This article first appeared in The Edge Malaysia Weekly on December 27, 2021 - January 2, 2022

DANISH physicist Niels Bohr, who won the Nobel Prize for explaining atomic structure and quantum theory, once said: “Prediction is very difficult, especially if it’s about the future.” Since I write the Tech column for The Edge, I have the difficult task at the end of every year to predict the key tech trends that will be worth watching in the new year.

Tech has a reputation of being overhyped. We tend to overestimate the short-term potential of any new technology and underestimate its longer-term potential. In recent years, investors have been far too optimistic about the near-term bets like software-as-a-service cloud computing firms, some of which have commanded valuations of 100 times annual revenues, but have been dismissive of long-term technologies such as electric vertical take-off and landing (eVTOL) flying cars, which are likely to be in commercial service by the end of the current decade.

Technology these days is moving at warp speed. “The tech cycles are getting shorter and shorter,” Haim Israel, head of thematic investments at Bank of America, told me recently. “Investors have traditionally tried to model growth of technologies linearly,” much like they measure growth of consumer goods companies, he says. “The problem is that most disruptive technologies are actually growing exponentially or way beyond our expectations.”

So, what’s driving the pace of technological change? It is a combination of factors — economics, demographics and technology. Take economics: The cost of capital for the past two years has been almost zero. Indeed, even before the pandemic, the cost of capital was very low compared to 10 or 20 or 50 years ago.

That means a lot of money is still flowing into long-gestation tech products, software and services, even if interest rates go up slightly — from zero to, say, 2% over the next two years, as the US Federal Reserve warns. Clearly, we will be in an environment of very cheap capital for a very long time. That means investors will still want to bet on technologies that can give them outsized returns.

The Bank of America strategist argues that “tech cycles are getting shorter because technology is progressing very rapidly with artificial intelligence, big data, machine learning and deep learning, so we now have these technology super-cycles that last far longer than the economic cycles of the past”.

We now use data much better than we have ever been able to. Every day, the world generates 2.5 quintillion bytes of data. A quintillion is a million trillion bytes of data. The astounding thing is that the huge number is doubling every two to three years. So far, we have been using only 1% of the total global data that is being generated every day. With advanced semiconductors, more computing power and supercomputing, we can use a higher and higher percentage of the ever-larger pile of data that we keep generating every day. How can we continue to do this? Consider this: The processing power of computers has increased more than a trillion-fold since Apollo 11, carrying the three astronauts, landed on the moon in 1969.

There is also the demographics. Gen Z, people born between end-1996 and end-2012, or those between nine and 24 years old, is the first generation born in an entirely online world. They were born after Amazon, the internet and e-commerce. Most were born after the first search engines were unleashed and many were born after the first social media platform went live. They tend to do everything online. They are clearly not comfortable with the offline world. Is it any wonder, then, that their rate of adoption of new technology is far faster than any previous generation?

So, how should we look at technology in 2022 as well as the year or two following the incoming new year? I went back to my notes over the past several months, and indeed even way back to the pre-Covid-19 months, to glean some nuggets of tech wisdom.

Here are some of the trends that I will be watching in tech next year and beyond.

Regulatory pressure on big tech — Apple Inc, Microsoft Corp, Amazon.com Inc, Google’s parent Alphabet Inc and Facebook’s parent Meta Platforms Inc — is mounting both in the US and Europe. The Biden administration and new Federal Trade Commission (FTC) chief Lina Khan have made it clear that substantive mergers and acquisitions by big tech are now a thing of the past. FTC is looking at some of Meta’s previous acquisitions from its Facebook days, like Instagram and Occulus, which could lead to the break-up of the social media giant.

Still, stricter legislation in the US is unlikely because of the divided nature of Congress. But Europe could take up any slack. A new Digital Markets Act there gives the European Union the right to terminate “killer acquisitions” aimed at buying up innovative start-ups to prevent future competition. It also tightens restrictions on targeted online ads and will force social media and messaging services to work with each other to avoid having a single platform in a dominant position. That means big tech platforms will only be able to grow organically and will increasingly encroach on each other’s territory to grow, which will help create more competition.

