I know I shouldn’t do it–predictions too often are either obvious or wrong–but I can’t help it. If I have to think about what’s coming in 2011, and I do, I might as well inflict those thoughts on the rest of the world. Isn’t that what blogging is all about? Anyway, here’s what I expect to see this year:
* There will be at least one monster initial public offering in tech. Take your pick (in more or less descending order of likelihood): Skype, Groupon, Zynga, Demand Media, LinkedIn, Twitter, Facebook (only if it has to). But despite many stories that will call this event a bellwether, the IPO won’t bring back anything like the bubble days of the late 1990s (and thank goodness for that) because there are still only a few marquee names that can net multibillion-dollar valuations. UPDATE: Well, so much for that descending order. LinkedIn apparently will be the first to file–though whether it will be a “monster” IPO is another question. UPDATE 2: Well, here’s that monster IPO–since it’s hard to believe Facebook won’t go public if it has to disclose financials anyway. But it likely won’t happen until early 2012. Update 3: Now Groupon appears to be leading the IPO derby. Update 4, 1/20/11: Now it looks like Demand Media will be the first out. Again, not sure that’s the monster one, but if it’s successful, more will come.
* App fever will cool. Good apps that encapsulate a useful task or bit of entertainment–Angry Birds, AroundMe, Google Voice–will continue to do well. But those apps that do little more than apply a pretty layer atop Web content won’t get much traction–and moneymaking opportunities are uncertain in any case. The bigger issue: Once HTML5 becomes the widespread standard for creating Web services, enabling much more interactive Web services right from the browser, I wonder whether the need for separate apps will gradually fade.
* Google will get closer to offering a social networking service–or at least incorporating social features into other services–but they won’t slow down Facebook. Lots of people think Google will bellyflop again, after failures with Orkut, Buzz, and Wave, but I don’t buy the argument that the company’s algorithmic DNA can’t produce useful social services. (After all, the PageRank algorithm underlying its search is inherently social.) At the same time, Facebook long since left the launchpad, and the best Google can do is to divine the next step beyond overt social sharing.
* It may be the fastest-growing company ever, but Groupon’s growth will slow. Of course it will! Otherwise it would be larger than Google by, like, July. The bigger question is whether eager investors will understand that as fast as the company is growing, and no matter how well it’s pursuing a local-business opportunity that many have failed to corral, it’s no Google or Facebook when it comes to net profit margins. Or at least I can’t imagine how it can be, if Groupon has to hire thousands of sales people and copywriters. But give it credit for cracking open at least a piece of the local-business market–and unleashing a flurry of competition, from a gazillion daily-deal startups to Google.
* Cable television cord-cutting (or at least cord-shaving) will accelerate thanks to continuing high unemployment, the growing amount of content on Netflix and other alternative services, and the likelihood that Internet-TV devices will keep improving. (For all its mixed reviews, Google TV will start to get more interesting as prices drop and TV apps arrive.) But the falloff in pay TV subscriptions will continue to be muted by the power that top cable networks wield, especially in sports and recent hit shows. And let’s face it, more than 100 million people currently paying for cable and satellite services know what they want.
* YouTube will finally become a business. Between content deals, a spate of new ad formats, and the realization that online video ads are really the most effective brand advertising, Google’s video site will start bringing in the revenues that its massive audience always promised. This will be a big boost for Google’s display ads that CEO Eric Schmidt has been promising would be the search giant’s next billion-dollar-plus business.
* A Verizon iPhone will push smartphones into the truly mass market, because thanks to Verizon’s network, the damn things will finally work as phones as well as computers. But Verizon’s gain won’t necessarily come at the expense of Android phones, which are getting better all the time, and maybe not even AT&T; there’s plenty of growth to be had from feature-phone users making the switch to smartphones.
* Facebook will make steady progress on more targeted ads, finally providing some clarity after years of promises on how it’s going to fulfill the expectations implicit in its breathtaking valuation. In the past six months, I’ve already been getting noticeably more relevant ads on Facebook. But like every other company employing such targeting, it will keep running into privacy worries that could slow the rollout. And I’m still skeptical that people’s “likes“–or their friends’ likes–will be as accurate an indication of what they might buy as what they type into a search box.
* Game mechanics will spread further into realms such as e-commerce and health care. But these incentives and rewards that get people to play otherwise boring games such as FarmVille won’t be the panacea for Internet startups that some investors hope.
* Location-based services such as Foursquare and Gowalla will struggle to reach the masses. To date, they simply haven’t offered people a compelling reason–beyond those game mechanics, and rather weak ones at that–to bother checking in wherever they go. Coupons and special offers related to your location or the particular place you’re visiting will be crucial to making this activity worthwhile, but it obviously takes awhile to build a critical mass, because I hardly see any so far, and none very interesting.
* Q&A services such as Quora and Facebook Questions will start to get traction beyond the digerati. Quora, in particular, has an amazingly high signal-to-noise ratio at least for now, providing a glimpse of how the Internet will provide ways to tap people’s brains, not just the information they’ve decided to put on a Website. At the same time, these services could produce a venue for very targeted advertising.
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