{"id":1365,"date":"2014-01-01T06:47:53","date_gmt":"2014-01-01T14:47:53","guid":{"rendered":"http:\/\/twothirdsdone.com\/?p=1365"},"modified":"2014-01-01T06:47:53","modified_gmt":"2014-01-01T14:47:53","slug":"10-predictions-for-the-computer-industry-for-2014","status":"publish","type":"post","link":"https:\/\/twothirdsdone.com\/it\/2014\/01\/01\/10-predictions-for-the-computer-industry-for-2014\/","title":{"rendered":"10 Predictions for the Computer Industry for 2014"},"content":{"rendered":"

My dear friend, Bob Cringely is a very successful blogger amongst other accomplishments. \u00a0You can read his blog qui<\/a>. He and I often speculate together about the future of technology.\u00a0 Every year around this time he makes predictions on what will happen in the new year in computer technology.\u00a0 Often he asks for my ideas, some of which he may incorporate with is own views and some of which he ignores.\u00a0 This year Bob had to deal with the illness of his mother so he asked his readers for their ideas.\u00a0 I decided that this year I would write up my own ten predictions which I will of course send to Bob.\u00a0 I should also say that as a technologist in my core, I often see things happening much earlier that they really happen.\u00a0 It is sort of the opposite of the sign on your cars side mirror which reads \u201cobjects may appear further away then they actually are\u201d.\u00a0 Here they are in no particular order:<\/p>\n

 <\/p>\n

\u00a0(1)\u00a0 Bitcoin becomes the MySpace of Crypto-Currency<\/b><\/p>\n

I have to confess that I am a bit bewildered about Bitcoin.\u00a0 On the surface, it is easy enough to understand if you just think of it as just another form of currency like the Dollar, Euro or Yen.\u00a0 But unlike the Dollar, Euro or Yen, there is no country or countries backing and controlling it.\u00a0 To really understand Crypto-Currency, one has to have both a pretty good technical background and in particular an understanding of cryptographic, open source and distributed systems.\u00a0 But one also has to have a pretty deep understanding\u00a0 of economics and especially money systems.\u00a0 Frankly, understanding money is a lot harder than most people think.\u00a0 It kind of reminds me of quantum mechanics.<\/p>\n

At first, I did not take Bitcoin seriously and that in retrospect was wrong.\u00a0 I actually have friends who have made small fortunes in Bitcoin (I hope none of them accomplished this by starting out with a big fortune).<\/p>\n

I am wondering, like many, about how Bitcoin can become a real currency.\u00a0 I don\u2019t think it is that yet.\u00a0 It is more like Gold although a lot easier to use and store.\u00a0 But until there is a whole supply chain that takes Bitcoin as its primary currency, I think those that that accept Bitcoin for payment must be changing their prices every day to match their preferred currency.\u00a0 Bitcoin is way too volatile to be used as a main currency. Because a lot of Bitcoin\u2019s are held by speculators, there is incentive drive the value up creating a potential bubble.\u00a0 We all know what happens to bubbles. Debt is a very important aspect of a successful currency. It is hard to have debt when there is high inflation or volatility.<\/p>\n

There is a lot of concern about the potential for Bitcoin to be manipulated.\u00a0 There is concern that\u00a0 it could be hacked.\u00a0 The mysterious start of Bitcoint by Satoshi Nakamoto (a person or collection of persons) who has since disappeared, causes some to wonder who is really behind Bitcoin.\u00a0 Now it appears that Marc Andreessen, the technical brains behind Netscape and now very successful venture capitalist, has sort of taken over the leadership of the Bitcoin movement. Anyway, I guess we should be glad its not George Soros.<\/p>\n

Given the early success of Bitcoin, there are many other Crypto-Currencies being created.\u00a0 The Bitcoin people feel that they can maintain the lead because of their momentum and present dominance.\u00a0 History proves that this is not always the case.<\/p>\n

 <\/p>\n

(2)\u00a0 iWatch – just in time<\/b><\/p>\n

This will be the year that Apple Introduces the iWatch.\u00a0 I wrote about the iWatch qui<\/a>. The features that I described are still the ones I expect, but I would place more emphasis on the use of the iWatch for transactions.<\/p>\n

By the way, Apple may introduce a large iPhone and\/or a larger iPad.\u00a0 I don\u2019t think this a game changer so I am not mentioning it here.<\/p>\n

