Given that it’s January, it’s time for predictions. Which means that it is first time to revisit last year’s predictions; for those interested here are the recaps for 2010, 2011 (Parts 1 and 2) and 2012. A few words before we continue, however.
Historically, the predictions here have been heavily based on logical extrapolations based on extant market factors. The advantage of this approach is that it tends to be fairly accurate; the worst I have performed in the three prior years of scoring was 67% correct. The disadvantage, however, is that this approach yields predictions that are grounded in fact but somewhat less exciting, as predictions go. These predictions have been accused, at times, of being “boring.”
In response to
public shaming a suggestion from Bryan Cantrill last year, however, I broke with this tradition and was more aggressive with my predictions for 2013. On the plus side, this yielded predictions that were at least theoretically more compelling. On the downside, however…well, you’ll see.
On to the predictions.
Apple Will Be Rumored to Be Looking at Yahoo
“Hence speculation about potential acquisitions like Twitter that might infuse the company with the DNA necessary to compete effectively with Google, Microsoft and others in the services arena.
While many names will continue to circulate, the prediction here is that one name that will emerge in 2013 will be Yahoo. Long regarded within the industry as a company adrift, one that excelled at alienating and hemorrhaging its best technical talent, the 2012 hire of Marissa Mayer seems to have something of a stabilizing effect on the company. Any potential turn around is likely years away, but Mayer seems to have at least stopped the bleeding. And with some recent successes like the Flickr iPhone app, they may be righting the ship.
But that won’t stop the rumors from circulating at some point, particularly if Yahoo continues to rebound under Mayer’s tenure. And to the Stephen O’Grady of January 2014, no, this piece does not count as a rumor.”
Being unable to count last year’s piece, the question is whether there were rumors of a Yahoo acquisition of Apple. The answer to that depends on how one defines rumors. Certainly Apple and Yahoo grew closer (“Yahoo, Apple Discuss Deeper iPhone Partnership“) but that does not constitute rumors of a merger. Many argued that the two companies were a logical match, see: “Should Apple Just Buy Yahoo!?”, The Motley Fool or “Why Apple Should Buy Yahoo!”, The Street. Those are rumors, right?
Unfortunately, no. Arguments from analysts – financial or industry – do not by themselves constitute a rumor. While I still believe in the logic behind this prediction, therefore, without even a single story citing unnamed “sources” concerning an acquisition, this prediction must be counted a miss.
The Biggest Innovation in Smartphones Will Be Pricing
“On Apple.com right now, the cheapest unsubsidized iPhone is $649.00. Even if one concedes that Apple’s design and polish is worth paying a premium for, the question is whether it’s worth twice as much as an Android device with comparable specifications. Currently, Apple is relying upon carriers to make them price competitive by presenting customers with consumer afforable pricepoints from $199 to $399.
But if Google and its partners can continue to make high end devices available at a price point half that of what Apple is charging, something has to give. And that may well be Apple’s margins. Rumors of Apple’s low-cost iPhone indicate that they are not only aware of this pricing umbrella, but poised to eliminate it.”
If I’m correct, the cost of smartphones will come down substantially in the next twelve months.”
On the one hand, there’s the $99 iPhone 5C and the $349 Nexus 5. On the other, there’s the $649 iPhone 5S, the $649 Samsung Galaxy S4 and the $599 HTC One. Clearly the market for higher end, higher margin handsets is being sustained. Just as clearly, however, signs of erosion – like the 5C itself – are evident.
This isn’t entirely a hit, but it’s not entirely a miss. I’ll call it a push.
Collaboration Innovation and M&A Will Spike
“Rapportive was not the first collaborative software add-on startup to be acquired (LinkedIn, 02/12), but it will certainly not be the last. With more collaboration softare users operating in SaaS environments, the opportunities expand horizontally for developers with bright ideas to target the space. Whether startups like 410 Labs (Mailstrom), Baydin (Boomerang) and so on get acquired or merely have their features replicated by the larger platforms they plug in to is unclear, but like Rapportive before them the featuresets they’ve produced independently are too valuable not to be incorporated back into the products they complement.
We will see that happen, one way or another, in 2013.”
In a word, no. We didn’t see that happen at all. Inexplicably, neither 410 Labs nor Baydin were acquired, nor were their features replicated. Collaboration more broadly saw minimal M&A activity, and while vendors like Box or Dropbox did expand sideways via features like Box Edit or Albums, overall the pace of innovation in the space appeared to slow.
