All posts in Predictions

2012 Predictions

So every year I put my nostradamus hat on and make bets as to what will happen in the upcoming year. I’m like 65% correct over the last 5 years, I should be wagering money on this. So here are my bets for 2012

1. Square will get bought out by Amex or Visa.
   Price will be in the $5B range. Dorsey will make sure it remains network agnostic (i.e. keeps accepting cards from the competitors).
2. Facebook will IPO and break the recent tech IPO slump
   This makes sense because Facebook actually makes money, whereas sites like groupon and zynga aren’t anywhere near as profitable as they would have previously liked us to believe.
3. LivingSocial catches up to Groupon
   I suspect LivingSocial’s more cautious approach to this market has left them in a much better financial situation relative to cash flow than Groupon, so they will use this to pull ahead. I do see the daily deal market stagnating though. So any lead changes will be due to non-daily-deal innovations they pull out of their hat. Think instant deals, and providing marketing services outside of deals to these small businesses they have.
4. RIM sells to Microsoft for less than $5B
   Seeing an opportunity to instantly force-upgrade everyone on blackberry to Windows Phone 8 with built in MSN Messenger, Microsoft buys the pieces of RIM, and leverages their connections in the enterprise world to push Outlook and Exchange. I see this as another skype like deal, since they can use their foreign cash assets to buy RIM (seeing as RIM is Canadian).
5. Amazon continues to grow its hardware business
   I see them releasing a kindle phone using android, and a larger Fire DX model. I expect them to ship 10-15M kindle devices in 2012. 20% of them being Fire models (android with color screens etc).
6. Amazon will still survive despite states imposing sales taxes
   The sales tax savings will be gone to most consumers, but with Amazon pushing harder on Prime services, the convenience and lower prices will still be enough to shift consumers away from Big Box retail. Their growth will be slower than in previous years though.
7. Mobile commerce explodes in US.
   Visa is making a HEAVY push for their retailers to upgrade to NFC equipped point of sale machines. Now the only component left is for the phone makers to integrate NFC into their devices en masse. This won’t happen until LATE 2012, expect it in the iPhone 5. However I do see tie ins with location + mobile + payments converging. Think paying for your meal by seeing the bill on your phone at your table, and hitting checkout. Question is who will be the network for that transaction or who will be the gateway. I could see Apple and Google fighting this one out. I don’t see NFC as the end solution, more the bridge solution in this. I do see the traditional point of sale device changing substantially (why do we still need cash registers? Apple retails have 1 per store yet sell on the floor more).
8. Salesforce buys a number of social media integration companies
   My guess is Hootsuite will be bought by salesforce in the $30-40M range. I could also see them buying Klout in the $10-15M range.
9. Facebook hits 1 billion users
   This number is less important than the active users, which will be in the 500M daily, and 500M on mobile (up from 350M mobile users now). The mobile is the key number, as that is where their growth will be in the next year or two. As of Dec 31, they were saying they had 800M users, with 50% active every day. No one else has the same reach on Mobile. 1 in 8 mobile phones in the world is accessing Facebook in some fashion at some point during the month. This is even more impressive when you consider the lack of reliable mobile data connectivity in much of the world. These are not all smart phones either, lots are simple feature phones.
10. The world will not end in 2012.
    If the Mayans could predict the end of the world, how come they couldn’t predict the end of their own civilization? So if you truly believe the world is going to end, please put me in your will. I will happily spend your money after you’ve commited suicide or scared yourself to death in December.

So what do you think will happen in 2012?

So I had some hits and some misses this year. I figure in the tradition of the last few years I’ll recap my guesses and also post tomorrow my predictions for the upcoming year.

1. Facebook growth slows, they hit 650M users by 4th quarter of 2011.
So I was a bit off on this. I was correct in slower growth, but they hit the 650M user mark in the 2nd quarter and were on their way past 750M mark by the 4th quarter. They however have been a bit more quiet this year when it comes to announcing user engagement figures.