 <\/p>\n

(3) Microsoft – Breaking up is hard to do<\/b><\/p>\n

Microsoft will finally get a CEO. The primary task of this person will be to breakup the company which will prove very difficult to do because this kind of thing is always difficult to do.\u00a0 In some cases, parts of the company will become independent companies and trade on the stock market. For instance, I expect that will be the case for the Xbox, while other parts, like Office might be sold to a company like\u00a0 Oracle.\u00a0 I think it will take about five years for all the work to be completed.\u00a0 Expect that Bill Gates will leave the board when the new CEO takes his\/her place.<\/p>\n

 <\/p>\n

(4) Desktop and Notebooks fall into the black hole of mobile computing<\/b><\/p>\n

There is a lot of computing power in smart phones.\u00a0 Take a look at the iPhone 5s as an example with its 64-bit\u00a0 CPU.\u00a0 The power of a mobile computer coupled with the move to Cloud Computing will change the partitioning of computing.<\/p>\n

Look for Apple to bring out a new line of Cinema Displays that will have wireless connectivity with IOS devices.\u00a0 Imagine that you can walk up to any of these displays and your phone, iWatch or iPad will link to this display.\u00a0 Applications will be designed to make full use of the display\u2019s real estate.\u00a0 Blue tooth keyboards and track pads\/mice will interface with your IOS device.\u00a0 All of a sudden you have the full desktop experience that most users know. You will be able to use the full iWorks suite for instance.\u00a0 It will might be running in the cloud but it will feel, as it does now, that it is running on your \u201cdesktop.” This is an extremely important event.\u00a0 Maybe the most important event of 2014.<\/p>\n

For instance, about two thirds of American have an iPhone. Of course, most of these are not iPhone 5s, but enough are to get things started.\u00a0 Not all these customers have Macs. In fact most do not.\u00a0 But most have desktops or notebooks that they will want to replace.\u00a0 Instead of replacing them, they only have to buy a new Cinema Display.\u00a0 They can then either use the free iWorks suite or or use the Microsoft Office Cloud service.\u00a0 Microsoft will have to make sure their apps work well in this environment because the Apple iWorks programs are awesome and are free.\u00a0 Google will have to do the same.
\nSo the only customers buying desktops in the future might be those that are heavily involved in using computers to do serious computational work.\u00a0 Welcome to the Mac Pro and the unannounced Mac Pro Light or the Windows equivalent.<\/p>\n

The same kind of thing will happen with large flat panel displays.\u00a0 The Apple TV will become an HDMI dongle just like Chromecast. You will be able to easily connect your IOS device to the display just as you can with Airplay now.\u00a0 Apple will introduce a very powerful gaming environment for IOS that will take advantage of both the A8 64 bit processor in the iPhone but also the motion co-processor to connect with various gaming peripherals.<\/p>\n

Look to 2014 being a very good year for Apple and in particular Apple stock (although I am negative on the stock long term).\u00a0 The capabilities I described will drive demand for new iPhone and iPad purchases.<\/p>\n

 <\/p>\n

(5) Cable TV becomes Cable Internet<\/b><\/p>\n

When I first went around to all the cable company CEO\u2019s in 1983 to introduce them to the concept of the cable modem, I told them that they should no longer think of themselves as being Cable Television Companies but rather Cable Communications Companies.\u00a0 Not all of them got what I meant, but fortunately,\u00a0 their greed and the fear of the telephone industry helped persuade them to experiment with the idea of using their \u201ccable plant\u201d to allow computers in homes to communicate with the nascent internet.<\/p>\n

Now, the cable industry is experiencing a loss of TV subscribers as young people in particular \u201ccut the cord\u201d and watch TV via the internet.\u00a0 But they are not really cutting the cord all the way. In particular, if they are at their home they are most likely still connected to the cable company.\u00a0 Revenue from providing residential broadband has allowed the cable industry to grow in the face of a decline in TV subscribers. This year, Cable Companies will make more money from broadband than from TV. TV is just one attribute of Cable just as Word Processing is no longer a\u00a0 Device but just an Application.<\/p>\n

