8 tech startup trends to watch in 2017

Artificial intelligence startups will be big next year, along with startups in cybersecurity, chatbots, VR and legalized recreational marijuana, according to experts.

By James A. Martin
Dec. 1, 2016

3. Cybersecurity startups

Cybersecurity was frequently in the news in 2016, thanks partly to Apple's iOS encryption skirmish with the FBI and other tales of ransomware attacks against businesses. Many experts expect continued growth in the cybersecurity space in 2017.

With every new attack vector or vulnerability exposed in 2016, "a cybersecurity company emerged to fill the space," says Nate Locke, partner at investment management firm Kayne Anderson Capital Advisors. "Companies looking to beef up their security defenses invested in software and other appliances. We anticipate businesses will start investing less in endpoint solutions and more in managed services that help them make sense of their existing infrastructure."

Security is complex and hard to manage, according to Locke, "and while enterprises have invested heavily in security products, many are not getting enough value from these technologies. In 2017 and beyond, we see the role of managed security service providers as increasingly important in helping organizations reduce the risk of a security breach."

4. Digital transformation and the cloud

In 2017 and beyond, enterprises will undergo a digital transformation "on a massive scale," according to research firm IDC (a CIO.com sibling company), enabled by the so-called "Third Platform" of cloud, mobile, big data and analytics, and social technologies.

"We are at an inflection point as digital transformation efforts shift from 'project' or 'initiative' status to strategic business imperative," said Frank Gens, IDC senior vice president and chief analyst, in a November press statement. "Every (growing) enterprise, regardless of age or industry, must become 'digital native' in the way its executives and employees think, what they produce, and how they operate. At the same time, Third Platform technology adoption and digital transformation is happening much faster than most expected and early competitive advantages will go to those enterprises that can keep pace with the emerging DX (digital transformation) economy." 

IDC believes the cloud will be a prime enabler of digital transformation, and it predicts that by 2020, 67 percent of enterprise IT infrastructure and software spending will be related to cloud-based technologies. During this transition, nearly every enterprise will be a cloud service provider of services to its own marketplace, making cloud capabilities an IT concern as well as a core business operations issue.

5. AR and VR startups

In the aftermath of the Pokémon Go phenomenon, augmented reality (AR) is on many people's radar. AR's big sibling, virtual reality (VR), also offers exciting potential for enterprises in 2017 and after. 

During the coming year, 30 percent of consumer-oriented Global 2000 companies are expected to experiment with AR and VR in their marketing initiatives, IDC predicts. "Interfaces are the essential gateway to customer engagement and they are evolving much faster than many have anticipated," the research firm says. "IDC expects AR/VR to reach mass adoption levels by 2021, when more than a billion people worldwide will regularly access apps, content, and data through an AR/VR platform."

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