2. WordPress ecosystem grows up
Totally wish this had really taken off, but still hasn’t. Things missing are a centralized app store, better monetization tools from Automattic, and better promotional tools for companies to monetize their apps/services. The market did grow though, there were a number of companies in the market place making 7 figures gross though. Sadly Infinimedia was not one of these (though our WordPress products are profitable, and we have more planned for 2012).

3. The first Youtube millionaire emerges
So this one is hard to track, but if you count Rebecca Black as a millionaire, from selling her tracks on itunes, and performing, then theoretically she is a YT millionaire, though I was hoping from purely YT generated cash. So I suspect there are a few who are close, who hit 500M views this year on their videos, but again, impossible to say.

4. Apple’s Mac App Store does $1B in gross sales.
Apple hasn’t released any conclusive data about this, and if they have, its buried in a line item somewhere in their annual report. I think the mac app store most likely DID do a $1b, but the volumes are way lower than iOS app store, and app price points are higher.

5. Apple gives away Lion for free or Less than $30
So they sold it for $29, so I hit the nail on the head here.

6. Twitter hits 200M users
I believe the official number is 250M users, but something along the lines of 80M Active. Another good bet by me.

7. Fox sells off Myspace for LESS than it bought it for
So Fox/News Corp sold Myspace for something along the lines of $35M if I recall correctly to Specific Media. This happened end of June. Since then, nothing has changed on Myspace, it is still a sinking ship. So I got this one right.

8.Groupon goes on a buying binge & hits $3B in gross sales.

So Groupon IPOd this year, hit close to $4.5B in gross sales, and did buy a few companies, though not as many as I would have liked. They didn’t buy as many companies as I expected them to, as they were short on cash due to their absurdly high burn rate. 
I’d say this was right.

9. Facebook credits expand beyond facebook

So aside from being able to buy Facebook credits in Target and CVS, you really can’t use them outside of Facebook. So I’d say this was wrong. I truly expected them to try to be the wallet of the social world.

10. Google reboots android marketplace.

This they definitely did. So did Amazon by introducing their own app store. So another hit for me.

Final tally, depends on how you count some of these, but I’d say I’m close to 60% correct on these.

What do you think will happen in 2012?

So every year I try and throw my hat in the ring of amateur prognosticators and posit what is going to happen in tech in the upcoming year. The following are my guesses (some wilder than others) as to what will happen in 2011.

1. Facebook growth slows, they hit 650M users by 4th quarter of 2011.
They’ve been growing so fast, that unless they get major inroads in India, Russia, Brazil, and China, they are not going to be able to sustain that growth. BRIC is the key to fb growth in 2011. I’d expect them to be able to get another 50-75M users from all the other countries out there, but to get that extra 75M they have to come from those 4 countries.
Likelihood: Very Likely

2. WordPress ecosystem grows up
Automattic is sitting on a potential gold mine of revenue from the ecosystem surrounding their tools. With 25M wordpress.com blogs, and another 25M installs of wordpress self-hosted elsewhere, you’re talking 50M+ users out there (though many users likely have multiple blogs, and many are inactive). The marketplace for tools has already proven itself through premium theme sites like woothemes (which pulled in $4M+ in 2010). We’ll see many services and shops spring up to try to cater to this market as wordpress becomes a more commonly used Content Management System. To control this marketplace though, Automattic will need to get people to buy stuff and process the transactions ala Apple. Back of napkin math tells me $50-75M in ecosystem revenue this year.
Likelihood: Very Likely

3. The first Youtube millionaire emerges
There are tons of youtubers out there who are generating TONS of views on their videos and making decent coin from the YT revenue sharing. However I can see someone finding the correct balance of product placement, ad sharing, and quality content that gets them the 100-200M views they need to get close to grossing 7 figures from their YT channels. (I also don’t think it will be iJustine)
Likelihood: tossup

4. Apple’s Mac App Store does $1B in gross sales in first year
Assuming the average app price will be in the $15 range, we’re looking at 70M apps downloaded and installed. I feel adoption of this might be slower than we think, mainly due to OS fragmentation, and lots of people running old versions of OSX, especially if Snow Leopard is required to use the store.
Likelihood: Bet money on this one

