Fearless Predictions for 2011

"A man who goes around with a prophecy-gun ought never to get discouraged: if he will keep up his heart and fire at everything he sees, he is bound to hit something by and by."  --Mark Twain

It's that time of the year when journalists, analysts, and bloggers fire their prophecy guns, predicting what will happen in the next 12 months.  Most year-end predictions fall into four categories of uselessness: Fish in the Barrel, Shots in the Dark, Wish-Fulfillment, and Self-Service. 

Fish in the Barrel are predictions so obvious that they're almost sure to come true.  You make this sort of prediction if you're afraid someone will come back in 12 months and point out how many things you missed.  Any good prediction list should include about 60% fish, to ensure a nice overall score.  For example, the San Jose Mercury News recently predicted that M&A activity will increase in cloud computing in 2011 (link).  Gosh, really?

In this spirit, I'd like to predict that water will flow downhill throughout the year.  Please keep track of that; I know I will.

Shots in the Dark are things that no one can really predict, but that involve prominent names, so they sound insightful and interesting.  You need about 20% of this sort of prediction on your list -- not enough to ruin your average, but enough so you'll sound bold.  Besides, if you get lucky and hit on one of these, you can claim credit for the rest of your career.  The Merc predicted that Google will buy Twitter this year.  Nice.

My shot in the dark is the Newt Gingrich will marry Lindsay Lohan in 2011.  I know it's a stretch, but if I'm wrong I can pass it off as a joke, and if I'm right I'll be famous forever.

Wish fulfillment.  This is the other 20% of a good prediction list: You should predict one or two things that everyone agrees ought to happen, even if it they aren't likely to actually come true.  You don't get blamed if these are wrong, because the failure of the prediction shows that there's something wrong with reality, not wrong with you.  The Merc's prediction that Carol Bartz will be fired from Yahoo in 2011 fits in this category.

My wish fulfillment prediction for 2011 is that mobile web apps will take over from native mobile apps.  I've been predicting that for years (link); if I keep doing it long enough I'll eventually be right.  But in reality I think it won't happen in 2011, because APIs and browser infrastructure for disconnected web apps aren't fully mature yet.  Maybe 2012...

Self-Service.  These predictions are a whole separate activity.  Many industry publications fill valuable column-inches, and reward advertisers, by asking industry CEOs to predict the next year.  Most of the CEOs have no idea what to say, so they pass off the task to their PR departments, who naturally predict that the most important event of the next year will be the total dominance of their employer.  That's how Wireless Week came up with the following stunning forecasts (link):

--A mobile operator predicts that this will be the year of 4G
--A mobile transactions company predicts that it'll be the year of mobile payments
--A networking equipment company predicts that it'll be the year of WiFi

And on and on.  Along these lines, I'd like to predict that 2011 is the year that my startup, Cera Technology, will take over the galaxy.

(By the way, it really will.)


The trouble with all of these sorts of predictions is that you can't do much with them.  They're fun to read (and that's probably their main point), but if you take action based on them you'll put your business at risk.  Even the fish in a barrel are riskier than they look, because they're built on straight-line predictions of current events, and the past is a poor predictor of the future.  For example, here's ReadWriteWeb in 2007 on a thing called SecondLife (link):

SecondLife will become an important platform for marketing, promotion, and of course social networking - as people and businesses figure out different uses for it. Also we think SecondLife will continue its expansion worldwide. Currently you can find Habbo and SecondLife cards in most supermarkets (Wallgreens, CVS) in the US, so this trend should continue in other parts of the world. In short, virtual worlds will become an integral part of the real world in 2007.

Ooookay.

I am not trying to pick on ReadWriteWeb; it's an excellent site, and there were huge numbers of predictions like this at the time.  But you get my point.

Since it's impossible to accurately predict the future, the forecast I'd like to see isn't a list of what will happen, but a list of what could happen.  And I'm not looking for small things, but the big surprise changes that make or break companies and industries.  Specifically, what assumptions are we making that could turn out to be wrong?  How would that change the balance of power in the market?  And what should we do about it?

