With January’s slew of announcements and earnings reports finally complete, the changes to the industry in 2013 are already clear. In this article I’d like to set out my predictions for the technology industry for the remainder of 2013.
1. Industry commentators are wrong and are stuck in a pre-1981, pre-Microsoft “hardware mindset”
The mobile industry is no longer about the device. The last few years have been about perfecting the mobile device. Smartphones are now derivative, innovation has already happened, and Apple’s share price is suffering partly because of this. For 2013, all important mobile innovation will be software-based. And the real value created will be in monetising fickle mobile users. Facebook, Apple, Amazon and Samsung will flourish or wilt based on their ability to produce great software, not great devices.
This situation has precedents. Legend has it that a power tool company, under pressure from new market entrants in the 1980s, asked itself a fundamental question: “What do we sell, drills or holes?” This is exactly the question that Apple and others must be asking themselves. The devices are secondary. It’s their purpose that it absolute. Most industry commentators are currently locked into an outdated hardware-centric view of the world, shades of pre-August 1981, when IBM installed MS DOS 1.0. This is antediluvian and they are wrong.
2. This will be Facebook’s year
Facebook’s IPO was a disaster. Facebook has since ‘gotten religion’ and upped the pace of mobile innovation dramatically. The recent announcement of Graph Search represents a huge opportunity for the company to transform over the next 3-5 years. Graph Search, in my view, will have a dramatic and positive impact on advertising revenues over time, especially on mobile. This year, I predict Facebook’s share price will climb above $38 for the first time since the IPO as analysts and investors form a better understanding of the huge commercial potential Graph Search offers.
3. Amazon – the dark horse of the mobile market
Amazon is coming on quietly, but incredibly quickly, in the mobile eco-system. Amazon has incredible assets, including a huge credit-card-enabled user base (only Apple can match it) and a proven ability to innovate with low-cost mass market devices such as the Kindle. Amazon also has the software sophistication to set the global standard for online retail customer engagement, still unmatched by many lesser sites. And Amazon can scale, across any market it enters. The rapid take-up of its low-cost, wireless and mobile enabled Kindle underpin my prediction that Amazon will be the next emerging force in the mobile eco-system. We will start to see this in 2013.
4. The mobile industry will experience a major shake-up
BlackBerry 10 isn’t a year late. It’s seven years too late. The business will eventually be pureed by the competition. BlackBerry’s launch of BB10 was neatly choreographed and the reviews have been largely positive. BlackBerry’s issue, though, is that this launch is too little too late. The business recorded its first ever fall in subscribers in the final quarter of last year. BB10 will deliver a resurgence, but this will be entirely temporary. The business has been too hardware-focused for too long and its market will be eaten by others. Its trump cards, enterprise integration and BBM, are being picked off my Microsoft and What’s App respectively.
5. Tech IPO intentions will become a major lure for M&A stalking horses
Several emboldened European next-generation businesses will announce their intention to seek a listing in the US. My view is that the majority of these businesses have no need for the capital injection that a listing would deliver. Most next-generation businesses are lean and have relatively little in the way of burdensome infrastructure or the relatively bloated headcounts that technology businesses had in the eighties and nineties. IPO intentions, in our view, will increasingly be a ruse to smoke out potential buyers.
6. This year we will see major innovation out of developing markets.
Developing markets are, for the most part, no longer developing. They are here. The heterogeneous customer base in these markets will make it considerably easier for innovators to build a large profitable user base. I expect the convention, which is that western technologies seep into developing markets to reverse in a major way. One major example is redefining smartphones; we will see sub $100 smartphones in greater volume out of China and other markets which will redefine what a ‘smartphone’ is internationally.
7. Ad Tech – social media settlers have marked out their territory. Now it’s time to monetise them.
Applying technology to performance advertising has been coming for years. This year will see Ad Tech become ubiquitous across platforms and geographies. In particular agencies will work out how to monetise performance advertising across platforms to much greater degree than previously.