My wife’s Google Maps app stopped functioning on Wednesday. Cue utter chaos as the DLR stopped short of Bank station on the commute. She had to walk in with no idea where to go. Not great at 31 weeks pregnant.
I still remember the first time I discovered Google Maps’ ability to tell a smartphone user exactly where they are. In fact, that’s all I can remember of that night. My friend had vomited on the stair railing of a nightclub as we were leaving and I’d unsuspectingly put my hand in it on the way out.
We were both keen to get home at that point, but not sure how to get to the bus stop. He pulled out his smartphone and the age of the pulsating blue dot began.
These days, I’d be in deep trouble without my smartphone and its various internet functions. But back at university, it all still seemed a bit arcane. Apart from when you’re lost and drunk, what else could Google Maps possibly be useful for?
In fact, I’m a fairly slow adopter of most tech. I like to wait until it’s easy to use and there’s a reason to use it. That combination is surprisingly rare.
Last week, while buying a lightbulb, I discovered dimmable lightbulbs and the wireless remote you can use to dim them. That’s obviously not exactly new – I’ve used dimmable lights a lot.
But it’s innovation that has reached a point which suits me. I can install it, use it and it is unlikely to break. As it’s dark when I wake up in the morning now, dimming the bathroom light would be nice…
Why am I telling you all of this? Because it shows how tech actually relates to our lives. In very imperfect ways.
My late adopter lifestyle doesn’t mean I don’t watch what’s on the tech horizon too. Some people like buying tech that doesn’t work properly yet. And so investing in new tech is one of the few types of investing that makes much sense to me. Because of the growth potential. The challenge is figuring out what tech is going to make it.
Hindsight is always a wonderful thing. But in tech investing, it’s especially epic. Because a lot of tech is a solution in search of a problem.
The printing press wasn’t profitable for many years. Until Martin Luther and his newsletters came along.
The steam engine was designed to pump water out of mines. Which wasn’t very successful. But you might say its other uses ended up being rather impressive.
The first nuclear reactors were powered with thorium, not uranium. Thorium reactors can’t melt down, aren’t suitable for developing weapons and the waste is much easier to deal with. In other words, it’s nuclear power without the problems. But the government had other ideas for nuclear tech at the time and so now we have potentially dangerous tech powering our grids.
So, for each new tech, figuring out what it can do is only half the problem. Figuring out what it will be used for is the other half.
I used to think that it’s hard to guess at what the next generation of mobile internet connectivity, 5G, will make possible. Actually, it’s easy to guess, but hard to know. Driverless cars are on the menu, for example.
But recently, I found out I was wrong. Many of 5G’s effects will be highly predictable. For a surprising reason that investors should take note of. 5G will make other imperfect tech actually work – a revolutionary idea.
My mobile phone is slower at downloading information from the internet today than it was years ago. In fact, I only began using 4G recently because 3G worked just fine. But I didn’t notice any speed improvement when I activated the 4G tab on my phone.
Will 5G be just as disappointing? Will I only adopt it years after it goes live?
Nope. But to understand why, we need more detail about why 4G didn’t do much.
The reasons are fairly simple. Our usage of internet data has increased faster than the capacity of our technology providing that data. My phone flat out doesn’t download anything at London Bridge train station. Not because 4G is rubbish but because everyone wants to use it. There are so many people fighting for bits and bytes on the airways.
But 5G is different to its predecessors in certain specific ways. Ways that, I think, make its effects more predictable than past tech revolutions. It enables tech we already have to function.
Not that there won’t be unexpected booms that 5G enables. But the point I’m making is that the investment potential of 5G is a little easier to figure out than usual.
Here’s why: 5G solves a lot of the capacity problems of 3G and 4G. In all sorts of weird and wonderful ways.
For example, instead of sending signals in all directions in the hope that one of those is the right one, 5G will be targeted beams. This clears up the airways, enabling far more traffic of data in the same air space.
As part of the 5G rollout, a wider spectrum will be used. Because all the practical uses of 3G and 4G weren’t anticipated, scientists didn’t expect us to use so much data. Now that we know we need the space, with everything connected to the internet, more space will become available.
The end result is to release a constraint on the existing tech we already have. Your phone will work where it currently struggles. You’ll be able to watch replays on your phone at the stadium with the configurations you choose, alongside everyone else in the stands doing likewise.
And this improvement will enable functions that we inherently need to be highly reliable to bother with them in the first place.
You’ll be able to choose the world’s number one surgeon to control the robot doing your surgery, even if they live in Okinawa and you’re in Milton Keynes. The reaction time of the robot to the surgeon’s commands should be ten times faster than the surgeon’s eye can transmit to his own brain, despite the distance.
Car crashes could become a thing of the past when self-driving cars’ reaction speeds are 1,000 times faster than a human’s. If that’s only true while you’ve got reception, it’s not much good. But that’s what 5G aims to fix.
I suspect extraordinary investment gains to flow from the various things that become possible because of 5G. But the ability to make what’s currently theoretically possible actually work effectively will be equally important to investors.
A lot of tech that currently struggles to deliver on promises will become reliable enough to be useful. And, perhaps most crucially of all, more reliable than humans in many ways including speed and accuracy. That’s dramatic change I can believe in and use, at the same time!
But what is the investment angle in all this? The obvious answer is to buy into the providers of 5G technology. But that’s only one of the three answers Eoin Treacy has for you here.
Until next time,
Editor, Southbank Investment Research