Photograph by Oli Scarff — Getty Images
By Promod Haque and Matthew Howard
December 28, 2016

When 2016 started, out doom and gloom in venture capital and the tech industry was not only predicted, but certainly expected. Despite the cloudy forecasts and slow IPO traction, the industry moved forward cautiously and evaluated business models and success rigorously, but also managed to be quite innovative in several emerging areas like virtual reality (VR), artificial intelligence (AI), cyber security, IoT and edtech. M&A activity reigned supreme with Microsoft scooping up LinkedIn and Walmart acquiring Jet.

2017 won’t be short of surprises, especially with a new administration in the White House, leaving us with some longstanding questions, such as: what types of tech is going to take off in the next 12 months? As a venture capitalist investing in virtually all things tech, here’s a look at some promising innovations in VR and AI for the year ahead.

Healthcare gets smarter

Doctors won’t become robots in 2017, but they will augment their capabilities with AI and ML approaches to diagnose and treat patients and improve efficiency. The future of addressing the large numbers of patients with increasing disease severity will require the semi-automation of skilled labor (nurses, doctors, and technicians) in healthcare. We will see this where technology will be used to help physicians choose between therapies based on the specific attributes of a patient, as well as in diagnostics like imaging where ML can be used to “pre-read” or provide “clinical decision support” to radiologists.

Augmented reality could trump virtual reality

AR via mobile phone will be big in 2017. While we’ll see the first year of quality VR through new hardware like PlayStation VR and Oculus, the reach and applications will be highly limited. Conversely, AR will see start of widespread adoption. There are currently 4.6 billion mobile phone users worldwide and that number is going to keep growing. AR-powered cameras on mobile phones will power applications such as image filtering, mapmaking, virtual tours, and more.

Self-driving data centers will emerge

Automation in 2017 will not be limited to Tesla and Uber self-driving cars. Gartner estimates Data Center spending will grow to $177 billion in 2017, up from $173 billion in 2016. Data center operators are in dire need of technologies that increase productivity (self-driving) and improve response to outages (self-healing). All elements of the infrastructure – compute, networking, storage, etc. – have been virtualized and can now be delivered as a service. Analysts predict that 75% of enterprises will have more than four diverse automation technologies within their IT management portfolios, up from less than 20 in 2014. This means with the right orchestration and management tools, operators can completely automate new rollouts or any changes to existing infrastructure.

Security will shift from defensive to predictive AI-powered security

While many companies claim to leverage advanced security techniques, most of those technologies are still static instead of dynamic when it comes to detecting and defending against cyber-attacks. The problem is that most companies have been working within set rules in basic machine learning, while hackers live and breathe the mantra, “rules are meant to be broken.” The next era of innovative security companies will truly realize the promise of AI methods — without limits. These will be the companies that will be able combat the newest breed of data breaches, spear-phishing and ransomware campaigns, social engineering and malicious code: and at the center of their success will be AI.

Robots take over secretaries (well, sort of)

The global virtual assistant market is projected to exceed $3 billion by 2020. We expect a dramatic shift in consumer adoption in 2017 as new assistants including Amazon Echo, Google Assistant, Apple Siri, and Microsoft Cortana become increasingly useful at home, at work and in the car. Not only will individuals benefit from these new voices in your ear, but retail, medical, enterprise and industrial use cases will increase in the coming years with productivity and efficiency as the drivers.

Blockchain startups become a thing

2017 will be the year we see a new breed of startups setting out to build companies around blockchain technology. Blockchain offers the ability to allow multiple parties to transfer and store sensitive information in a space that is easily accessible, secure and anonymous — which allows it to be used in any industry. It could simplify paper-heavy, expensive, or logistically complicated financial systems, like remittances and cross-border transfer, shareholder management and ownership exchange, and securities trading, to name a few. Once widely adopted (starting with developers and startups), blockchain will help mitigate risk, streamline processes and increase efficiency, transforming the world as we know it in the next several years.

Overall, 2017 will be an exciting year to see what happens with emerging technologies that are just taking off and impacting traditional sectors. It’s going to be an interesting year, hold on!

Promod Haque is a senior managing partner at Norwest Venture Partners. Matthew Howard is a managing partner at Norwest Venture Partners.

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