Here are my four forecasts of possible game-changers in 2011:


1.  The Mobile Data Market Stops Growing

That's a prediction you won't see in many places, but think about it for a minute.  Every market eventually saturates. The question isn't whether mobile data will saturate, but when.

Right now everyone's assuming the saturation point is far away, because smartphones are owned by only at most a third of phone users in the US and Europe (link).  The other two thirds are still available!  I have no doubt that most of those people will eventually get smartphones as their prices drop.  Horace Dediu has made this case very persuasively (link).

What I'm not sure of, though, is that those people getting cheap smartphones will pay for data plans.

When I was at Palm, we studied the market for mobile devices very intensely.  At the time, about a third of mobile phone users were willing to pay extra for any sort of advanced feature.  The other two thirds weren't willing to pay anything extra.  Many of them were too poor, some of them were too cheap, and some of them just didn't see any value in it.

If you gave them free hardware, like a cameraphone, they'd take it of course.  But when it came time to pay for camera-related services, they took one look at the first month's bill and then stopped sending photos to each other.  That's why multimedia messaging was a business failure.

Things have changed since I left Palm.  Smartphones are a lot more capable than they were four years ago, the networks are better, and Apple has spent years advertising the benefits of an iPhone.  I'm sure that has increased the number of people willing to pay extra for mobile data.  But by how much?

No one I know of has studied this directly, but I did recently see some consumer research from one of the major analysis firms.  It suggested that the percent of people willing to pay extra has risen to about 40%.  If that's true, then rather than being a third penetrated, the mobile data market may be about 75% penetrated.  Given the rapid growth of smartphone sales, we could hit the demand wall as soon as late 2011.

I'd be delighted to be wrong in this forecast.  Maybe the willing customers are growing much faster than the studies indicate.  Maybe the new devices coming this year will suck in a bunch more people.  I hope so.  But if you think 100% of the population is going to willingly add $200 or more a year to their phone bills just to browse the web from a bus, you're living in fantasyland.  And the end may be a lot closer than you think.

What it means.  The major mobile companies should be conducting careful consumer research on the willingness of people to pay for data plans.  Match that up with the growth rate of smartphones, and see where the lines cross.  Then invest (or hide) appropriately.


2.  Facebook Becomes Passé

No, Facebook won't die in 2011; I'm sure it will continue to grow throughout the year.  But right now Facebook is seen as the hottest player in the Internet, the leading disruptor that forces everyone else to react to it (link, link).

By contrast Google, the previous lead disruptor, is looking more and more like a typical big company trying to hit its growth targets.  The most striking evidence for this has been Google's public switch from internally-generated innovation to acquisitions.  At the peak of Google's rise, analysts fawned over its plan to innovate internally by hiring bright people and turning them loose on problems.  An article in Fortune Magazine in 2006, Chaos by Design, said Google had figured out how to create an internal atmosphere of "structured chaos" in which new ideas would bubble to the top automatically (link).  Four years later, Google's VP of corporate development says acquired companies can move faster than Google itself can (link).

"The stunning success of acquisitions that led to products like Google Maps, Android and YouTube has also opened Google to criticism that the company has become Silicon Valley's answer to the New York Yankees, using its wad of cash to buy talent rather than developing it from within." --San Jose Mercury News

It's not a shocking change.  Tech Overlords don't last forever, and in fact it seems like their reigns have become shorter over time.  IBM was the dominant player for about 25 years, Microsoft for maybe 15, and Google has held that role for less than ten.

If Facebook is the new leader in disruption, what could knock it off the throne?  I think its own success may carry the seeds.  As Facebook has become more and more popular, the young people who first fueled its success have started to look elsewhere for their social connections.  I've been watching the online habits of my teenage daughter and her friends.  They use Facebook, of course, but it's just one in a constellation of social tools they use, and it's not at the center.

The hot property among the people I watch appears to be Tumblr, which is a combination of social network and blogging platform.  Unlike Facebook, which focuses on your connections, Tumblr focuses on shared self-expression.  It's a new social medium, the easiest place online to say "I love these shoes" or "here's how I feel" or "listen to this song that my friend just posted."  For users who want to communicate feelings more than ideas, Tumblr is a unique vehicle.  No wonder it's popular among teens, who by definition are sorting out their feelings.

