What to Watch in Tech in 2016: The Bubble, VR, Yahoo in Decline and Apple's Midlife Crisis

silicon valley bubble watch
Yahoo's Tumblr buy in 2012 has yet to payoff. Kimberly White/Reuters

Bubble Watch

If there is a tech bubble, it's happening just outside the view of Wall Street. Unlike the 2000 bubble, where public stock valuations flew into the sky without accompanying earnings, this time around the concern is with unlisted companies that are getting investments that peg values on venture capital estimates. These billion-dollar unlisted companies are called "unicorns," and while you're probably heard of some—like Uber, AirBnb, Snapchat and Slack— others, like Quikr, Kabam and Farfetch are mysteries to most.

One unicorn, Square, tested the IPO market in 2015 and found its $6 billion private valuation was a lot closer to $4 billion on the open market. That discrepancy should have sent some shockwaves through the venture capital world and there are some signs the easy money is drying up. But what happens to the private money if it really is overvalued? It may not end well for investors or for employees.

Is 2016 the year when startups come back to Earth?

Can Facebook Conquer Publishingand Outer Space?

Facebook is growing like snowball rolling into an avalanche. Facebook revenue increased 40 percent in 2015 and inside the company employees are focused on getting the next billion users.

The media world was well aware that 2015 was the year Facebook moved into publishing, unveiling Facebook Instant articles. The feature was supposed to take articles from media companies and then make them load quicker for Facebook users, but it also just happened to put the company into the publishing (and advertising) game. It's a move that has most of publishing a little freaked out—most media companies are hugely dependent on the Facebook Newsfeed for traffic now that the website home page is going the way of A1 (that's the first page of a newspaper for those of you who've never seen one).

And as for its other big plans, well, they're not quite outer space, yet. But the tech giant is building planes that use lasers to give countries in the developing world Internet. It's this kind of big thinking that's helped Facebook way outgrow the label of a social media company. They've even bought the most-hyped gadget in gaming in the past few years, Oculus Rift, which brings me to…

Can Virtual Reality Blow Your Gaming Mind?

The world was once briefly enamored with VR back when Clinton the first was president, a trend that produced a string terrible movies in the 1990s. It's taken 20 years, but the technology is finally good enough to be convincing. Everyone is going to big on virtual reality. Microsoft has the Hololens, Sony has its own VR project, Google's Cardboard is cute until you realize it really works and Samsung's headset was a hot holiday gift.

But the hottest VR arrival for 2016 is set to be Oculus Rift, the Kickstarter project that Facebook bought for more than $2 billion. Will it change gaming forever? (And yes, it could transform the porn industry too.)

Apple's Midlife Crisis

Apple is turning 40 this year, and like a lot of people entering middle age, the company is asking itself a lot of existential questions. It still owns several industries and boasts the most diehard fans of just about any brand in the world, but there are signs it may be losing its cool. The Apple Watch, while adored by some, hasn't yet showed it can transform the world the way the iPad and the iPhone did. The gap between the iPhone and other smartphones seems to be shrinking and Apple Music is barely out of its trial period. Apple stock is ending the year down a bit, and significantly off its all-time high from May 2015. The company needs to make 2016 about proving it's still the coolest kid in the room.

Yahoo's Doldrums

The voices calling for an end to Marissa Mayer's time as CEO at Yahoo are getting louder—although if Mayer can't turn the company around, who can?

The biggest question for Yahoo over the past 10 years has been why the place seems to falling behind with the same talent as the rest of Silicon Valley. Full disclosure, the author worked at Yahoo and can confirm that it's packed with smart, passionate people, but that hasn't saved it.

Yahoo's stock is way down this year—more than 33 percent since 2014. And if it weren't for two very savvy investments in Yahoo Japan and Alibaba and some cash, Wall Street would value the company at nothing. That strange math was at the core of the plan to spin-off parts of the company and save it from a giant tax bill. That idea was ultimately scuttled, but it showed the pressure the company is under from investors to do something big.

The $1.1 billion Tumblr acquisition in 2013 has yet to pay out, and with home page traffic and email—long Yahoo's bread-and-butter—declining for everyone, Yahoo has real problems. And Mayer can't click her heels together and fix them.

It's a Google—er, Alphabet—Planet

If Yahoo's attempts at a self-spinoff were met with scorn, Google's strange rebranding as a holding company called Alphabet that owns Google was met with the chin-scratching pause that normally follows a bold chess move. Was it a tax move? A way of keeping the company looking forward while appeasing investors? Something no one but Larry Page and Sergey Brin understand?

Either way, Google's stock soared in 2015. Whatever the future holds, the company seems to have a strong, core business to fall back on. Competition has done little to upset its dominance in search or in ads.

A message on Alphabet's minimalist website emphasizes "taking the long-term view," which is what the company has always done. Several of Google's big moves could pay off in the coming months, like its emphasis on artificial intelligence and health technology. They also haven't given up on Google Glass and the next version could be the one that changes the game for heads up displays.

The company is also set to unveil a self-driving car in a partnership with Ford at the Consumer Electronics Show next week.

Honorable Mentions

Encryption now comes standard in a lot of Silicon Valley products now—and it's also become a trope in presidential debates for both parties. The candidates love that Silicon Valley is driving innovation and creating jobs, but they hate that it's making it harder for law enforcement to see what we're up to. No matter who wins the Republican and Democratic nominations, expect the right of the government to snoop on your phone to be a big issue in 2016.

Uber is acting more and more like a grown-up with each passing month. Will its new offices in Oakland San Francisco-ize the city across the bay? It's a strange thought to think of the world's black car fleets being run from the town that has "no there there."

After some stagnation, in 2015 Twitter added a CEO and some snazzy new touches on its product. Can the other massive social media company start growing again in 2016?

Silicon Valley the show will be back to needle the real Silicon Valley with its third season in 2016. Things keep getting worse and worse for the team at Pied Piper, but the show added relatable female characters and season two was the strongest yet. And the show has ruffled some feathers. Back when the show came out, Elon Musk said, "I really feel like Mike Judge has never been to Burning Man." Burn!

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