Kindle Fire will outsell iPad, Windows Phone will rebound, and six other tech predictions

Panelists at the WTIA's annual predictions dinner held Wednesday night in Seattle. (Photos Tyler Sipe)

Facebook will go public in 2012. Apple will lose some of its innovative edge without Steve Jobs. And the majority of Americans will be driving electric vehicles by the year 2022.

Those were some of the predictions last night as the Washington Technology Industry Association hosted their annual Predictions Dinner. I had the distinct honor, once again, of moderating the panel which was anchored this year by RealNetworks chairman Rob Glaser; Ignition Partners’ Frank Artale; Voyager Capital’s Bruce Chizen; and Alliance of Angels’ Chairman Dan Rosen.

There was a lot of great back-and-forth during the discussion, but I am highlighting what I thought were the eight boldest predictions of the bunch.

Before the panel started, Artale pointed out that all four of the panelists spent a chunk of their careers at Microsoft. That didn’t mean they were all loyalists. Rosen remarked that the best Windows tablet he owns is a Macbook Air, running Parallels. He later added: “I never underestimate the ability of Microsoft to screw something up.”

Given the Microsoft lineage, we spent a good portion of the evening discussing the software giant’s prospects for 2012. And much of that centered around Microsoft’s ability to compete with Android and Apple in mobile.

That led into one of the first big, bold predictions of the night from Bruce Chizen, who noted as CEO of Adobe he’d pretty much count of Microsoft messing things up. But Chizen, for one, was the most bullish of them all when it came to Microsoft’s prospects in mobile.

1. Bruce Chizen: Microsoft’s share of the smartphone market will hit double digits in 2012

Voyager's Bruce Chizen (Photo: Tyler Sipe)

Earlier this week, Gartner released survey results showing that Microsoft has control of just 1.5 percent of the global smartphone market. Obviously, that’s not where Microsoft wants to be. But does it really have a shot in mobile? Panelists at last night’s event actually think so, with Chizen noting:

“If you just look at Nokia’s market share, they are in double digits … and all of those phones will go out with Windows Mobile. It will be 17 percent new shipments.”

Glaser agreed that Nokia is a “swing factor” and predicted that Microsoft would have three percent of new smartphone shipments in the U.S.; 12 percent in Europe; and five percent in Asia. “This is Microsoft’s year, with Nokia, to either demonstrate that they can get traction in Europe, which is Nokia’s home field.”

Rosen countered: “If they get it right, it is 20 percent probably. But, if they screw it up, it is single digits.”

Artale, meanwhile, predicted seven percent.

2. Rob Glaser: Microsoft should buy RIM

Rob Glaser and Bruce Chizen (Photo: Tyler Sipe)

At past predictions’ dinners, venture capitalists such as Matt McIlwain of Madrona have suggested that Microsoft should buy RIM. And, at this year’s event, Glaser said the time might be right.

“They should buy RIM. A buyer and a seller have to agree on a price, so to say they should is not to say they will. But RIM has a tremendous amount of loyalty in the corporate enterprise market, and their consumer fall-off has been very severe…. They don’t in my opinion have a good OS strategy…. In terms of single moves available, that would be the best available move. You’d have the question of how you avoided freaking out the other handset guys, but just that base of support that they have in the enterprise, from messaging, which given Exchange is a very strong base to build on…. The kind of deals that Microsoft likes doing are kind of hollow-out deals, with Yahoo in search or Nokia in phones. Those are much more cash efficient. But, if you can’t do a hollow-out deal with RIM, they are getting cheap enough that even Steve (Ballmer) might take a look at it.”

Chizen agreed with that assessment of RIM, but also noted that SAP could be a smart acquisition if Microsoft could get the price right. “Come the end of 2012 and 2013, they are going to look at the enterprise landscape and realize that there’s Oracle and IBM and they’ve been left behind, and they may have to buy SAP.”

3. Chizen: Kindle Fire will outsell iPad in units during the fourth quarter

Bruce Chizen: “I think in the U.S., the Kindle Fire could actually outsell the iPad — in units, not dollars. It is a great price point. It is a great device. It is really focused on consuming content and Amazon has that vertically integrated, and Apple has proven, when you vertically integrate content, it helps as certainly Rob (Glaser) knows.”

Glaser added that he has yet to open his Kindle Fire, but based on some of the reviews he’s read they look to have have gotten more right, than wrong. “It is an ambitious product, and if you look at what Amazon has built before, I give them a ton of credit… But this is a much more complex, multi-faceted product, and if they can pull off the step-up to that complexity — which the initial reviews seem to say they have — they will do super well.”