The other thing that makes Tumblr different is that it's not overrun by 40-year-olds reconnecting with their high school classmates.

This is a very typical Tumblr page (link).

Here's a Tumblr user on the difference between Tumblr and Facebook, expressed through video clips, which is very typical of the way Tumblr users communicate: link.

I'm not saying that Tumblr is the next Facebook.  Right now Facebook has about 30 times more traffic in the US; comparing them is like comparing a ladybug to a wolverine.  For all I know, in another six months the kids may have moved on to something else.  But the lesson of Tumblr is that Facebook encodes one particular type of social interaction, the friends-list-with-status-updates.  The real world of social interaction is far, far richer than that, and we don't know how it will translate online.  Chances are that at some point Facebook's powerful paradigm will turn into a straitjacket.

Will that happen in 2011?  I have no clue.  But I bet it'll take a lot less than a decade.

What it means.  Rather than trying to compete with Facebook head on, I'd be looking at other paradigms for social interaction online.  What social needs do people have?  Approval?  Validation?  Stimulation?  How can you deliver those things online, more effectively than people can get them in person?


3.  Book Publishing Dies
  
Someday, ebooks will enable established authors to sell their writing directly to the public, bypassing the publishers and bookstores and taking 70-80% of the revenue for themselves, rather than giving 85% of it to middlemen.  I have no doubt whatsoever that this will happen.  The trick is figuring out when.  People have been predicting it for more than a decade, but so far the publishers are still in charge.

As you know if you've been reading this blog for a while, I've tried to do some economic analysis on when we'll reach the tipping point where publishers become redundant (link).  I won't repeat the whole analysis here, but the summary is that when about 20% of the book-buying public has ebook readers or tablets, it'll make economic sense for an established author to drop print entirely and go straight to electronic distribution (because they can make so much more per copy sold electronically).  We're likely to see slow progress for ebooks until that point, and then an accelerating stampede after.

We're not close to the 20% tablet penetration figure yet, and we won't hit it in 2011.  But 20% is just an average across all authors; some may find that the market has shifted for them earlier than others.

So I was fascinated when I ran across this LA Times article on authors who have already decided to start ditching their publishers (link).  These aren't vanity writers going electronic because they can't get into print; they're established authors who are pulling their backlist books out of print because they can make more money selling them electronically.  One of the authors, Joe Konrath, detailed the economics of his decision here.

Check out the Times article and Konrath's scenario on the potential death spiral for bookstores (link).  The rumbling sound you'll hear is the Four Horsemen riding after the book publishing industry.  Will they arrive in 2011?  Not for all publishers, and not all at once.  My guess is that we'll continue to hear more hype than action in 2011, with the big switch starting in 2012 or 2013.  But the situation is fragile, and today's migration could turn into a stampede sooner than I expect.

What it means.  As I've said before, publishers need to find a way to deliver real value to authors and readers in an electronic world.  Maybe it's editing services, maybe it's marketing, maybe it's something I can't think of.  But it's different from what most of them do today.  And no, helping an author navigate the variety of ebook stores is not the answer.  An agent can do that.


4.  The Year of the Tablet Backlash

I'm sure Apple is going to sell a lot of iPads, Amazon (and maybe B&N) will sell a lot of e-readers, and hopefully the HP/Palm tablet will be interesting.  But I think it's very likely that most of the other tablets entering the market this year will exit just as quickly.  Why?  Because there's no particular user problem they're solving.

I've seen these consumer electronics bubbles before.  One company has a successful product, somebody else copies it ineptly, and everyone else piles on because they don't want to be left behind.  Never mind that they don't know why they're building the products, or for whom.  The result is inevitably a big overshoot, inventory writeoffs, damaged careers, and a press backlash as the manufacturers run away from the market and customers feel burned.

This is another case where I'd be very happy to be wrong, but the situation smells very much like the other product bubbles I've lived through.  If the tablet market does take off, it'll probably be because the manufacturers were rescued by an unexpected killer app.  If things end badly, give some blame to Google for feeding the overshoot by pushing Android as a tablet OS even though they have no clear idea what the market is for it.  Credibility is a precious resource, hard to accumulate and easy to squander.  When you have a powerful brand, you can convince people to follow you up the hill on a crusade once, or maybe twice.  But after you've burned them enough, they won't follow you readily again.  Just ask Microsoft.

