It’s easy to make predictions. It’s even easier to cherry pick correct predictions and hope the rest are forgotten. Believers as we are in accountability, however, for the fifth year in a row it’s time to review my predictions for the calendar year just ended. All of them, good, bad and ugly.
As is the case every year, this is a two part exercise. First, reviewing and grading the predictions from the prior year, and second, the predictions for this one. The results articulated by the first hopefully allow the reader to properly weight the contents of the second – with one important caveat that I’ll get to.
This year will be the sixth year I have set down annual predictions. For the curious, here is how I have fared in years past.
Before we get to the review of 2015’s forecast, one important note regarding the caveat mentioned above. Prior to 2013, the predictions in this space focused on relatively straightforward expectations with well understood variables. After some
serious shade thrown by constructive feedback from Bryan Cantrill, however, emphasis shifted towards trying to better anticipate the totally unexpected than the reverse.
With the benefit of hindsight, one thing is apparent:
Nevertheless, we press on. Without further delay, here are the 2015 predictions in review.
- Amazon is Going to Become More Dominant Thanks to “Honeypots”
In 2015, Amazon will become even more dominant thanks to its ability to land customers on what I term “honeypot” services – services that are exceedingly easy to consume, and thus attractive – and cross/upsell them to more difficult-to-replicate or proprietary AWS products. Which are, notably, higher margin. Examples of so-called “honeypot” services are basic compute (EC2) and storage (S3) services. As consumption of these services increases, which it is across a large number of customers and wide range of industries, the friction towards other AWS services such as Kinesis, Redshift and so on decreases and consumption goes up. Much as was the case with Microsoft’s Windows platform, the inertia to leave AWS will become excessive.
According to several metrics, AWS satisfied the prediction that it would extend its lead in 2015. This, in spite of notable increases in traction for several other players, most notably Google and Microsoft. Attributing the cause to this performance is a more difficult question, but it is interesting to note that AWS has a new title holder for the fastest growing service in its history, Aurora, which took the crown from Redshift. The rapid adoption of unique-to-AWS, and thus not externally replicable, services is suggestive of a user population that is willing to invest in premium, in-place services. As quickly as these services are growing, however, it is unrealistic to believe that they are the engines behind AWS’ broader acceleration: they’re simply too new. Which in turn implies that the growth of AWS is still fueled in large part by its core, basic offerings and that services such as Aurora or Redshift are important first for their ability to lock customers in and secondarily for the revenue they generate.
And so we’ll count this prediction as a hit.
- Kubernetes, Mesos, Spark et al are the New NoSQL
Not functionally, of course. But the chaos of the early NoSQL market is remarkably similar to the evolution of what we’re seeing from projects like Mesos or Spark. First, there has been a rapid introduction of a variety of products which require a new conceptual understanding of infrastructure to appreciate. Second, while there may be areas of overlap between projects, in general they are quite distinct from one another. Third, the market’s understanding of what these projects are for and how they are to be used is poor to quite poor.
This is currently what we see when customers are evaluating projects like Kubernetes, Mesos and Spark: the initial investigation is less functional capability or performance than basic education. Not through any failing on the part of the individual projects, of course. It just takes time for markets to catch up. For 2015, then, expect these and similar projects to achieve higher levels of visibility, but remain poorly understood outside the technical elite.
Developer and end user questions about emerging infrastructure projects are nearly ubiquitous. So are vendor efforts to answer these questions. Nor is this just Kubernetes.
Ten years ago, the most difficult software choices an enterprise had to make were a) which relational database and b) which application server to use. Today, they are confronted by a bewildering array not just of projects and products, but of distinct technical approaches and visions. Worse, these are moving targets; two projects that do not functionally overlap today may – probably will – tomorrow.
Until these coalesce around standard, accepted models much as Ajax once came to describe a mixed bag of unrelated technologies which were employed towards a particular approach, market confusion will remain and education will be a significant upfront problem for infrastructure projects major and minor.
We’ll call this a hit.
- Docker will See Minimal Impact from Rocket
Following the announcement of CoreOS’s container runtime project, Rocket, we began to field a lot of questions about what this meant for Docker. Initially, of course, the answer was simply that it was too soon to say. As we’ve said many times, Docker is one of the fastest growing – in the visibility sense – projects we have ever seen. Along with Node.js and a few others, it piqued developer interest in a way and at a rate that is exceedingly rare. But past popularity, while strongly correlated with future popularity, is not a guarantee.
