When you think about high-tech, connectivity and the Internet of Things, perhaps Silicon Valley comes to mind. But it’s Greater Phoenix where that innovation now goes to scale.
Greater Phoenix doesn’t get much rain, yet a perfect storm of ideas, innovation and industry have converged to make the area the destination for the next wave of technology. The emerging tech hub is young, with a median age two years below the national average. It boasts a well-educated talent pipeline, high-quality university system, overall market affordability and an attractive operating environment with low taxes and sensible regulation. At the same time, traditional tech cities, such as San Francisco or Seattle, face rising operating costs, high costs of living, over-regulation and punishing tax burdens.
The region’s legacy historical industries – aerospace, defense, micro-electronics and healthcare – have pivoted to the connected world, joined forces with emerging disruptors and focused attention on the Internet of Things. The area’s young companies are largely anchored in IoT, industrial IOT, in software and cybersecurity, and they have redefined Greater Phoenix. The Internet of Things is really the thing in the region, creating “ The Connected Place” rooted in five sectors.
Arizona has leveraged its regulatory position to advance autonomous vehicle (AV) testing with few restrictions. While other states have stringent barriers in place that make it difficult to move an AV from testing to market, Greater Phoenix offers a streamlined opportunity for the industry to flourish. Waymo and Local Motors have come to the region and joined a dozen others testing AVs. The region is now discussing building an autonomous vehicle institute that would create the nation’s first AV safety certification process. The public-private partnership will include Arizona State University and other partners. The state will also be an early AV adopter, with a large population of both young and old creating demand.
Greater Phoenix has helped pioneer wearable technology for the military, healthcare and fitness/performance industries. We’re the nation’s fifth-largest defense contracts market, with every major defense contractor operating with a significant presence. Arizona State University and the U.S. Department of the Army have partnered on a $100 million plan to put wearable real-time communication devices on flex displays on our troops. In healthcare, Mayo Clinic, Dexcom and MD Anderson work in Arizona on wearable diagnostics that focus on wearables for detection, monitoring and telemedicine. The area attracts people who are into fitness, so wearables aimed at optimal fitness and athletics, such as exoskeletons and concussion detectors, have found a home for testing at Barrows Neurological Institute in Phoenix.
Whether it’s Honeywell building connected devices and planes, or Amazon and other retailers doing e-commerce, Industry 4.0 is about machine learning and connected distribution devices. The next wave of American industrialization will bring about more automated facilities featuring point-to-point, machine-to-machine and machine learning. That has forced our university system to adapt to supplemental automation as e-commerce continues to grow. SkyBridge Arizona at the Phoenix-Mesa Gateway airport will eventually enable Mexican customs to pass products bound for Mexico from our inland port without having to go through another process. In 20 years, we will have mass warehouses that will seamlessly ship products into Mexico and Latin America. As that nation’s youth continue to raise demand for e-commerce sales, Phoenix and Mesa will become a major hub for exports in all of these facilities.
The region is a top-five hub for cybersecurity companies. Of the more than 300 organically grown software companies in the area, the majority work in SaaS or cybersecurity. Combined with the area’s long-standing aerospace, defense and state department employment, there’s a lot of cybersecurity growth in both data protection and security operation centers. In 2017, Switzerland-based Kudelski Group chose Phoenix for its U.S. headquarters over San Francisco and Denver. The area has also seen growth in security operation centers. Boeing has its most advanced center in the United States in Mesa, while Amazon quietly moved a major center as well. Within the next two years, expect another dozen Tier-1 technology companies to place mission-critical, cyber-threat analysis centers in Greater Phoenix.
Arizona recently passed legislation to boost the development of blockchain- and FinTech-enabled technologies. We launched the FinTech Sandbox earlier in 2018 to encourage FinTech blockchain cryptocurrency activity in the market and allow companies to test up to two years with consumers in Arizona under oversight of state attorney general’s office. As with AVs, we give latitude to companies to test their technologies. Our intent is to create reciprocity zones around the world, in places such as Dubai, London and Singapore, to encourage their companies to come to Arizona and test products before starting formal licensing. Blockchain will disrupt virtually every sector — we expect Greater Phoenix to be the place where that disruption begins.
Chris Camacho is president and CEO of the Greater Phoenix Economic Council, one of the nation’s longest-standing public private partnerships for economic development. During his tenure, GPEC has led the attraction of more than 280 companies creating 47,011 jobs and $4.4 billion in capital investment. Some of the more notable projects include Apple, Silicon Valley Bank, Zenefits, GoDaddy, Yelp, Amazon, Garmin and General Motors. He oversees the domestic and international business development and market strategies while serving as GPEC’s executive leader in community interactions.