What it means.
  If you're making a tablet app, don't depend exclusively on Android.  And if you're creating tablet hardware, the product you should be building is an info pad (link).


There you are, my four forecasts of big game-changers that could happen in 2011.  What do you think?  You're welcome to disagree with these, but I'm most interested in your predictions of other big, surprising changes that could happen in the next 12 months.

28 comments:

Rick said...

Is this contrarian for contrarianisms sake? I think 40 year-olds reconnecting with their high school classmates is a feature not a bug. You might be a few years early there.

Michael Mace said...

Depends on how old you are, Rick. If you're 16, being around a bunch of 40-year-olds is creepy. Facebook chose to go for the mainstream; nothing wrong with that. But it has consequences as well as benefits.

Brendan said...

"What I'm not sure of, though, is that those people getting cheap smartphones will pay for data plans."

At least on Verizon Wireless, you cannot use a smartphone without buying some kind of data plan (which costs $15-29/month). Even if you try to activate an ancient Centro or Treo--data plan required.

Anonymous said...

Apple fans will buy anything that Steve Jobs puts in front of them but that's a small market- and even with that market, disappointing that not more iPads sold. But then between smartphones up to around 4 inches or so, and laptops, there's no use for tablets.

Reda EK said...

as usual, I like your writing and good as well as balanced view!
One thing I would add is the operators fight back... Pretty much in the past 2 years they followed the lead of Apple and Google watching them taking out the revenue out of their walled garden. I am curious to see how they will try to regain control of the "food chain". If I were an operator I would use billing to get the control but they might come up with a genius plan. who knows

Anonymous said...

Could the tablet bubble not be a sign that the portable computer market is closer to diversifying than people thought?

I remember getting my first hybrid tablet/laptop in 2004, and while the MS powered tablet pseudo-boom didn't last long, it was due to a large cost difference between tablets and pre-netbook laptops, and no mainstream adoption.

Other elements are falling in to place, although not your favoured mobile web apps...yet. Maybe by 2012 I'll have an info pad instead of a paper notebook, a tablet instead of a laptop and a desktop computer in my office, at long last! Or something...

Mike Cane said...

>>>What I'm not sure of, though, is that those people getting cheap smartphones will pay for data plans.

They would, and will, when it drops to this point:

The Photo Foretelling Apple’s Doom

Elia said...

I also disagree with #1 but for a different reason. First, the research at Palm was most likely wrong. My guess is Palm asked people whether they would pay for a data plan and 2/3 said no. But that is only because people in general are miserable at predicting how they would use a new technology until we show them how. I wasn't privy to the research but my guess is more people will end up using data connections then predicted.

Second, I believe the current smartphone boom has been led by consumers. With that in mind I believe 2011 will be the year of business. Currently almost all business solutions are old desktop ones: server/client model sales and numbers stuff, Office suite stuff, etc. I believe app/web solutions will appear this year that appeal to business users of these devices and that will drive huge adoption of smartphones and data plans.

Rick said...

I agree that the Palm research numbers are probably a little low, but the point that the entire feature phone market is unlikely to upgrade to smartphones, regardless of data plan costs, is valid. AT&T started to address that with the elimination of the 'unlimited' plan in 2010, and creation of the low-cost plan to try to grow the market, but even $15/month is probably still too high.

It frankly amazes me that, on a blog this thoughtful, we still see commenters looking for anything they think might "foretell doom" for Apple. Apple is, by far, the technology company that has shown the industry how to create and grow new markets over the last decade. They always have produced a 'premium' product, so why would a low-ball smartphone plan on Virgin Mobile (a very niche player in the US) foretell anything for Apple? That plan is far more likely to hurt carriers dependent on other Android handsets.

Finally, while there are certainly "Apple fans" out there, it's ridiculous to say that Apple is in any way dependent on some 'hard core' devotees for its success these days. The iPhone and iPad have succeeded far beyond the Mac business (which has been growing dramatically over the last five years anyways), and anybody who suggests that there is some sort of hard limit on how big a market the iPad might ultimately become hasn't walked into an Apple store recently. Even at the depths of the downturn, the Apple Store at any mall was always packed, as consumers became more quality-conscious rather than price-conscious.

