2016 to See Major Integration of Cognitive Technologies

  • Deloitte
NEW YORK — In 2016, 80 of the world's 100 biggest software companies will have integrated cognitive technologies, such as machine learning, natural language processing, or speech recognition, into their products, marking a 25 percent growth from the 64 of the top 100 companies who offered cognitive technologies in 2015, according to Deloitte's technology, media and telecommunications (TMT) practice.

The 15th edition of Technology, Media & Telecommunications (TMT) Predictions, forecasts that machine learning is likely to be the most prevalent of all cognitive computing technologies, given the breadth of its applications such as classification, anomaly detection, personalization and fraud detection. Natural language processing (NLP) will also provide valuable applications in software, dealing with unstructured text, while speech recognition will grow in use for applications that may benefit from hands-free modes of operations.

"Advances in cognitive technologies such as speech recognition, natural language processing and machine learning – together with the emergence of platforms that are opening to the developer community – are contributing to a rise in commercial applications," said Paul Sallomi, partner, Deloitte Tax LLP. "This year, cognitive technologies will continue to capture the imagination of industry giants and startups as they explore and monetize new areas within this emerging technology landscape. We see more and more consumers and businesses embracing the potential that cognitive technologies offer in a wide variety of applications including the Internet of Things."

Other TMT predictions to affect the marketplace in 2016 include:


  • Two and a half million virtual reality headsets and 10 million game copies are expected to be sold this year. Deloitte predicts that virtual reality will have its first billion dollar year in 2016, with about $700 million in hardware sales, and the remainder from content. This year, the industry is estimated to sell about 2.5 million VR headsets and 10 million game copies. The VR industry's growth will be attributed to the technology's use across multiple applications, both consumer and enterprise, with video gaming providing a core commercial activity being driven by tens of millions.

  • Number of women in IT is expected to remain flat. By the end of 2016 fewer than 25 percent of information technology (IT) jobs in developed countries will be held by women, (i.e., women working in IT roles). This figure is about the same as 2015, and may even be down.

  • Trailing millennials will become the most pro-PC of any age group. The age group of trailing millennials, defined as 18-24, are likely to be the most pro-PC of all age groups in 2016. While also reliant on mobile technology, this age group's ownership, intent to purchase and use of PCs will likely be higher than any other age group in 2016 and the population as a whole.

  • R&D spend may signal a tipping point for graphene super material use. While the total value of the graphene materials market in 2016 is likely to be in the low tens of millions of dollars, research and development spending for the year is likely to be in the hundreds of millions of dollars. In the medium-term, graphene may be incorporated into products worth many billions of dollars of value per year — but it could be decades before this material's potential is fully realized.

  • Online photo sharing is likely to surpass two trillion. In 2016, 2.5 trillion photos will be shared or stored online, a 15 percent increase over the prior year. Over 90 percent of these photos will have been taken over a smartphone: Digital SLRs, compact cameras, tablets and laptops will collectively contribute the remainder. This estimate does not include the trillions of photos that remain on devices' memories.


  • Five factors will erode traditional TV market. In 2016 the U.S. traditional television market, the world's largest at about $170 billion in 2016, will likely see at least some erosion on at least five fronts: the number of pay-TV subscribers, pay-TV penetration as a percent of total population, average pay-TV monthly bill, consumers switching to antennas for watching TV, and live and time-shifted viewing by the overall population especially by trailing millennials 18-24 years old.

  • Mobile games are leading, but less lucrative. In 2016 mobile (smartphone and tablet) will become the leading games platform by software revenue, generating $35 billion in revenue, up 20 percent from 2015. This compares to $32 billion for PC games and $28 billion for console games, up only 5 and 6 percent respectively from the previous year. However, average revenue per game by platform will vary significantly.

  • Value of box office admissions is expect to hit $10.6 billion. In 2016 the value of movie theater admissions in the U.S. and Canada will reach $10.6 billion with about 1.3 billion tickets sold, a decrease of about 3 percent. The annual movie box office is driven heavily by the fortunes of the top five blockbusters. The popularity of these films accounts for most of the year-on-year volatility. Since 2007, the trend has been for the five highest-grossing films to generate over 40 percent of the box office. In 2014 the top five fared poorly and the box office fell 5 percent. Last year was better – up a forecasted 8 percent. 2016 may surprise, but likely the consensus is for a slightly weaker slate of blockbusters, and therefore a decline, although not as bad as 2014.

  • Volume of used smartphones is expected to grow by 66 percent to become a $17 billion market. In 2016 consumers will sell outright or trade-in approximately 120 million used smartphones, generating more than $17 billion for their owners. This is a marked increase from the 80 million smartphones traded in 2015 with a value of $11 billion. Moreover, 10 percent of premium smartphones ($500 or higher) purchased new in 2016 will end up having three or more owners before being retired.

  • Touch-based commerce on mobile devices is expected to increase 150 percent. The number of individuals who use a third party, touch-based payment service to make a purchase on their mobile devices (smartphones and tablets) should increase 150 percent to reach 50 million regular users in 2016. Touch commerce enables retailers to exploit shoppers' increasing use of mobile devices to browse retail sites where transactions have remained scarce, due mostly to laborious payment processes.

  • Tenfold increase in gigabit Internet is expected, 70 percent of which to come from residential connections. The number of gigabit-per-second (Gbps) Internet connections will surge to 10 million by year-end, a tenfold increase of which about 70 percent will be residential connections. Rising demand will be fueled by increasing availability and falling prices. It's anticipated that about 600 million subscribers may be on networks that offer a gigabit tariff as of 2020, representing the majority of connected homes in the world.

  • More than a quarter of customers will be data exclusive, making no traditional phone calls in a given week. About 26 percent of smartphone users in developed markets will not make any traditional phone calls in a given week in 2016. Referred to as data exclusives, these individuals have not stopped communicating, but rather are substituting traditional voice calls for a combination of messaging (including SMS), voice and video services delivered over the top.

  • Voice over Wi-Fi and/or LTE is expected to be five times higher than at the start of 2015. Deloitte expects that 100 mobile operators worldwide will be offering at least one packet-based voice service at the end of 2016, double the amount year-on-year, and six times higher than at the beginning of 2015. Deloitte estimates that approximately 300 million customers will be using voice over Wi-Fi (VoWiFi) and/or voice over LTE (VoLTE), double the number at the start of the year and five times higher than at the beginning of 2015.

"It is truly amazing to witness the tenacity of companies and individuals to advance today's technology in anticipation of tomorrow's customers and realities," said Sandy Shirai, principal, Deloitte Consulting LLP. "Industry talent today is well on its way to unlocking new solutions and developing new products aimed at changing business processes and societies for the better. As public awareness grows through some of today's leading conferences and shows, businesses and leaders are in a better position to get to know their customers, their needs, and ultimately, how their technology is making a direct impact."


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