5. Apple gives away Lion for free or less than $30
Why give away Lion? Well chances are the Mac App Store would work best on Lion (most iOS like experience). This would also entice lots of users to upgrade as well.
Likelihood: Very likely

6. Twitter hits 200M users.
They’ve been hovering around the 150M range for a while it seems. I can see them hitting 200M if they introduce a chinese partnership of some sort, but kids don’t care for it, and I don’t see that changing.
Likelihood: Very likely

7. Fox sells off Myspace for LESS than it bought it for
Not the colossal loss that AOL took on Bebo, but it will be significantly less than the billions they thought they were going to cash out of it. Wouldn’t be surprised if one of their former executives who has raised tons of $ for their buyout firms gets involved. (not entirely sold on this one though)
Likelihood: Long shot – not sure if they are willing to take the ego hit.

8. Groupon goes on a buying binge & hits $3B in gross sales.
The sales figure is going to be hard to verify as they are still private. Rumors were they were close to an annual $2B run rate in late 2010, so $3B seems feasible in 2011. How do they get there? Buying their way into new markets, snatching up lots of little competitors cheaply.
Likelihood: VERY likely

9. Facebook credits expand beyond facebook
Think about it. They become a socially backed wallet with 150M mobile devices already in use. Why not let people buy merchandise w/credits? Bump credits to a friend? No one else has that same reach on so many mobile devices in the US/CA/EU.
Likelihood: Better than 50% chance.

10. Google reboots android marketplace
Google is going to need to reboot the marketplace to improve the ui, experience, and filter out spam more. Look for this around Q2 2011. We’ll also see the quality apps start earning more money from their app purchases. Android apps won’t be as profitable as iOS apps until late (q4) 2011 or early 2012 though. Look for this marketplace reboot right before iphone 4S or iphone 5 comes out next june.
Likelihood: Better than 50% chance.

So what do you think will happen in 2011?

As seems to be my annual tradition, I’m doing a recap of all my predictions I made a year ago. So here they are. If you’re curious here are my 2009 predictions (recap), 2008 , 2007 (recap), and 2006. So far I’m beating the house I’d say, some of these things I predicted in 2008 occurred in 2009, others from 2009 didn’t hit til 2010. But my guess is I’m hovering around 75% accuracy over the last 3 years or so.

1. Facebook hits 500M users by Q3 2010.
Dead on with this one. Exactly in september they announced 500M users. Booya. A+

2. Facebook makes a huuuge mobile push
They did get on every platform, and make strides to emphasize mobile tools (like locations) but still fell short of what I’d hoped (fb platform mobile). A-

3. Facebook acquires Foursquare or Brightkite
Brightkite did get acquired, though not by fb, but fb built their own location based tools. so i would get a C+

4. Hulu emphasizes the social layer to tv watching.
Meh, they added facebook connect, but failed to do much else other than go mobile. C-

5. MySpace has a major overhaul
Yup. A. would have been A+ had anyone still cared about Myspace.

6. Someone will finally make it easy for small businesses to get online
Squarespace did some stuff, network solutions did some stuff, but nothing exciting happened here yet. C’mon people this is a BILLION $ business waiting to be built. Though you could argue facebook pages are the answer to this. C

7. Social gaming companies evolve out of facebook.com
Yup, Zynga powered this, they are now on iOS, Yahoo, MSN, and their own domains. A

8. Electronic Arts “socializes” some of their top games
EA bought playfish, and brought some of their games to fb. Still not what I would have expected (where the eff is simcity as a competitor to yoville by zynga?) B+

9. Physical P2P credit card transactions/money transfers don’t take off
Nothing mainstream has happened yet, none of my non-tech friends have asked to bump me money or square me away. So unfortunately for that industry I’m right.

10. Twitter undergoes a major re-org design wise.
Super correct on this one. A+. This happened over the summer if I recall correctly.

Overall grade 75% which if you were a betting man, would mean you just beat the house.

Coming soon, 2011 predictions.