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Technology Trends – Charting the 2019 Outlook## The US Economy and Its Impact on the Technology SectorFor the most part, 2018 was a solid year for the American economy with itsgears grinding on most of its cylinders. The spending of consumers increasedand companies had more investments. But the year 2019 may offer a slowing downof this growth according to expert analysis of economists.The Bureau of Economic Statistics recorded a growing pace of 3.5% for the USgross domestic product (GDP) of the US in the third quarter of 2018. This roseto 4.2% during the fourth quarter.Yet these inspiring numbers may not be sustainable for 2019. Goldman releasedtheir prediction that the GDP may decline by 1.8% this coming third quarter of2019 and may continue to plummet to 1.6% during the fourth quarter of 2019.Experts believe the positive growth of 2018 was a direct result of tax cuts in2017. For this fiscal year, Goldman expects a tightening of financialconditions.However, the outlook is not entirely dim. There is just a balance of cautionand optimism for 2019. The American economy may slow down but it will not yetenter recession this year. There is also an enduring belief that thetechnology industry will continue to play a pivotal role in keeping theeconomy afloat and alive.### The US Economy: Crunching the NumbersReuters conducted a survey of economists about the possibility of a recessionin the US for 2019 and most responded that the probability is low at 35%. Butthe forecasts are not overly optimistic either. Several economic and politicalfactors have been identified as challenges for the US economy.These include the continuous rise of interest rates, difficulties incontrolling borrowing costs for consumers, and more trade tariffs by virtue ofPresident Donald Trump’s aggressive trade policies.Moreover, the global economy is not as energetic too. The Organization forEconomic Cooperation and Development provided a lower forecast for the economyof the entire world from 3.5% – down a few notches from its earlier forecastof 3.7%. The thinktank believes that the prospects of global expansion hasreached its peak and may likely slowdown in the next two years.In a separate assessment, Bank of America Merrill Lynch had a survey of fundmanagers. 44% of them expressed insights that global growth will slow down in2019.Some of the global events that have been contributing to this uninspiredforecast include the continuing Brexit trade wars, the tension between Italyand the European Union, more US sanctions for Iran and shaky stock markets, tomention a few.But there is still light at the end of the tunnel for the American economy.The US has the world’s largest economy and it has strengthened further withthe creation of more jobs. Most of these employment opportunities emerged fromthe dominance of its technology sector.### The Tech Titans of America: Heavy Lifters of the US EconomyThe tech sector continues to be a bright spot for the American economy.Even when the Trump Administration hasn’t delivered yet on some of itspromises such as the deregulation of the financial sector and tax reforms, thestock market hasn’t come to a screeching halt.Most experts give credit to the strong performance of tech giants such asApple, Alphabet (the parent company of Google), Facebook, and Amazon.They comprise 37% of the total market gains of America presently.Wall Street experts fondly call these tech giants GAFA or Google, Amazon,Facebook and Apple. James Pethokoukis has this to say about GAFA in hisopinion piece “Leave Silicon Valley Alone” from theweek.com:“Google, Amazon, Facebook, and Apple — what Wall Street calls GAFA — are fourof America’s most valuable and important companies, providing a massivebenefit to consumers. Collectively they’re the Tony Stark of corporateAmerica: They pay for everything, design everything, and make everyone lookcooler. If the U.S. is going to remain the world’s technological leaderagainst China’s challenge, GAFA will be pivotal.”The Economist noted that ten years ago, the five largest spenders of Americawere bastions of traditional businesses such as AT&T, Chevron, ExxonMobil,General Electric and Verizon.Now the top five are Alphabet, Amazon, Apple, Intel, and Microsoft – all techgiants.They accounted for 80% of America’s advanced industries from 2015 to 2017These tech companies have smartly reinvested 50% of their total gross cash-flow towards productive projects such as properties, plants, and equipment.For example, Alphabet is redeveloping Chelsea Market in New York while alsofunding vital data centers.Amazon is creating e-commerce fulfillment centers to remain in the lead as faras online market activity is concerned.Semiconductor firms are expanding productions to help out sustainabletechnologies such as machine learning and autonomous (self-driving) cars.Most tech giants are also improving access to cloud computing capacity. Thishas made it easier for other industries to be more efficient in their datahandling and storage needs.