While a Nasdaq or New York Stock Exchange-listed Bitcoin ETF, or for that matter a broader Crypto ETF that allows anyone to easily buy or sell bitcoins or a basket of cryptocurrencies is unlikely to be given the go ahead in 2022, the world will see major traction on Central Bank Digital Currencies, or CBDCs, in 2022. Right now, central banks only issue physical cash that you and I use every day. Increasingly, as we use our digital wallets to pay for a range of transactions, it is clear that we are moving towards digital currencies. Not Dogecoin, Shiba Inu Coin or even Bitcoin but actually digital US dollars, digital euros or digital yen. A handful of small Caribbean islands such as St Kitts and Nevis, Grenada and Antigua have already issued CBDCs, or digital forms of their currencies, over the past two years, but we will see traction on major currencies going digital. China is likely to be the first among major economies to issue a digital yuan and an initial indication could come within 12 months. It has already completed a pilot scheme with over 20 million digital wallets carrying digital yuan over the past two years. In 2021, the country will finalise preparations to flip the switch and take the digital yuan live.

After years of hype, virtual reality (VR) headsets and augmented reality (AR) glasses will finally arrive in 2022. Meta Platforms, the social media giant formerly called Facebook, is expected to introduce its new Meta Quest 3 VR headsets in the second half of next year. Apple is expected to release its own VR-augmented reality headset in the last quarter of next year. Apple’s AR glasses are now expected to be launched in 2023. Xbox Series X console creator Microsoft, Amazon and Taiwan’s HTC are all expected to launch their own AR/VR or mixed reality hardware over the next 18 months.

In 2021, as the world gradually began to reopen after 18 months of Covid-19-related lockdowns, hybrid work beckoned. In some of the busiest city centres such as New York, offices were still at less than half of their capacity at their peak in early December. Corporate captains were hoping that, as Covid-19 was banished, they might eventually have more than 80% of their staff back at their old desks, with just 10% to 20% still working from home. But the “great resignation” of 2021 and near-full employment are forcing companies to be more flexible and allow more people to work from home. Already, studies show most workers are as productive, if not more productive, working from home.

2022 will be the year when the Office of the Future begins to take shape. Over the next two years, companies will start to resize their offices and redesign the workplace. Big global financial centres like New York and London could see up to 30% of their current office space becoming redundant. And as more retail business moves online, city centres will have more boarded-up “dark stores” catering to 15-minute grocery deliveries and “ghost kitchens” catering to 20-minute food delivery services.

2021 was the year of electric vehicles or EVs. Tesla Inc became a trillion-dollar company and was briefly worth more than all the other listed auto companies combined. It was also the year that legacy automakers such as Volkswagen, General Motors Co and Ford Motor Co were forced to become more serious about their own EV strategies.

2022 will be the year of EV infrastructure — particularly in the EV charging space. There are already 1.3 million EV charging points around the world, but consultancy McKinsey & Co estimates at least US$90 billion (RM380.2 billion) will be spent on 40 million more by 2030 as battery EV sales grow 25% annually until 2030. Governments and private-sector firms need to spend US$1.6 trillion on charging infrastructure to achieve net-zero greenhouse gas emissions targets by 2050. US President Joe Biden’s signature Infrastructure Bill provides for a national network of EV chargers in 2030.

In the aftermath of the Covid-19 pandemic, 2020 and 2021 were great years for innovation in healthcare. Pfizer (with its partnership with Germany’s BioNTech) and Moderna used mRNA technology to be first out of the gate with their respective Covid-19 vaccines. mRNA, or messenger RNA, vaccines that teach our cells how to make a protein that triggers an immune response, were mostly unproven before the advent of Covid-19 despite decades of research. Given the rapid proof-of-concept for such vaccines during the pandemic, it is now clear that mRNA can produce highly effective and safe vaccines.

In 2022 and beyond, the focus of mRNA will shift away from boosters for Covid-19 variants to tackling an array of other vaccines and treatments in less time and at lower costs than traditional methods. Already, mRNA vaccines are being developed to battle malaria, tuberculosis and the human immunodeficiency virus, or HIV, that causes AIDS. Moderna has been pouring resources into research to use mRNA technology to fight cancer.

Whether it is heavy rains and floods across Southeast Asia or intense heat waves, extreme droughts and extended fire seasons in Australia, or higher temperatures, windstorms and rising sea levels in Europe and North America, climate change is real. Not surprisingly, climate tech is one of the hottest segments of technology. So far this year, a record US$38 billion of venture capital (VC) money has been poured into climate tech start-ups, up from just US$6.6 billion in 2016. When the final tally is done, total VC funds directed at companies trying to reduce greenhouse gas emissions and address the impact of climate change is likely to exceed US$40 billion in 2021. You are likely to find the biggest winners where VC money is flowing. Larry Fink, CEO of the BlackRock, the world’s largest asset management firm, said recently that the common thread in the trillion-dollar market-cap companies of the next decade will be their focus on climate tech.

Assif Shameen is a technology writer based in North America

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