It’s that time of year for the annual Prognosticators’ Ball, when most of us dine on humble pie. I will be opining on what’s coming in 2012 for the parts of tech I follow, but first a report card on how I did a year ago. Here’s what I predicted, followed by my completely unbiased assessment of each:
* 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.
Bingo! Four of those companies went public (and one, Skype, got bought by Microsoft), but it remains clear that the IPO window opened only a crack so far.
* 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.
Wrong! I still wonder, even more this year, about the appeal of apps, which increasingly look like a return to the bad old days of constant upgrades. But the day of reckoning, if it ever comes, certainly didn’t happen in 2011.
* 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.
Bingo! Despite constant criticisms that it isn’t really taking off beyond the digerati, as well as nits about how it’s handling various features, Google+ is a very promising social beachhead for Google.
* 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.
Bingo! In fact, Groupon faced a number of challenges, not just growth, and its stock price remains below its first-day closing price thanks to concerns about rising competition, business model, and management’s ability to shepherd a public company.
* 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.
Half-right. TV ownership declined for the first time as some people realized they can cobble together alternatives to $100-plus cable subscriptions. But as I also said, most people still more or less like their cable service, so change will be slow.
* 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.
Still to be determined. With a $100 million investment in original content, a big redesign, and an accompanying push for advertising, this may already be a reality, but we don’t know yet. So I was probably a bit early on this one.
* 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.
Jury’s still out. Depending on whom you read, smartphone sales may or may not be outpacing feature phone sales. And certainly Verizon’s iPhone was a big hit. But I think it’s going to be a bit longer before smartphones truly reach the global masses.
* 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.
Bingo! While we won’t know Facebook’s ad revenues for sure until it files for its IPO this coming year, and it remains uncertain that its social ads will steal any thunder from Google’s search ads, the company’s doubling of revenues this year, to more than $4 billion, means it’s doing something right.
* 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.
Bingo! No knock on Foursquare, whose user base keeps growing pretty well, but Gowalla got sold and I ask you, how many of your friends use check-in services regularly?
* 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.
Wrong! Quora may be doing OK for all I know, but Facebook Questions went nowhere. At this point, it remains uncertain whether these services will be must-do’s for most people, let alone develop into real businesses. Then again, Siri on the iPhone could change the game.
All in all, not too bad. Now we’ll see how I do for 2012.