I watched a group of sixty-somethings passing an iPad around a table at Panera over the Christmas weekend, as the owner told everyone how much he loved it. These were not "Apple fans" by any stretch, but you got the definite feeling that more iPads are going to be sold to this small group over the next few months. While there might not be a "tablet" market by the end of 2011, I think Apple will be very satisfied with the size of the iPad market.

Anonymous said...

I would do back flips and front flips if Facebook becomes passe. And I have a whole army of parents of young adolescents who would join me I bet. Facebook is the most untrustworthy major company to come down the pike in the last couple of years and I long for them to disappear, or at least be less prominent.

Michael Mace said...

Thanks for the great comments, folks.


Rick wrote:

>>Is this contrarian for contrarianisms sake?

Not for its own sake, but you're right that most of the post is contrarian. But that's built into the topic -- unexpected changes are by definition contrarian.


Reda EK wrote:

>>One thing I would add is the operators fight back....If I were an operator I would use billing to get the control


I agree that they could do a lot with billing, and I've never completely understood why they don't try to do more things.


Anonymous wrote:

>>Maybe by 2012 I'll have an info pad instead of a paper notebook, a tablet instead of a laptop and a desktop computer in my office, at long last!


I'd love to see it!


Elia wrote:

>>I also disagree with #1 but for a different reason. First, the research at Palm was most likely wrong.


Elia, you wound me. I supervised that research.


>>My guess is Palm asked people whether they would pay for a data plan and 2/3 said no.

Nope, we never asked them that. We gave them lots of different scenarios for various sorts of new value-added products and services and apps that they could get added to mobile devices. Basically, we threw in every sort of mobile product or feature we could think of, everything from game-playing to e-wallet. About a third of the people surveyed showed significant interest in at least one of the offerings. The other two-thirds were not interested in any of it.


>>my guess is more people will end up using data connections then predicted.

Could be.


>>I believe 2011 will be the year of business.... I believe app/web solutions will appear this year that appeal to business users of these devices and that will drive huge adoption of smartphones and data plans.

That is a cool prediction.


Rick wrote:

>>It frankly amazes me that, on a blog this thoughtful, we still see commenters looking for anything they think might "foretell doom" for Apple.


I think it's very interesting to see the clusters of opinion you get online. There are people eagerly seeking either positive or negative news about certain key companies: Apple, Nokia, and Google in particular. RIM too has both critics and defenders, but the defenders are surprisingly quiet outside of the BlackBerry messaging boards.

I think Facebook may be developing opposing pools of commentators as well.

Some of the groups seem to be tied to geographies; you get a lot more Apple skeptics in Europe, and a lot more Nokia skeptics in the US.

The whole thing is kind of amusing. As a blog author, you eventually learn that certain types of comments about an Apple or a Nokia are almost guaranteed to produce a huge surge in readers. It's sometimes tempting to play with that stuff, but life's too short.


Anonymous wrote:

>>I would do back flips and front flips if Facebook becomes passe....Facebook is the most untrustworthy major company to come down the pike in the last couple of years and I long for them to disappear


I don't think you should assume that any company supplanting Facebook would behave any differently.

Anonymous said...

i somewhat agree with prediction number one, especially when i consider that most smartphone owners i meet do not quite understand why their phone have WIFI. once it is explained to them that they could use that to get online in hotspots many suddenly feel they have no need at all for cellular data. of course in most cases the carriers will not let them cancel the data plan and use the phones wifi only.

but there is a wildcard in play here. carriers do offer data only plans for smartphone. with t-mobile it is only $39/month. if consumers get smart enough to subscribe to a data only plan and than run a VOIP app on top they will get full smartphone capabilities plus have a dramatically reduced bill every month.

if someone like apple or google were to make this happen via some sort of MVNO arrangement for a small tablet that is phone sized with a speaker/mic the the right place for VOIP calling it would have a chance of actually happening.

what about an iPad style data option for the ipod touch? with VOIP running on top? what bargain hunter could resist?