However, the Cable Industry has kept a lot of bad habits (like bundling of channels) which make it difficult for new companies to provide Internet based TV.\u00a0 This is about to change.\u00a0 But to make it really happen, Cable Companies will want to get a bigger piece of the action. They will want to charge not only for speed but also for quality just as the wireless companies are now doing.\u00a0 Once this happens, everything will change.\u00a0 But since this will depend on government regulations, I can not predict exactly when and how this will happen.\u00a0 As part of this, providers of content can pay directly for the bandwidth.\u00a0 So if you use Netflix to stream a lot of Video, it will not effect your bill with your cable company. Netflix will pay them for the bandwidth you use when streaming.<\/p>\n

Once the dam breaks, things will change very fast.\u00a0 This will have negative effects on the cable networks who have relied on having TV channels to be able to make deals for programing. Now if the Internet is used as a medium, there are unlimited \u201cchannels\u201d.\u00a0 \u00a0 Once TV is on the internet, advertising can be done in a much different and more targeted way.\u00a0 This will also weaken the Networks that rely on advertising.\u00a0 As the Networks see major declines in their profits, they will be able to invest less and less, leading to a quickening of their demise.<\/p>\n

We will continue to see changes in consumer viewing habits. Not only will consumers see what they want when they want but they will see it with the people they want no matter where in the world they will be.\u00a0 I hope to say more about this in a few weeks when a company I both advise and have invested in leaves stealth mode.<\/p>\n

 <\/p>\n

(6) Facebook – the AOL of Social Media<\/b><\/p>\n

Facebook is a company I am negative on even thought I use it every day.\u00a0 Clearly it is the dominate company on the social media stage but I don\u2019t think for long.\u00a0 There are a number of factors that will effect their standing.\u00a0 The first is demographic. Young people that first created the market for Facebook are either moving off the Facebook Platform or never getting on.\u00a0 They don\u2019t want to be on a social media site that they share with their parents and grandparents.\u00a0 Also much of the growth of Facebook as been outside the USA and in developing countries.<\/p>\n

I suspect that while these numbers add to Facebook\u2019s population, they don\u2019t do much for the bottom line.<\/p>\n

 <\/p>\n

Equally as important is that Facebook\u2019s users don\u2019t really like the company.\u00a0 They might like using Facebook because it connects them with their friends but they don\u2019t like the confusing interface, constant changes in privacy and the sense that Facebook is exploiting them.<\/p>\n

Young people are moving to social media sites that are more mobile oriented like Tango, Talk Plus, Line and WeChat. Then there is SnapChat the opposite of a \u201ctime line\u201d.<\/p>\n

Facebook has a market capitalization of $135 billion dollars but made less than a billion dollars on the sale of more than $5 billion dollars.\u00a0 It recently spent a billion dollars to by zero revenue buy acquiring Instagram.\u00a0 Facebook is trading at 90 times estimated earnings.\u00a0 For Facebook to justify its stock price it will be forced to find more ways to monetize its traffic and most of those ways will turn off their users.\u00a0 Actually, the only hope for Facebook will be discovering life on another planet.<\/p>\n

 <\/p>\n

(7) Amazon buys Netflix and finally has to pay California Sales Tax<\/b><\/p>\n

Amazon intends to be one of the major media distribution companies in the \u201cnew order.”\u00a0 They are already following in Apple\u2019s footsteps using Amazon Prime to distribute Media.\u00a0 Now they are imitating Netflix with original programming.\u00a0 Netflix has House of Cards which is a drama about a bunch of smart but corrupt politicians.\u00a0 Amazon has Alpha House which is a comedy about four moronic politicians living together in a house in Washington DC.\u00a0 Given that these guys are idiots, it might be better to describe it as a documentary.\u00a0 House of Cards was a major hit and won an Emmy.\u00a0 Alpha House is pretty much a dud. Netflix redefined viewing habits and created the concept of Binge Viewing while Amazon has had little impact on viewing habits of consumers.<\/p>\n

Netflix is, in a sense, the worlds largest \u201ccable\u201d operator.\u00a0 It reaches more people than HBO.\u00a0 Most devices and most modern TV\u2019s can receive Netflix.\u00a0 Bezos is going to finally figure out that he can not catch up.\u00a0 And he will not want to see Netflix in the hands of some other company.\u00a0 Netflix was really cheap a year ago when it traded at about $90.\u00a0 It is now just a bit south of $350 dollars.\u00a0 Its total market cap is about $22 billion. While Amazon has done well going from $245 to $405 and has a market cap of $182 billion this is nothing compared to the movement in Netflix\u2019s stock price.\u00a0 Netflix must now feel comfortable with their current price because they have recently removed a Poison Pill provision making it much easier for someone to accumulate large amounts of their stock.\u00a0 This will push the stock up even further so the sooner Amazon moves to acquire Netflix, the better.\u00a0 Of course, Bezos hates paying state sales tax which Netflix does.\u00a0 Maybe this is what is slowing him down.<\/p>\n