### Cloud Computing and Data Management SolutionsAmong the strongest suits of the digital sector is the emergence oftechnologies that focus on efficiency: cloud computing and data managementsystems.Cloud computing remains one of the budding technologies with a strong grip inthe market. This technology focuses on the collection and storage of big dataand information security.Data management systems have also become vital to ensure that data can beaccessed uniformly, systematically and efficiently across various platforms.These breakthroughs have become useful and integral to other non-techcompanies. Other industries have been using these technologies such as healthcare, transportation, education, energy, entertainment, communications,finance, and professional services.Tech titans keep finding ways to integrate itself as a need, in varioussectors. Take for example Google’s efforts to focus on education by making iteasier to transmit information, documents and other deliverables online withthe help of Google platforms such as Gmail and Google Drive.Mobile operating systems have basically become a two-way race between Appleand Alphabet.Facebook and Google comprise three-quarters of the digital advertisingindustry in 2016.The tech giants have become the centers of gravity for the American economy.Cloud computing and data management systems have created a lot of employmentopportunities and earning potential in America. Even with the unpredictabilityof economic policies and even politics, IT-related companies have asustainable path to revenues.According to Cyberstates 2018, there is an expected rise of 13 percent incomputer and IT-related jobs between 2016 to 2018. Among all other occupationsin the US, this is the fastest rate so far.The tech boom has also become a benefit for non-tech companies which provide awide range of services and products.Examples of these are FedEx and UPS which have been improving their e-commercecapabilities by purchasing airplanes and creating more depots.The emergence of cloud storage and data management systems has also increasedthe demand for peripherals such as server racks, wall mounts, and cablemanagers for databases.### Politics and the Tech SectorRemarkably, one of the biggest challenges of the tech industry has nothing todo with technological limitations. The point of contention so far is politicsand policies.The ongoing trade tension between Washington and Beijing has created frostyrelationships and potential deadlocks when it comes to emerging technologiesand supplies of spare parts.Trump has recently put tariffs amounting to $250 Billion of Chinese products,including tech goods.Washington has put out threats that they will enforce export controls on awide range of digital breakthroughs developed by American tech titans.Google, Facebook, Intel, Amazon, and NVIDIA have so far created significantmilestones and strides when it comes to these new technologies: * Machine learning and neural networks * Computer vision * Artificial intelligence * Cloud services Dedicated chipsets * Autonomous vehicles * Augmented and virtual realityThe US government is citing national security grounds as reasons for theseexport controls. They believe that China is stealing intellectual propertyrights of American tech titans using predatory and unfair means.The hope is by enforcing export controls, it will be difficult for China tohave access to these breakthrough technologies.But if these technologies are withheld or hidden, it doesn’t necessarily meanChina will never have access. Most tech analysts believe that China has movedon from stealing and they are also competitive in their own innovations.Moreover, these scientific breakthroughs are also available in academiccircles. There is nothing that is stopping China from accessing thesetechnologies using academic sources.Analysts believe that other countries may develop the same technology thatAmerica will be hiding or withholding, and sell their own versions. It canpotentially lead to significant revenue losses for US companies.In the long run, it can compromise the considerable lead of American techtitans in the digital sector that they have worked hard to build.Ed Black, chief executive of the Computer and Communications IndustryAssociation has this to say:“It does not seem to me like it is a well-thought-out game plan. The gapbetween . . . what [the administration] would like to do and what they canreasonably accomplish is potentially very large. That, I think, is anindication that they have yet to fully develop a strategic or tacticalapproach.”As far as production of parts and peripherals is concerned, on the other hand,it can be an opportunity for American companies to rely more on internalcapabilities and further improve the production of spare parts and other IT-related peripherals.### Rocky Relationship with the White HouseIt’s not only with China. President Donald Trump also doesn’t have the mostideal relationship with American tech companies – even though it has beenwell-established that the economic dominance of the US globally is largelypowered by its tech titans.Recently, Washington has imposed immigration limits for tech companies. Thiswould severely hamper the performance of companies who rely on the H-1B visaprogram that allows them to hire highly skilled workers from overseas.Trump’s ongoing trade war with China also has serious implications on gadgetmakers, especially small startups for hardware. The supply of spare partsabroad may experience difficulties. This may lead to the transfer of theburden to consumers through higher retail prices.### Upward Trajectory for the IT SectorDespite the challenges they are facing in the economic and political climate,the outlook for tech companies is very optimistic this 2019.Silicon Valley in the southern Bay Area of Northern California remains theiconic core of tech companies. Analysts hope tech companies will keepbranching out further into the Heartland to gain more momentum for theindustry and to provide more jobs.Tech titans Amazon, Google, and Apple have started offering high-level postsaway from the typical hubs of Seattle and the Bay Area.Tech companies are putting a premium on finding talent in various parts ofAmerica.The success of the tech boom is not limited to Silicon Valley. The outlook istrending upwards for the entire country. In 22 states, tech companies rankamong the top five economic contributors.Data from Brookings from 2015 to 2017 show that there have been massive ITgrowth in areas outside of Silicon Valley. Consider the following:Wichita, Kansas: 552 jobs, 18.9% change Lakeland-Winter Haven, Florida: 