In the time since, we’ve had a lot of conversations about Docker and Rocket, and the anecdotal evidence strongly suggested that the negative impact, if any, to Docker’s trajectory would be medium to long term. Most of the conversations we have had with people in and around the Docker ecosystem suggest that while they share some of CoreOS’s concerns (and have some not commonly cited), the project’s momentum was such that they were committed for the foreseeable future.
It’s still early, and the results are incomplete, but the quantitative data from my colleague above seems to support this conclusion. At least as measured by project activity, Docker’s trendline looks unimpacted by the announcement of Rocket. I expect this to continue in 2015. Note that this doesn’t mean that Rocket is without prospects: multiple third parties have told us they are open to the idea of supporting alternative container architectures. But in 2015, at least, Docker’s ascent should continue, if not necessarily at the same exponential rate.
Normally, this is where we’d examine quantitative data from sources like GitHub, Stack Overflow and so on to assess Docker’s trajectory and potential impacts on it. This is unnecessary, however. It would be difficult to build the argument that Docker was not impacted by Rocket in the wake of the June announcement of the Open Container Initiative. To be clear, this is a low level standard, one that permits competing container implementations: it is explicitly not an effort to make either Docker or Rocket the once and future container spec. And Docker’s momentum as a project has continued unabated.
But as welcome as the news was from a market perspective – standard wars are tedious and benefit few over the long term – the impact of Rocket and the drivers behind it are clear. Which makes this, unfortunately, a miss.
Scoring this prediction depends on whether the spirit of “major change” is accounted for. If we judge this prediction literally, it’s a miss because the platform did in fact see a major change in 2015. For the first time since the project’s inception, Android is moving to something other than a cleanroom reimplementation of the runtime. For reasons likely stemming from Oracle America, Inc. v. Google, Inc., Google is moving Android N to the OpenJDK project. Which is the literal definition of a major change.
If the context of the prediction is taken into account, however, the prediction is less of a miss. While the shift to OpenJDK is a big change for the Android project, it is still Java. What Google has declined to do, at least this time around, is make a change such as the one Apple is undertaking, replacing Objective C with the newly released (and open sourced) Swift.
In light of that fact, it seems fair to call this a push.
- Services Will Be the New Open Core
Which is why we are and will continue to see companies turn to service-based revenue models as an alternative. When you’re selling a service instead of merely a product, many of the questions endemic to open core go away. And even in models where 100% of the source code is made available, selling services remains a simpler exercise because selling services is not just selling source code: it’s selling the ability to run, manage and maintain that code.
If services were the new open core, what would we expect to see? One logical outcome would be commercial organizations – especially those who have historically embraced open core-like revenue models – deploying open source software as a service. Which is what we began to see in 2015. Previously, we’ve seen Oracle expand not just its business models but its financial reporting from the traditional on premise software offerings to incorporate IaaS, PaaS and SaaS. In 2015, this continued. In March, Elastic – originally known as Elasticsearch – acquired a company called Found, whose principal product was Elasticsearch offered as a service. Asked about the deal, Elastic CEO Steven Schuurman responded:
“At this point we have massive corporations who run 10, 20, 30, or many more instances of ELK servicing different use cases and they’re coming to us asking how to manage and provision different deployments. On the other hand, people ask us when we’re going to provide something as a service.”
IBM came to a similar conclusion regarding the demand for these types of database-as-a-service offerings, adding a company called Compose in July. Like Found, Compose was in the database-as-a-service business, and was added to IBM’s existing stable of software as a service offerings.
Less obviously, a large number of the commercial open source organizations we spoke with over the year were either exploring the idea of similar forays into SaaS models or actively engaged in their execution.
None of which, of course, should come as a surprise given the aforementioned traction of products like Aurora. Service-based models are increasingly in demand, as Schuurman said, which means that vendors will supply that demand.
This is a hit.
