2011: Apps Get Spendy, Carriers Get Grabby, Google Loses Its Way
Every year for the last five years I’ve made it a habit to attend an annual dinner at New York’s Waldorf Astoria hotel hosted by Mark Anderson, the CEO of Strategic News Service. Stratnews is a newsletter that circulates to senior executives of several tech companies, and Anderson also runs a conference called FIRE (Future In Review), where Oracle co-President Mark Hurd appeared last month. At this dinner, Anderson gives a speech during which he makes 10 predictions concerning the tech economy for the coming year, and it’s always interesting.
This year I’m not attending because I had other things to do, but I managed to catch up with Anderson by phone this morning to get a quick rundown of his predictions. Here they are, as summarized by me with a few quotes from my chat with Mark:
1. The smartphone market breaks in two. Secure for the enterprise vs. consumer-oriented. As companies become increasingly concerned about protecting their intellectual property from being exposed or stolen in network-based attacks, corporations will become a lot more careful about allowing employees to use smartphones on their networks. “Research In Motion will get a ‘yes’ nod right away, Apple’s iPhone will get a tentative ‘yes’ and Microsoft will be next in line after that if they’re willing to see the opportunity that’s in front of them, with a special secure version of Windows Mobile 7. Everything else, Android in particular, will be in the other seat.”
2. Wireless carriers make a grab for power. Increasingly marginalized as the owners of so-called dumb pipes, carriers will use Google’s Android to make a grab for power they’ve been generally losing lately on the handset. “Android gives carriers power while Apple’s iOS takes it away. The long-term trend toward the carriers ultimately losing their power will not change, but in 2011 they’ll see Android as a ticket to regaining some of the power they’ve lost on the handset.”
3. ITunes seeds its own competition. As much as it appears to be the monolithic player in digital media, iTunes will seem less so this year. “I think Netflix is going to be an amazing story in 2011. It may have out Hulu-ed Hulu in terms of video.” However, iTunes’ control of the music market will remain unchanged.
4. The free-app ecosphere hits a money wall. All those inexpensive and free applications on the iPhone and Android phones will start to cost a lot more than they did before. “If it’s an app that helps you rent a car from Hertz or fly Southwest Air it will still be free. Real smartphone applications will start to cost money and the prices will escalate. They’ll go from costing zero to $3 to between $10 and $30.”
5. Google loses its way. Google will fail to answer the fundamental question, “What business am I in?” and will be perceived as confused and lacking a cohesive strategy. “Google is all over the place with its driverless cars and Google phones. There’s lots of great ideas bubbling up through the employee ranks getting nods from top management, but I don’t see any strategy there. It’s a fun place to work, sort of like a Xerox PARC for grown-ups. And there’s nothing wrong with that unless you’re a shareholder. There’s never been a company with so much money and so random a strategy as Google.”
6. The year of the electric car, part 2. Electric cars start showing up in real production numbers, and charging stations for cars start popping up like weeds. “The numbers begin to shoot up in 2011 and they never stop.”
7. Carry-alongs–netbooks, tablets and the like–remain the fastest-growing segment of computers. Expect to see a lot more 9-inch and 7-inch devices this year.
8. Data Matters. Oracle takes off and becomes a global platform for databases. “Larry Ellison and Mark Hurd working together remind me of Bill Gates and John Shirley. One is the brilliant visionary and strategist, and the other is the genius operations guy. SAP will suffer as a result, and in fact already is. It will get worse.”
9. Net TV is in, cable is out. Internet-based TV options will penetrate about 40 percent of U.S. households, which will trigger a revolution in mass media. Cable and satellite providers will suffer. Cable-cutting is real and will be seen not as the result of consumers cutting back in lean economic distress, but as making a permanent choice. “They won’t be back.” Netflix (see prediction No. 3) will make a breakout play to reach them.
10. E-Books go mainstream Though their share of the book-publishing market will remain fractional, the growth of that fraction that is e-book sales will go ballistic. Expect revenues in the ballpark of $160 million per quarter and a compound annual growth rate of about 140 percent. “E-reading will become as common as eating with a spoon.”
So how accurate is Anderson? Very, he argues, though what forecaster wouldn’t? You can judge for yourself. Here’s a story I did last year for Bloomberg Businessweek on his predictions for 2010, and another on his predictions for 2009.