Making this prediction a miss.
Data Moats Will Become a Stated Goal
“As mentioned in the review of last year’s predictions, many businesses are beginning to comprehend the opportunity – and more importantly, threat – of data aggregation and collection. What we’ll see in 2013 is an increased understanding of the data moat, and a more widespread utilization of them as points of differentiation.”
While the market as a whole still has yet to fully digest the reality that data is an asset, and that smart vendors aren’t selling products any longer but products enabled by data, there were those who perceived the opportunity. Spiceworks, of course, has seen the opportunity all along, but newcomers to the market like CloudPhysics with its concept of “collective intelligence” are helping push the rock up the hill. And the interest in – and active product plans around – data from within our customer base spiked dramatically.
Finally then, I’ve got a hit.
Google’s Compute Engine Will Emerge as the Most Important Amazon Challenger
“While there are many would-be cloud providers in market, Google is different. The company has the advantage of having run infrastructure at a massive scale for over a decade: the search vendor is Intel’s fifth largest customer. It also has deep expertise in relevant software arenas: it has run MySQL for years, the company was built upon customized versions of Linux and it is indirectly responsible for the invention of Hadoop (via the MapReduce and GFS papers).
In 2013, then, Google will emerge as Amazon’s most formidable competitor.”
Arguments could be made here for several providers, most notably Microsoft Azure, but with GCE finally going GA, interest in the platform is outpacing competitive platforms substantially. In spite of interesting announcements from the likes of CenturyLink (Tier 3), CSC (Infochimps/ServiceMesh), Joyent (Manta), Softlayer (IBM), and so on, then, GCE is top of mind for a great many developers at the moment. And while he stopped short of annointing them the second place candidate, Ex-Joyent CTO Jason Hoffman is at least bullish about Google’s technical capabilities if not their commitment level in this interview.
I’ll call this a hit.
The Focus of Online Education Innovation Will Be Less on Learning Than Certification
“First, and most obviously, there are questions regarding the rigor of the educational experience. Without classroom supervision, and at massive scale, how can educators ensure that students are actually paying attention to the coursework? Traditionally, this is accomplished via testing, but distance education poses challenges here as well. How can employers be sure that those claiming to have completed online courses were actually the ones taking tests?
In 2013, then, we’ll online educators using innovation to tackle the first problem.”
Contrary to this prediction, it’s possible that 2013 may represent the beginning of a decline in the importance of certificates and titles. As the Boston Globe’s Scott Kirsner wrote:
While MOOCs seem like they can only enhance a job candidate’s appeal, many people I talked to noted an important shift in the world of hiring. Credentials, whether a MOOC certificate or an MBA degree, are declining in importance, while portfolios are on the rise.
What’s a portfolio? Some sort of evidence of your expertise and abilities online, like design work showcased on Dribbble.com, software code on GitHub, a mobile app you’ve built, or a sales presentation you developed and posted to SlideShare.
And indeed, the lack of emphasis on a formal education is becoming increasingly common in the technology sector, at least outside of specific employers who put an emphasis on educational pedigree.
All of that said, tactically this was a year in which MOOCs began to examine and address the problem of certification in earnest. In September, for example, edX – the institution jointly founded by Harvard and MIT – announced a pilot program to certify that the students completing the coursework were the actual students in question. Coursera’s version of this is called Signature Track.
Whether or not employers will broadly choose to elevate the portfolio over certificates and degrees at some point in the future is as yet undetermined. But at least in the present, MOOCs are aggressively moving to reassure the downstream customers of their services – employers – that their offerings have real value.
I’ll call this a hit.
Every Business Will Throw Money at Data Teams
“In other contexts, enterprises will eschew efficiency and consume infrastructure resources (primarily via public cloud offerings like Redshift) at alarming rates, believing that the solution for poor algorithms is more, bigger data.
The outcomes from these collective efforts will be mixed, but spending will continue unabated. With the world having been revealed as the province of the Big Data winners, businesses will ratchet up already heightened spending on data fields to unprecedented levels.
It’ll be a good year to be on a data team, in other words.”
On the spectrum of prediction risk that Bryan Cantrill has proposed – Safe, Likely, Possible, Exciting, Spectacular – the above prediction is only fairly classified as “Safe.” Even if the demand for some new, unpredicted emerging technology outstripped the importance of data science resources, it doesn’t make them unimportant. Indeed, data scientists are a currency in demand from a wide variety of resources today, from financial services to traditional ad/media spend to social network/search to retail to, in the person of Hilary Mason, VC.