- One Consumer IoT Provider is going to be Penetrated with Far Reaching Consequences
If it weren’t for the fact that there’s only ten months remaining in the year and the “far reaching” qualifier, this would be better categorized as “Likely” or even “Safe.” But really, this prediction is less about timing and more about inevitability. Given the near daily breaches of organizations regarded as technically capable, the longer the time horizon the closer the probability of a major IoT intrusion gets to 1. The attack surface of the consumer IoT market is expanding dramatically from thermostats to smoke detectors to alarms to light switches to door locks to security systems. Eventually one of these providers is going to be successfully attacked, and bad things will follow. The prediction here is that that happens this year, much as I hope otherwise.
The problem with this prediction, again, is its specificity. In a year in which attackers found vulnerabilities in everything from from Barbie dolls to Jeeps, the fragility of the IoT ecosystem was revealed repeatedly. But while there were attacks on consumer IoT providers such as FitBit, none of them came with far reaching consequences. That we know of now, at least.
As much as this prediction is essentially inevitable, then, for the year 2015 it’s a miss. Thankfully.
This was, simply put, a miss, and a miss with interesting implications. Lambda’s server-less model was and is an interesting, innovative new approach for constructing certain types of applications. And it certainly attracted its a reasonable share of developer attention; the Serverless framework (AKA JAWS) checks in with over 6600 stars on GitHub – or about a third of what Node has – at present.
For all of that, however, Lambda adoption has not been proportionate to its level of market differentiation. For such an interesting new service, actual usage of Lambda has been surprisingly modest. On Stack Overflow, the aws-lambda tag has a mere 388 questions attached to it – Node has almost 110,000.
The question is why, and my colleague actually answered this in October:
So far Lambda adoption has been a little slow, partly because it doesn’t fit into established dev pipelines and toolchains, but also almost certainly because of fears over lock-in.
Lambda, in other words, has the same problem that Force.com and Google App Engine had when they launched: however impressive the service, developers are reluctant to walk into a room that they can’t walk out of. Which in turn implies that, counterintuitively, the best thing for Lambda at this point would be a competitive clone. AWS could potentially address this concern and jumpstart Lambda adoption by releasing an open source implementation of the service, even a functionally limited version, but given the company’s history this is extremely unlikely.
In the interim, then, AWS must either find ways to reduce the potential for lock-in or wait for other competitors to make its own product easier to adopt.
- Slack’s Next Valuation Will be Closer to WhatsApp than $1B
In late October of last year, Slack took $120M in new financing that valued the company at $1.12B. A few eyebrows were raised at that number: as Business Insider put it: “when it was given a $1.1 billion valuation last October, just 8 months after launching for the general public, there were some question marks surrounding its real value.”
The prediction here, however, is that that number is going to seem hilariously light. The basic numbers are good. The company is adding $1M in ARR every 11 days, and has grown its user base by 33X in the past twelve months. Those users have sent 1.7B messages in that span.
Anecdotal examples do not a valuation make, of course. And there’s no guarantee that Slack will do anything to advance this usage, or even continue to permit it. But it does speak to the company’s intrinsic ability to function well as a message platform outside of the target quote unquote business team model. What might a company with the ability to sell to both WhatsApp users and enterprises both be worth? My prediction for 2015 is a lot more than $1.12B.
Yet another prediction undone by an overly specific forecast. On the one hand, Slack’s valuation is enormously higher than it was entering the year. By March, in fact, a mere five months after the billion dollar round that mystified some observers, Slack’s valuation more than doubled to just under $3 billion. Having made the leap from application to platform in December, with a variety of third parties now treating it as a viable route to market, the company is unquestionably more valuable on paper than it was during its last round, even if the current funding climate has soured.
All of which validates the underlying premise to the original prediction, which was that the company was “hilariously” undervalued. The problem was the usage of WhatsApp as the yardstick. Even with its valuation more than doubled, Slack is still not within hailing distance of the $19B WhatsApp fetched.
I remain convinced that the company’s strict business focus and blind eye towards off label usage of the service is doing it no favors from a valuation standpoint, but as the saying goes, it is what it is.
Which means that this prediction is, sadly, a miss.
- The Apple Watch Will be the New Newton
It could very well be that Apple will find a real hook with the Watch and sell them hand over fist, but I’m predicting modest uptake – for Apple, anyway – in 2015. They’ll be popular in niches. The Apple faithful will find uses for it and ways to excuse the expected shortcomings of a first edition model. If John Gruber’s speculation on pricing is correct, meanwhile, Apple will sell a number of the gold plated Edition model to overly status conscious rich elites. But if recent rumors about battery life are even close to correct, I find it difficult to believe that the average iPhone user will be willing to charge his iPhone once a day and her watch twice in that span.