196 jobs, 15.4% change Chattanooga, Tennessee-Georgia: 285 jobs, 11.6% change Boise City, Idaho: 785 jobs, 11.6% changeThe established IT hubs have also strengthened their base. Most new tech jobsare still offered in markets that are already focused on technology:• San Francisco • Seattle • San Jose • Los Angeles • Austin### Tech Titans and the CloudThe leading IT companies have put an emphasis on cloud computing, datamanagement systems and other emerging technologies. This has opened highwaysof revenue potential for tech and non-tech companies that are providingrelated products and services.With the tech titans in the lead, the economic outlook for the entire ITsector is sustainable and encouraging.Google has a good stake in the cloud industry sweepstakes. With their freeplatforms, they have created a higher demand for data storage, higherresolutions for images and larger sizes for files. Google is in a goodposition to respond to more data demand in the future.Alphabet, the parent company of Google, has also invested in Waymo, a unit forautonomous transportation that focuses on robo-taxi services. Going into thefuture, it has a valuation of $175 billion and can increase further as datamanagement for this technology continues to progress.Apple, on the other hand, had a relatively lost year for 2018. While itreceived a year-high 25% growth in 2018, investors eventually felt themomentum slowed down along with the decline of iPhone sales in the last monthsof 2018.Daniel Ives, an analyst from Wedbush Securities, mention two critical factorsin the down year of Apple: the slowdown in iPhone sales and the lack oftransparency for investors.But thankfully like other tech titans, Apple is not a one trick pony. 5Gtechnology is set to arrive in late 2019 and Apple is in a good position tocapitalize on it. With this, investors may expect positive growth for Apple’sstock in the latter months of 2019.Another technology that Apple can bank on is the possibility of releasing avideo service that will go head to head with Netflix and Amazon Prime Video.The anticipated increase in Apple’s needs for data management can only bodewell for the future of the IT sector.As for the software industry, there is a growing dependence on big datamanagement and cloud storage. It is also encouraging to note that the sectorhas created 10.5 million jobs in America across all 50 states – a strongindication that the sector is here to stay.Because of this impact, the software industry accounts for $1.14 trillion ofthe US Gross Domestic Product (GDP). Software companies also find ways to keepthis sustainable and thus they have devoted $63.1 billion for research anddevelopment.### Enduring Economic Challenges for a Stable and Sustainable 2019Despite challenges, tech companies will keep on grinding like clockwork andproducing outputs at a high clip.The key to all of this is innovation. The tech titans of America continue tohave access to breakthrough technologies that change the way the world doesits business.And while there will be hiccups along the way, technology and innovation arelike freight trains that are hard to stop, especially when the world embracestheir ways and means.This is what happened when Google became a household name as an online searchengine. Or how Facebook evolved from a college project to the primary energybehind social media. Or Apple’s prototypes that projected smartphones as aneed and not as a luxury.The tech sector will continue to blaze trails not only for America but alsothe entire world. It will open several gateways to more productivity and jobs.Currently, most private sector jobs are provided by companies that have beencreated less than five years old. These are companies that are powered byinnovation and technology, currently employing over 6.7 million people andbringing back more work in the US.It significantly decreases the need to outsource jobs.The automation of several non-tech industries has also increased theproductivity and efficiency of the US economy. These have caused lower pricesand higher demands, which in turn causes more employment opportunities forAmericans.The future is still bright for the tech titans of America. It is alreadyunstoppable now, and it can only gain more momentum in the future. If there isa force that can make America great again, look no further than Silicon Valleyto take the lead. Innovation is at the heart of it all.There was a time when technology was just an exciting possibility: a door thatcan open multiple gateways, a prospect that can lead to diversionary fun andgames.But times have changed. Technology is now the game. Technology is now.Digital breakthroughs can change the landscape of the world with the touch ofa fingertip. There is barely any time to catch up on the latest trends.But idly wink, and it can lead to significant financial losses or a plunge toirrelevance if a company doesn’t pay attention. It’s keep up or pay the price.Cradled in Silicon Valley, the leading technological titans of America havewasted no time sprinting ahead of the competition in their respectiveindustries. The world has followed their leads.Even with the unpredictability of government interventions and market forces,the tech titans of America are safe. They ensure the stability of the entireIT sector for 2019 and beyond.A thriving innovation ecosystem, in turn, will provide smarter opportunitiesfor growing our economy, protecting the environment, boosting education, andimproving public safety.” – Chris Hopfensperger, executive director ofSoftware.org.SummaryArticle NameTechnology Trends – Charting the 2019 Outlook – RackSolutionsDescriptionAmerican economy may slow down but there is an enduring belief that thetechnology industry will play a pivotal role in keeping the economy afloat.AuthorFabio CuffaroPublisher NameRackSolutionsPublisher Logo