 <\/p>\n

(8) Internet of My Favorite Things<\/b><\/p>\n

Everything is going to be connected to everything.\u00a0 It is going to be a wild ride.\u00a0 I already have light bulbs that are connected to the cloud. My car is connected to the cloud. I wear exercises devices that connect to the cloud. My piano is connected to the cloud.\u00a0 I could even jam with musicians. It will be like the wild west all over again.<\/p>\n

But then again, I am waiting for the hackers to take over cars, cause washing machines to destroy clothes and of course stream videos of us in our pajamas.\u00a0 And then there are the personal Drones!<\/p>\n

 <\/p>\n

(9) Google Glass joins the other zero billion dollar business that Google has launched\u00a0<\/b><\/p>\n

If you read my blog often, you will know that I am not too fond of Google.\u00a0 I refer to Google as the Microsoft of 21st century. Of course they have done some amazing things but much of what they do is mediocre.\u00a0 For me, throwing a bunch of spaghetti against the wall and seeing what sticks is not a business strategy.\u00a0 I do understand that many of you will disagree with my point of view.<\/p>\n

I know something about the \u2018glass’ application. In fact, I know a great deal. I have been working in this area for over ten years.\u00a0 They company I have been involved with most recently is Innovega.\u00a0 We have the real deal but it takes both glasses and contact lenses to really work, so it’s not for everyone. But I know that Google Glass is probably for a lot fewer people.<\/p>\n

I think it is a silly idea that has very limited long term prospects.\u00a0 Not because I do not believe in the concept.\u00a0 It is because I do not believe in the implementation.\u00a0 I joke (partly) that when Larry Page became CEO he tried to figure out how to get Sergy out of his hair.\u00a0 Sergy came to him with the idea of Google Glass – which may have started when Innovega paid a visit to Google.\u00a0 Larry said to Sergy \u201cthis is so important that you should spend all your time and energy on it.” It was probably worth spending a few billion dollars for Larry to no longer have to share an office with his co-founder.<\/p>\n

 <\/p>\n

(10) Foundry or Floundery<\/b><\/p>\n

Finally I have to mention my former company, Intel, where I was Vice President of Business Development until I left in 1999.\u00a0 Intel has a great deal of excess semi conductor manufacturing capacity.\u00a0 It\u00a0 is perishable – if it is not used it just goes to waste.\u00a0 We used to say that when we designed a new factory, the first chip it produced cost a couple of billion dollars and the ones after that just a few dollars.\u00a0 Factories have very high fixed costs.\u00a0 They are like airplanes or hotels, you want to fill every seat and every bed.<\/p>\n

Apple needs Intel to build its A processors.\u00a0 For obvious reasons, it no longer wants to have Samsung build its chips.\u00a0 So it probably has put a \u201cgun to Intels head\u201d and said that they will design out the Intel microprocessors in the Mac line if Intel does not start doing foundering work for Apple.\u00a0 And Google is threatening Intel with developing its own line of server processors if Intel does not start making chips for Google.<\/p>\n

Intel will remain the top semi conductor company in the world, but that is like owning the best house in the worst neighborhood.<\/p>\n

As most of you know, Intel missed the transition to mobile but frankly even if they had made the transition, there was no way the company could continue to have the margins they enjoyed during the PC phase of computing when Microsoft and Intel earned more than 120% of the profit of the industry (this was possible because so many other companies lost money.) \u00a0 It takes a long time to develop and build new factoriess to take advantage of new semi conductor manufacturing and design technology.\u00a0 Intel was used to growth and building out capacity to intersect that growth.\u00a0 In the 90s I was often quoted as saying that “Intel had to build factories to manufacture products that were not yet designed to serve markets that were not yet created.” That was true then and it is true now, but now the products will not be Intel\u2019s.<\/p>\n

 <\/p>\n

Please feel free to comment and make your own predictions.\u00a0 And don\u2019t forget to check Bob\u2019s blog.<\/p>\n

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