Anonymous said...

I don't buy that eBooks will be the death of publishers, although they may make publishers' real added value more clear, and they will radically change the distribution side.

There is a misconception out there that publishers are printers. The small publishers I know (and I work for one) do not do any printing in-house. I also know first-hand that Harper Collins uses at least one outside printer, because I had a plant tour where a half million full-color Harper Collins books were being printed. Publishers' work is editing, design, marketing, and distribution.

No author can be an effective editor for him/her self.

Design of eBooks is very different from design of paper books, but many authors will still want better design than they can do themselves. This will be especially true as fancier features such as tables, embedded fonts, embedded video, and graphics become more standard and reliable in eBooks.

Distribution is radically different with eBooks, and right now you mainly just leave it to Amazon, Apple, and Barnes & Noble. Selling eBooks from your own website only gains you about 10% of the selling price versus selling through them, so the gain is very different from selling your own physical books direct versus through retailers. (The cost to print a book is usually under 20% of cover price, but a retailer pays 50% or less. So when you sell your own book direct you keep 80%, but selling through retail you keep 30%.)

Then there is marketing. How many authors want to market their own book? I bet the majority find marketing distasteful and want someone else to do it.

So I predict publishers will not disappear, but they will be more clearly understood to be editing / designing / marketing companies. Or maybe the balance of power will shift to the authors and they will hire editors, designers, and marketers. But those roles still need to be filled, and any smart publisher will see that and move in that direction.

kevin said...

I think in 2011 the no-contract US cellular providers like Virgin Mobile, MetroPCS, Boost (part of Sprint) have a chance to grab those who are unwilling to pay the $55/month for voice and data. Right now, one can get 300 voice minutes plus unlimited data for $25 a month on Virgin. The price of a smartphone is still a bit high, but I expect sometime in 2011, a smartphone might be just $100. That might do the trick.

shoobe01 said...

How did I miss your infopad article? Anyway, I agree that this is a needed niche. I've started carrying around a ruggedized 10.6 x 7.2 x 1.65 x 3.85 lb tablet PC.

It is decidedly imperfect, in the ways you say (too heavy, XP tablet is good enough but no better, not enough battery, etc.) but close enough that I use it a lot, and can see more and more clearly, that I want essentially your idea.

I am not using an iPad or Galaxy Tab (both of which I have played with plenty) because they are consumption devices. I want to create and play with my info!

WaltFrench said...

First, a big thanks for some fun thinking.

Second, I don't understand how the publishing market will work without the publishers. From the little I understand of it, they do rather more than slap some covers on press runs & ship the product to retailers.

The problem that still needs to be solved is getting the word out that “Vingfght is a great mid-life captcha comedy in the tradition of Moses' Tablets.”

My impression is that the pop music business in the US has pretty much imploded, with tour revenues way off, CD sales all but gone, and the tried-n-true avenue of radio undercut by Narcissus Radio, as the Labels have become irrelevant.

Is that where books are headed? It hardly seems like the Nirvana you suggest. Seems there is still plenty of benefit from curation, reviewing, promoting from authority instead of simple monetary incentive, and the other publishing services.

Rob said...

I think you're missing the point on data plans.
The population willing to pay $200/year for data may well be 30%ish.

At one stage, only a portion of people were willing to pay for SMS.

But data will become cheaper (or at least spawn limited low-rate plans) -and the companies will blend it into their plans in increasingly obscure ways.

There is no way my mum will pay $200 for data, but $40/year in the form of a slightly obscure choice to go with one provider rather than another (where the price difference isn't entirely clear) - she'll absolutely use that for occasional email and google maps.

Jeremy said...

To your point #1 about data - there was an article in Fortune a couple months ago that spoke about that (I briefly looked for the article, but didn't find it online). AT&T said that it's basically the 80-20 rule and that in order to expand the market, they have to order lower cost plans and in order to that, they have to limit data.

AT&T is banking that you're right ;)

John said...

Mike - you wrote:

"It suggested that the percent of people willing to pay extra has risen to about 40%. If that's true, then rather than being a third penetrated, the mobile data market may be about 75% penetrated."

