It’s amazing to think that 50 years ago, the Morris Minor car was still rolling off the production line, and Neil Armstrong and Buzz Aldrin touched down on the surface of the moon.
While the Morris Minor ceased production just two years later, much of the ground-breaking technology used by NASA has been instrumental in the disruptive world of technology that we live in today.
The guidance computer aboard the Apollo spacecraft had about as much processing power as a simple electronic calculator.
But it was ingenuity that led NASA engineers to safely land a man on the moon and return back to Earth. Many scientists argue that the technology developed by NASA resulted in a radical shift in electronics and computing systems.
One of the biggest barriers facing NASA engineers was how to miniaturise electronic circuits, in order to save room in the spacecraft. The solution was to place all components onto a small ‘wafer’ made of silicon – and so, the microchip was born. The scientist, Robert Noyce, went on to found Intel, and the rest, as they say, is history.
The pace of change is so fast that the speed of microchips has doubled around every two years ever since their inception, and this is expected to continue doing so going forward - a phenomenon known as ‘Moore’s Law’.
As technology moves on, it’s important, as an investor, to move on with it. Kodak is used as the posterchild of a company that disrupted an industry, but failed to keep up, having created and dominated the photographic market. It then fell victim to the disruptive influence of digital cameras and mobile phones.
As technology moves on, it’s important, as an investor, to move on with it
When it comes to investing, it’s important to understand that many large technology companies are not necessarily the disruptors of tomorrow. Nick Evans, manager of the Polar Capital Global Technology Fund, insists it’s about finding the “next generation” of technology winners.
He claims legacy tech is all around us, citing companies such as IBM, Oracle and Hewlett Packard as companies that have disrupted industries in the past, but younger companies will now pick up the baton and disrupt again.
Even the smartphone market is not immune, despite the fact that more people own a mobile than ever before. Recent poor results from Dixons Carphone Warehouse were blamed on consumers not replacing their phones as frequently as they had in the past.
Today, Mr Evans cites sectors such as cyber security, ecommerce, robotics/automation and digital marketing as offering compelling opportunities for investors, as disruptors in their own right - but how can you find the next trillion dollar company?
As an investor in technology, it’s possible to buy shares in individual companies that have succeeded in disrupting markets, such as Netflix, Amazon and Facebook.
However, it can be difficult to know whether these massive companies will continue to lead the market and, as such, it may well make sense to leave it to the expertise of a fund manager and their team. There will always be new disrupters in new markets, and hence there will always be attractive investment opportunities for a global technology fund manager.
Where technology stands now is remarkable compared to half a century ago, and presents opportunities for investors willing to take a risk on a fast-paced sector
Mankind will never stop innovating. When Neil Armstrong said the words “one giant leap for mankind”, who would have guessed that 50 years later it would result in us being able to watch Love Island on a mini screen on the way to work?
:: Claire McCombe is a private banker at Barclays Wealth & Investments NI