So while hard figures are harder to obtain here – more reliable than Google Trends, at least – based on the observed demand and direction of data science types in our space, it seems safe to call this a hit.
Explicit Services Will Be Advantaged Over Implicit Services
“[Google Now] is pretty easily Android’s best new feature, and is clearly the shape of things to come. In 2013, then, we’ll see Google continue to make Google Now more useful, but also see competitors like Apple or Microsoft attempt to surface some of the latent features of their platform in a more explicit fashion. Voice search, Siri and competitors may be enormously capable, but as long as vendors are depending on users to discover those hidden features, they will go generally unused.”
Google Now has certainly done its part to make this prediction come true, both expanding the topical coverage of Now and porting it to iOS. Apple, meanwhile, has invested inorganically in acquisitions such as Cue, in all probability as a competitive response to Now. As has Yahoo, interestingly, which picked up Aviate for roughly 2X what Apple paid for Cue. Aviate, for those who have not used it, is an alternative interface for Android that adjusts itself based on factors such as location.
Given the above, and the lack of any observable breakout success for voice services such as Siri, I feel safe in calling this a win.
Telemetry Based Models Will Be Democratized
“The bet here is that the 37signals experience will be predictive, and that many shops will begin collecting and mining their generated telemetry in search of performance gains, feature improvements or even additional value added services for customers. There’s not much choice in the matter: if competitors will be using their telemetry, businesses will be forced to use theirs to keep up. And the democratization via open source nature of these tools will enable this.”
While it is true that the tools 37signals employed – Impala, among others – saw upticks in adoption, the business of collecting and operating on telemetry was anything but democratized in 2013. It’s not primarily a software problem; the technology available, even at no cost, for collecting, storing, and querying datasets even at scale is quite good. But the challenge for many of the businesses we work with is focus. Even as many businesses as written above acknowledge their interest in leveraging telemetry for mutual opportunity between customer and vendor, and are actively exploring same, the lack of out-of-the-box solutions depresses interest. What we hear from them is something like: “I’m in the business of building $MYPRODUCT: leveraging the analytics it generates and selling that is a fundamentally different business.” The would-be solution to this demand, which is part packaging and part analytical expertise, is a substantial opportunity for someone.
But as it’s an opportunity largely unfulfilled at the present time, this is a miss.
The Most Important Cloud Question Will Be Not Whether to Use it But How Much Am I Already Using?
“While the cloud model generally and price competition specifically have acted to make cloud resources more and more affordable, at scale even small costs add up. As executives everywhere are discovering.
It should be no surprise, then, that a cottage industry of startups (Cloudability, Newvem, PlanForCloud (Rightscale), etc) has emerged to provide not only visibility into total costs, but proactive advice on utilization rates and optimization functionality.
While much speculation will still center on whether enterprises are or should be using public cloud resources, then, intelligent organizations will acknowledge that, like it or not, they will be using the public cloud in some form and seek the ability to measure that usage carefully.”
If Cloudability’s numbers are at all representative, then the enterprises that aren’t intensely focused on measurement of public cloud spend have a serious problem on their hands. In 2012, Cloudability customers spent an average of $21,500 an hour. By 2013, that number was $65,099 – an increase of 203%. And they’re predicting 3X to 4X growth by 2014. While those numbers are interesting, market behaviors alone would confirm the explosive growth of public cloud. From the acquisitions of the likes of Softlayer to Dell’s decision to go private to Oracle’s belated sponsorship of OpenStack, the pressure on market incumbents has become obvious to even casual observers. And as spend goes up, the importance of monitoring same – particularly for businesses unaccustomed to ongoing, annuity-style expenses – goes up in response. Which means that Newvem will not be the last company to be acquired in this space.
I’ll call this a hit.
The Final Tally
Out of ten total predictions, then, we have four predicted incorrectly, five correctly and one push. Which yields a success rate, less the push, of 55% – easily my worst ratio to date. That said, as with previous years I stand behind the substance of even the misses on this list, believing that many yet remain likely to occur – just not as quickly as I’d expect. Apple may not have literally have been rumored to be acquiring Yahoo, as one example, but the thought process behind it remains logical and defensible. While it’s a miss according to the binary scoring system here, then, it still has some value.
Which may help explain why, in spite of the bludgeoning I absorbed this year, I will be retaining the more aggressive approach for 2014 and years moving forward. Look for next year’s predictions shortly.