a Trump administration’s priorities impact tech investments and the resulting tech developments?

The short answer, of course, is no one really knows. But given the staggering disconnect that’s been highlighted by the recent election results between the tech community and a large portion of the US population, it’s not unrealistic to think that the changes could be profound.

At a simple level, there are already signs that the business climate is moving into a more conservative phase with a focus on basic types of developments. All the discussion about infrastructure improvements, for example, clearly highlights the areas that are going to receive attention from the new administration.

Wall Street and many observers have interpreted this to mean that industries like construction, steel, and heavy equipment are the likely beneficiaries of this shift in investment priorities. While that is no doubt true, there are also potentially interesting pockets of opportunities for tech companies—if they’re focused in the right areas.

Smart city applications
One obvious example is the technologies being built for smart city applications. While I freely admit to having been a skeptic about the potential for some of the more grandiose smart city visions that a few tech companies have touted, there’s one incredible truism for most all Internet of Things (IoT) applications: it’s much easier to integrate technology into something being built than it is to add it on after the fact.

In other words, if we do start to see a great deal of construction and other infrastructure projects being funded, that could be a great opportunity to embed the necessary “intelligent” components into these projects. It would certainly be a lot easier to do that than to retrofit some of these technologies into existing infrastructure.

The problem is that the cost rationales and benefit discussions for adding these tech elements are going to have to be a lot more concrete and specific than most of the vague “we’ll sell it as a service” business models that currently infiltrate many IoT initiatives. While there are certainly situations where building a business that depends on continuous service payments makes sense, an infrastructure project that is meant to be around for decades isn’t one of those situations.

The problems with SaaS
Plus, the truth is, many of the “as a service” business models are often created to hide weak fundamental value for a product or service. If companies can’t figure out how to get prospective customers to pay for something outright, they often obfuscate the situation by creating business models that are built on never-ending ongoing payments for a ”service.”

In the more conservative business environment it appears we’re headed into, I have a feeling these “as a service” models aren’t likely to survive. I just don’t see most people being willing to accept the idea that nearly everything will come as a pay-as-you go service—especially the use of public infrastructure. (Witness the challenges that public toll road companies have been having.)

Similarly, the soul-searching that many in tech are now doing is bound to challenge expectations about what types of areas are worthy of more investment. Even with record amounts of capital available for VCs to invest, it’s not clear that smartphone-driven dog-walking services or revenue-free GIF meme-generating companies are the best options. Arguably, it’s been true for a while, but the election results make clear that way too much time and money has been, and continues to be, spent on products and services that really only appeal to and benefit a small fraction of the population.

Moving forward, focusing on developments that have clear-cut advantages for people and industries outside the tech circle would seem to make a lot of sense. From manufacturing and robotics to agriculture and health care, there are a huge range of industries that could potentially benefit from the kinds of technologies and innovations that the tech industry can create. They may not be as sexy or exciting as what many tech companies and investors have focused on until now, but the potential impact could be much broader.

In the end, no one knows for sure which new opportunities will thrive in what is bound to be a very different business and investment climate. What seems clear, however, is that the halcyon days of the tech industry being able to foist some, frankly, pretty questionable business ideas onto an audience of little more than its own friends and family are likely over.

Here’s a link to the column: http://www.usatoday.com/story/tech/columnist/2016/11/17/trump-election-likely-drive-new-tech-investment-priorities/93935532/

USA TODAY columnist Bob O'Donnell is the president and chief analyst of TECHnalysis Research, a market research and consulting firm that provides strategic consulting and market research services to the technology industry and professional financial community. His clients are major technology firms including Microsoft, HP, Dell, and Qualcomm. You can follow him on Twitter @bobodtech.