Last week the International Data Corporation (IDC) -- an information technology, telecommunications, and consumer technology research firm -- released its annual tech predictions for the coming year. Some of the topics covered are ongoing trends that are continuing to grow, while others are new areas that are showing up in tech.
From that list I've picked out five trends I'm keeping tabs on in the coming year, starting with one of the fastest areas in tech growth: China.
China took over as the world's top economy this year, and its technology market is growing just as fast. The country already leads the world in Internet of Things connections, thanks to China Mobile's more than 32 million machine-to-machine (M2M) connections.
IDC's chief analyst, Frank Gens, says, "China has a roaring domestic market in technology." Nearly 500 million smartphones will be sold in China next year -- and Chinese vendors will make 85% of those devices. Next year, China's technology market will make up 43% of all tech sector growth worldwide.
In 2015, wireless data will be the biggest telecom services sector and the fastest-growing, according to IDC. The firm expects the wireless data market will be worth $536 billion next year, but also thinks pricing wars will hurt margins. That's not surprising, considering Sprint (NYSE:S) and T-Mobile have been pushing wireless carrier prices down to drive customer growth -- including Sprint's latest initiative to cut wireless bills in half. To make up for lower margins, carriers will delve further into cloud services.
In addition to that, carriers are expected to make more "mutually beneficial" data deals with companies like Netflix and Amazon. IDC expects forthcoming net neutrality laws to include a baseline speed and minimum performance level for ISPs, but that higher performance versions will also be available if companies choose to pay for them -- just like Netflix did earlier this year.
The changing face of mobile
Next year phablets are expected to continue cannibalizing tablet sales. Sales of phablet smartphones (4.7 inches and larger) are expected to increase by 60%. That's bittersweet news for Apple (NASDAQ:AAPL), which has seen its iPad sales slow recently while its iPhone 6 Plus captured 41% of the US phablet market in the most recent quarter.
In addition to size, some of the top smartphone vendors will change as well. Samsung's worldwide smartphone shipments are expected to fall below 20% for the first time in four years, as Chinese vendors like Xiaomi and Lenovo continue to grow.
Internet of Things inevitability
IDC says that 50% of Internet of Things (IoT) activity is "centered in manufacturing, transportation, smart city, and consumer applications" right now, but that over the next five years all industries will have Internet of Things initiatives. That should be good news for Sierra Wireless (NASDAQ:SWIR), which currently makes 34% of all M2M embedded wireless modules worldwide. About 85% of Sierra's revenue comes from the modules, and as the IoT continues to expand so should Sierra's dominant position in the space.
That doesn't mean every area of the Internet of Things will be a huge winner, though. IDC predicts wearable technology will "underwhelm" in 2015, with just 40 to 50 million wearables selling next year.
As all this technology grows, it'll be more important than ever to secure it. That's why about 15% of mobile devices are expected to add some sort of biometric accessibility in 2015, and reach 50% in the next five years. On top of that, new areas of security, like threat intelligence as a service, will help enterprises assess data risks. One of the biggest needs in security will be the Internet of Things, as most IoT connections made today are either unsecure or poorly secured.
There's plenty more to consider
Clearly these aren't the only trends to be watching next year, and we always have to leave open the possibility of new trends that no one can foresee right now. But by highlighting a few areas, investors can begin to drill down to companies that are already making moves in these spaces. I'm personally keeping a closer eye on Sierra Wireless in the coming year for its Internet of Things ambitions (though there are plenty of others diving in as well). Between the IoT, mobile shifts, China, and tech security, 2015 is shaping up to be a big year for tech.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, China Mobile, Netflix, and Sierra Wireless. The Motley Fool owns shares of Amazon.com, Apple, Netflix, and Sierra Wireless. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.