Can you explain how you got that 75% number? I'm not saying you're wrong, I just don't understand how you got there.

Ram said...

My prediction is that "femtocells for capacity augment" will no longer be relevant owing to all these smart phones with WiFi radios.

Read here:
http://mobilebroadbandblog.wordpress.com/2011/01/05/femtocells-are-they-still-relevant-for-data/

Jose said...

Hello Michael,

Interesting, I have been working on something like your "info pad"(my own pad) for years now.

If you are interested and have a tablet send me an email and I will send you a binary but it only works on Linux now, I'm porting it to mac now. Extremely responsible, it makes a difference.

Chris said...

I mostly agree with your posts and have followed your blog for quite some time.

However, as others have discussed, I'm not too sure about 1. I suspect that most people will end up buying data plans too, but only when the price falls significantly to a range that most people are willing to pay. When those people are exhausted, I suspect then we will see a truly saturated market.

Another point is that Google has not advocated Android as aggressively for tablets - they seem to have a rather unclear strategy really, which may doom it. Chrome OS is what is supposedly their tablet OS, although the recent changes with Android Honeycomb suggest a more tablet oriented OS. This mismatch will create some serious problems.

Instead, for the tablet market, I predict that there will be a few successes with Android tablets, but for the most part, the majority of Android tablets will fail to live up to both the expectations of consumers (who expect a seamless experience) and manufacturers (who are eager for sales). The few successes may even go as far as to challenge the iPad. Like every industry, we're probably going to see a long tail, short head sort of situation.

All in all, it's an interesting time to be watching the technology industry. As always, the industry is in constant change.

David Shellabarger said...

I made a prediction list before reading yours. I'm a young Android developer and my predictions are almost completely opposite from yours.
Since you do analysis for a living, I have to assume you know what you are talking about but I just don't see it.
Here are my rather optimistic predictions: http://www.nightshadelabs.com/2011/01/predictions-for-2011.html
I hope you enjoy reading them.

Michael Mace said...

More cool comments. Thanks for sharing them.


Anonymous wrote:

>>if consumers get smart enough to subscribe to a data only plan and than run a VOIP app on top they will get full smartphone capabilities plus have a dramatically reduced bill every month.


It's an interesting scenario. If you bought a data-only plan would you still get the subsidy on your phone (assuming that you live in a country that allows subsidies)? That could make a difference in adoption.

The coverage for those data-only plans also seems to vary from country to country. I tried to use a data dongle in Australia last year, and was disgusted by the poor coverage -- it was much worse than voice coverage. Plus I often couldn't even get in during peak hours.


Anonymous wrote:

>>There is a misconception out there that publishers are printers. The small publishers I know (and I work for one) do not do any printing in-house. I also know first-hand that Harper Collins uses at least one outside printer...Publishers' work is editing, design, marketing, and distribution.


You're right. I went into this in more detail in my post on the publishing industry, but didn't want to repeat all of it in the predictions.

I think the question is whether the value delivered by publishers is worth 85% of revenue, in a situation where inventory management and bookstore placement is no longer relevant. I think it's fair to say that many authors believe most publishers add little value, just throwing books into the market to see if they will sell on their own. Given the choice, they might choose to hire their own freelance editors (perhaps from the ranks of people laid off by the publishers).

So the real issue is that the publishers will have to prove the value that they add, in a disaggregated world where authors can hire their own freelance support staffs. I think you and I are about 80% in agreement on that, but you're more optimistic than I am about the publishers' ability to adapt (and to adjust their economic models accordingly). Fair enough; it's a judgment call.


shoobe01 wrote:

>>How did I miss your infopad article? Anyway, I agree that this is a needed niche.


Shoobe, you are a user after my own heart. Keep asking for this product -- someday, someone will build it.


WaltFrench wrote:

>>From the little I understand of it, they do rather more than slap some covers on press runs & ship the product to retailers. The problem that still needs to be solved is getting the word out that “Vingfght is a great mid-life captcha comedy in the tradition of Moses' Tablets.”


It depends on which publisher you're talking about. Some are much more value-added than others. I oversimplified for the sake of brevity in the post.

