US in 2017: All systems go, but with an eye on Trump

The US spent most of 2016 obsessing over whether it would be Hillary or Donald who would replace Barack Obama as POTUS and the rest of it getting used to the idea of the President-elect. Technology played a key role even here with Facebook taking a hit for its involvement in the propagation of ‘fake news’ memes: evidence, as if we needed it, that the tentacles of tech extend into every nook and cranny of the world today.

You don’t have to stretch a point to suggest that Trump’s presidency could have a very real impact on the way technology is used and sold in 2017. Every indicator points to the incoming President as being a fan of snooping and it is plausible that some customers of cloud services will demand that their data does not reside in, or travel through, America.

Others in the US will worry about their ability to find and recruit the best talent from all over the world given Trump’s statements on jobs for Americans but optimists maintain that the technology sector has been a gravy train for the American economy for decades now and doing anything that would derail it would be crazy.


IPOs and valuations

Certainly, after a hiatus when tech IPOs all but dried up and most tech stocks were marked down, the tech sector ended 2016 in robust health. The IPOs of Twilio and Nutanix restored faith after the ‘tech is dreck’ sentiment of the summer and share prices bounced back too. A company like Mimecast, caught up in the ups and downs of the markets having floated late in 2015, could end up feeling happy by the time 2016 came to an end.

The icons of the American technology world remain illuminated. Apple is still the world’s most valuable company while Microsoft, after years in the (relative) doldrums, looked like a company renascent and unafraid of making the transition from client/server to cloud era. Amazon was its usual self, pulling off a never-ending torrent of product releases and ending the year with the ‘bang’ of its Echo and Dot international releases.


Big blues

As for the old guard, IBM and Hewlett-Packard (the latter being now two companies, of course) will once again be scrutinised for their ability to reinvent themselves. The headquarters of those companies listed cover the states of California, Washington and New York but the country has several other tech hubs and Utah is doing particularly well. For all the talk of globalisation, America remains a clear leader in ICT and the internet.


New services

Speaking of reinvention, the world of IT services, often regarded as somewhat staid, had an interesting 2016 as companies like IBM, Deloitte and Accenture continued to reconfigure for the cloud and digital transformation era with acquisitions and new structures. The days of the 10-year application outsourcing mega projects might be fading but they will be replaced by more bite-size deals and the old giants have shown their willingness to adapt. As more digital transformation projects cycle through, these companies are well positioned to serve the needs of large companies that want to disrupt themselves rather than having others do it for them. As for US tech spending, Forrester has already predicted a five per cent lift as business technology and transformation projects open wallets.

In 2017 there is no strong reason to doubt that the US will not continue to lead the technology world and there are many hugely funded organisations capable of going to IPO from Dropbox to Palantir to Uber. VCs still perch on cash mountains and they spy a wealth of opportunities from driverless cars to flying vehicles. Silicon Valley might be losing out to San Francisco as a location for hot companies but its denizens have never been as bullish.

Indeed, a protectionist President who has spoken strong words about the growing power of China might help block the sorts of deals that have seen China become a serial acquirer of American companies. After all, in early December President Obama stepped in to prevent a deal that would have seen China’s Fujian Grand Chip Investment Fund purchase Germany’s Aixtron. Obama cited a national security risk and it’s tempting to wonder whether in the current climate Lenovo’s agreements to buy IBM’s PC and server businesses would have been passed through with so little fuss.


Also read:
Nutanix soars on IPO to repay faith
Dropbox banks on bottom-up boom


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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