While betting against Apple has been a fool’s game for the better part of a decade, then, call me the fool. I’m betting the under on the Apple Watch. Smartwatches will get here eventually, I’m sure, but I don’t think the technology is quite here yet. Much as it wasn’t with the Newton once upon a time.
Out of all of the predictions, this is the most difficult to grade because with the exception of Apple itself, no one actually knows how well or poorly the Apple watch is selling. Speculation, however, is not in short supply.
Fred Wilson predicted in 2015 that the Watch would not be a home run, and got irritated when media outlets interpreted that to mean it would be a flop. John Gruber was understanding of the nuance. In December, he scored his prediction that it would be a flop as a hit (as an aside, Gruber was less impressed with his predictions for 2016). An analyst with Creative Strategies regarded it as “absolutely mind blowing that people in their right mind think the Apple Watch is a flop.”
Who’s right? In July, in a piece entitled “Why the Apple Watch is Flopping,” Engadget said:
Imagine if months after the iPad release, we learned it still hadn’t outsold some model of Windows tablet. A couple of million units sold sounds okay, but hardly the sort of smash hit we’ve come to expect from Apple. A precipitous decline in sales after just a couple of months? Not a good sign.
In November, Forbes opened a piece on the Watch with the following:
Apple is remaining tight lipped about the official sales figures for its debut wearable – the Apple Watch – but that hasn’t stopped analyst Canalys declaring some pretty staggering numbers.
It has stated that Apple has “shipped nearly 7 million smart watches since launch, a figure in excess of all other vendors’ combined shipments over the previous five quarters.”
And just last month, Wired closed a piece of theirs on the Watch with:
Cook has said in the past that the company keeps quiet on specific sales numbers for the Watch for competitive reasons, even when they exceed expectations. Still, one can’t help but think that if Apple had such a record-breaking December—which would make sense, since Apple likely sold a whole bunch of Watches over the holidays—it would want the world to know.
The tl;dr then is that no one knows if the Watch is a success because Apple declines to provide the information necessary to make a firm judgement. Two assertions seems plausible, however. First, that Apple is outselling other comparable wearables; whatever the market for the Apple Watch, it seems clear that Apple’s logistical, marketing and product design advantages make comparisons to Android, Pebble and other smartwatches pointless. But as Wired suggests, if the Apple Watch was a breakout success, it is unlikely that they’d continue to be opaque about the sales figures. If you have success, particularly in a brand new product category with uncertain prospects, you would typically advertise that fact.
Anecdotally, reactions from Apple Watch buyers suggest that the Watch is a very different product from the iPhone. When the iPhone was released, every buyer was an evangelist. Having the internet in your pocket – the real internet rather than a tiny subset dumbed down via WAP – was life changing. Watch users are, in my experience, much less enthusiastic. Most like it, for the notifications or the fitness capabilities, typically, but I have yet to have a conversation with a Watch buyer who characterizes it as a must buy, let alone a life changing device. The most common review is something like “I like it, but it’s not for everyone.” The iPhone, comparatively, was for everyone.
There are very few products like the iPhone, of course, so judging a product – even an Apple product – by that standard is, to some degree, unfair. But with Apple flush with cash but facing questions about its ability to grow, all eyes were on the company to see if it could reinvent the watch the way it did the mobile phone. So far, at least, the answer appears to be no. Arguably part of the problem is a function of technology limitations – weight, battery life and so on. But the Watch is also still waiting for its killer app, its internet-in-your-pocket, and it may be that there simply isn’t one.
Time will tell on that subject, and unfortunately it will have to for this predication as well. Absent better data, the verdict on this prediction is incomplete.
The Final Tally
How did I do? Setting aside the one push and the one incomplete grade, three of six predictions can be argued to be correct. This marks the second year in a row of fifty percent success. Another way of saying this is that I tied the lowest rate since I started doing these predictions.
As was the case last year, the failure rate of predictions is highly correlated to their difficulty. It’s simpler, obviously, to predict some things than others, hence the categories.
For 2016, the predictions will nevertheless attempt to preserve the aggression. Which means that I can probably look forward to a similar failure rate this time next year.