I think the history of software applications is relevant. At the start of the packaged consumer software industry, there were a number of software publishers who operated much like book publishers. They eventually died, because software creators found that they could make more money selling direct, and because mail order and the Internet undercut the software stores.

Although publishers thought they were needed for curation and promotion, software creators found that they could do this for themselves, aided by review magazines and online discussions.

Who's to say the same thing won't happen with books?

Michael Mace said...

Rob wrote:

>>But data will become cheaper (or at least spawn limited low-rate plans) -and the companies will blend it into their plans in increasingly obscure ways.


The carriers are already complaining that they can't make money on their current data plans; that they need to raise prices, not cut them. This is one of the biggest problems with mobile data -- bandwidth is limited, cell tower sites are expensive, fiber infrastructure to those towers costs a bunch. The network doesn't scale as efficiently as the wired network.


Jeremy wrote:

>>AT&T said that it's basically the 80-20 rule and that in order to expand the market, they have to order lower cost plans and in order to that, they have to limit data.


Which means we'll need to see a dramatically different price and business structure for data. I agree. But that in turn changes usage patterns. I'll come back to this subject in a future post.


John wrote:

>>Can you explain how you got that 75% number? I'm not saying you're wrong, I just don't understand how you got there.


Sure. If current smartphone penetration is 30% of the population, and the total available market for data plans is 40%, then the market is 3/4 penetrated, or 75%.


Jose wrote:

>>If you are interested and have a tablet send me an email and I will send you a binary but it only works on Linux now, I'm porting it to mac now. Extremely responsible, it makes a difference.


Jose, I think you should be porting to Android, not Mac. You need hardware designed for a stylus, and I think you're more likely to get that on Android than on iOS.


Chris wrote:

>>Chrome OS is what is supposedly their tablet OS, although the recent changes with Android Honeycomb suggest a more tablet oriented OS.


Google has been mixed on this. They sometimes say Chrome is unfit for touch, and sometimes say it's going there in the future. We should never assume that Google is of one mind on an issue -- it's a decentralized, complicated place.

Luke said...

Hi Michael,

"Google has been mixed on this. They sometimes say Chrome is unfit for touch, and sometimes say it's going there in the future."

Andy Rubin has said Chrome is concerned with "evolving the web". Is that not their culture, to accelerate innovation and force competitors to catch-up?

I don't know of the ultimate fate of ChromeOS, but looking at the latest Android 3.0 preview, Chrome looks to be incorporated into the operating system, for the most feature-rich browser on tablets.

I'd be surprised if the additional development effort of ChromeOS (Chrome + Linux kernel) isn't worth exploring, as a "net-centric" operating system, despite also developing Android.

ttv said...

..And that's the reality as what I have observed today.

Howard said...

The Mobile Data Market Stops Growing:
I think Michael is way off the mark here. We still have a surge in video calling from the iPhone, iPad and Droids to come never mind the further increase in personal and business tasks coming with the next iPad and it’s increased integration into medium and big business.

Facebook Becomes Passé:
Michael is eating some kind of mushrooms if he really thinks this. Tumblr is a nice app but it’s not going to make a big dent and Facebook is safe for quite a while yet. It makes no sense to extrapolate from Google to Facebook. Users can change search engines and even email with little effort. Changing out of Facebook requires a consensus among groups of friends. Nope, ain’t going to happen UNLESS social networks allow interconnectivity, and that is quite unlikely.

Book Publishing Dies:
Oh please. Paper books have a good 10 years in them yet and the percentage of eBooks is unlikely to rise above 13% or so by the end of 2011. They are most certainly not going to ‘die’ in the coming 10 months. His other predictions for self publishing already started happening in 2010, so they are not much of a prediction.

The Year of the Tablet Backlash:
Another misleading headline but his general point is right imho. The competition have piled on with unfocussed, un coordinated products. It’s the OS that matters and the iOS is so far ahead. Droid is catching up with it’s tablet OS but I think it will be 2012 before the iOS has real competition from Droid. Microsoft haven't a clue. The iOS is being adopted into medium and large business at an amazing rate and homes are starting to get more than one iPad. Apple will continue to sell every one they can possibly make.