This is Part 2 of a five part series on the hottest trends for 2016. Today we focus on emerging technology trends effecting U.S. businesses.

Beware of the Drones[i]-The Federal Aviation Administration (FAA) has granted over 2200 commercial exemptions for the use of drones. Jobs for drone pilots, and software developers will proliferate in every sector of the economy.  According to Goldman Sachs, the market is expected to double in 2016 and triple in 2017, buoyed by cheap drones from companies such as DJI (China) capable of everything from inspecting oil pipelines to monitoring cattle.[ii]

The Netflix Effect Takes Hold[iii]-The shift towards original content and faster internet speeds has massive implications for the telecom, entertainment and technology sectors that try to capitalize as new competitors such as You Tube Red and Go90 emerge.

The Shift to Public Clouds[iv]-Soon, IT departments will have to say uncle. White-box network switches (such as those sold by Cisco) are growing at a 50% clip (per year) in a trend away from traditional networking hardware.  As the needs of internal customers expand to everything from appliances to cars, IT departments lack the skills to support more complex systems and protect them from cyber-attacks.

Big Data Goes Mainstream-Relational databases hosted on the cloud will close the gap for small and mid-market companies seeking to compete with Fortune 1000 companies. New social media technologies will allow retailers to push new promotions to consumers through their cell phone.  Companies such as Go Daddy and Square will make data analytics available to the local boutique or yogurt shop.

Cashless Society– Kenya’s M-Pesa may be the model for a world where payments are made via text message. As Apple, Google, Facebook and PayPal seek out solutions that convert our smartphones into digital wallets, the banking and credit card markets could be deeply disrupted. [v]

Endless Payments[vi]-While B2B software products have always included “maintenance agreements”, Microsoft has shifted towards endless payments which supports passive income. Last quarter, the company grew its subscriber base for Office 365 by 25%, signaling a fundamental shift in its subscription and pricing strategy. Look for other providers of software to follow suit.

The Great Digital Mesh[vii]-We are way past “bring your device to work”. The Internet of Things perpetuates the trend towards multiple devices for multiple situations, including phones, tablets, and wearables, used in airports and fitness centers. IT departments are expected to make their complex corporate networks compatible with consumer electronics.

Adaptive Security Architecture– Cyber-security experts point out the need for organizations to adapt to the ever changing threats in our environment. Security is dynamic and not static and will require daily hand-to-hand combat with hackers attacking our systems.

Internet of Things Platforms– In order to support the broad range of devices and services, platforms will be built from the ground up to support disparate devices. IoT is moving towards a maturation phase, where its individual parts “work seamlessly together”. [viii] The meshing of devices requires apps that are device agnostic.  Information must flow across platforms and devices (such as the ability to manipulate your Nest device off your phone or tablet).

Smartphones Lapse as the Industry’s Growth Vehicle– After China’s smartphone market grew 64% in 2013 and another 20% in 2014, sales are expected to flatten out in 2016 (to about 1% unit growth). [ix]  While Apple may take the biggest hit, all of the major providers will be stymied by slow growth in China. Meanwhile, shifts in pricing strategies at AT&T, Sprint and Verizon mark the end of 2 year contracts, and pricing subsidies.

Streaming Wins the Day[x]-According to Nielsen, on demand music streaming increased 54% in 2015.  Spotify now has over 75 million users. While consumers dislike streaming ads, the economics are too powerful to ignore. The freemium model has sustained a 500% increase in download/streaming revenue in the last 5 years.

Augmented Meets Virtual[xi]– There will be over 11 Million virtual reality users in 2016, 26% using mobile devices.[xii] Facebook’s $2 Billion purchase of Oculus VR is a sign of things to come as gaming, travel, and marketing applications proliferate. Meanwhile, augmented reality commercial applications in logistics, design and medicine (for example) have experienced a 10x increase in the last 3 years. View Part I of this Series on the Intended Consequences Blog!

[i] The Kiplinger Letter November 13, 2015 [ii] 5 Disruptive Tech Trends that Could Dominate in 2016 [iii] The Netflix Effect is Spreading-Bloomberg Businessweek [iv] Cisco Tries to Make a Different Switch Bloomberg Businessweek [v] The Future of Money -Leslie Stahl 60 Minutes [vi] 5 Disruptive Tech Trends that Could Dominate in 2016 [vii] Gartner’s Top Technology Trends in 2016 by David Cearley [viii] Ambient Computing  by Daecher and Galizia Deloitte University Press [ix] China’s Slowdown Won’t Deter Apple [x] Listen Up! By Jonathan Ringen Fast Company September 2015 [xi] Augmented and Virtual Reality Device Forecast 2015-2018 by CCS Insight [xii] Superdata Virtual Reality Market Brief