4. Rosen: Amazon will get into the smartphone business

“I think the next thing they will leverage their Prime accounts with .. is a mobile phone service,” said Rosen, referring to Amazon’s $79 per year Amazon Prime subscription service. “I can’t imagine why they wouldn’t do that. They can become the largest reseller of mobile phones, in no time…. And, it is not Android. It is going to be the Amazon operating system, maybe based on Android code. They are aiming to take good control of a number of markets.”

5. Rosen: Amazon will surpass Microsoft in market value in five years

Dan Rosen

Everyone of the panelists had interesting insights on this topic, but no one really bit fully when I asked at what point, if ever, Amazon would surpass Microsoft in market value. Both Apple and IBM have passed Microsoft, and it would seem like it’s just a matter of time. But the panelists weren’t quite sure, other than Rosen who thought it would likely happen in the next five years.

Chizen discussed Microsoft’s enormous cash position and referred to the comeback story with IBM as evidence that companies can reinvent themselves. and Artale pointed out that there would have to be a fundamental shift in the developer community to Amazon Web Servcies.

“If it happens, I’d say it will happen in the next three years because from a momentum perspective, once momentum takes off, it goes up like a hockey stick and then it doesn’t stop,” Artale said.

Glaser said he doesn’t like to discuss market caps, but added that “Amazon is ascendant in many of their businesses, and declining in none of their businesses.”

Glaser said he’s been amazed by the “aggregate rate of growth at Amazon, given their size,” but he didn’t offer a prediction if Microsoft would lose the title of largest tech company in Seattle to Amazon.

Rosen, however, after giving an eloquent defense of Microsoft’s high-profit margin business predicted that it would likely occur in the next five years.

“Amazon’s margin, despite their great execution, is still under pressure. If they are going to get their market cap to be greater than Microsoft’s, they are going to have to find a way to increase margin, because Microsoft’s margins are great, which is why they keep accumulating cash.”

Nonetheless, even as Microsoft transitions into a pure enterprise software company, Rosen said that in the next five years he thinks Amazon will likely be bigger.

6. Chizen: Apple will stumble without Steve Jobs

“They can be a good company. Long-term maintaining greatness will be a challenge for them…. Steve had such an impact on that company, at such a detailed level, every device, every operating system, every menu, every design aspect, everything they did, he got involved in and inspired people to do the things they did, and without him there I have a tough time seeing — and not in year one, year two — but I will be surprised five years from now if Apple is still viewed  with the same level of respect and greatness that they are viewed today. They could be a good company…. But I don’t think long-term (Tim Cook) can keep it doing great things.”

7. Glaser: There’s only a 30 to 40 percent chance that the T-Mobile and AT&T merger will happen

Rob Glaser (Photo: Tyler Sipe)

Glaser, who has been engaged in a few antitrust battles during his career, said that the combined market share of Verizon and AT&T would be roughly 80 percent if the deal happens. “And that’s a pretty big number for the courts to put through,” he said.

“I would guess, once the U.S. government came in as strongly against it as they did, it is 60-40 or 70-30 that it doesn’t happen. But … judges can do crazy things.”

Rosen added that it’s a “very problematic” situation for AT&T since the wireless carrier has publicly stated that its reason for the acquisition was to gain access to additional bandwidth.

8. Rosen:  Sales of electric vehicles will outnumber gas-powered cars by 2021

“I think sometime within the next 10 years that is going to happen,” said Rosen.

Chizen agreed, but said it would likely be at the far-end of that range. “The thing that is holding back the EV is market is two things: One people like the predictability of when their car is going to run and not run…. The other is price. Certainly, those who are environmentally-concerned and those with money are willing to spend the $10,000 or $15,000 premium on EVs, but as you move to different parts of the country, people don’t want to spend that kind of money and I think that is a barrier to entry.”

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  • Bob

    Nothing very bold there. Fire outselling iPad is probably the biggest leap. WP getting to double digits in 2012 is probably also on the optimistic side. Amazon passing MS in valuation is pretty much a given. I’d say three years or less, not five. And Google should do it by January with Oracle following before the end of 2012. Apple losing a step post Jobs, again fairly safe assumption. MS buying RIM, no way. SAP, maybe. Chizen is right that MS has been left behind in the enterprise by Oracle and IBM, at least on the higher value add items. MS having an IBM style comeback, not unless they get a new CEO like IBM did. That isn’t going to happen and it’s probably too late now anyway.

    • http://twitter.com/_Armo David

      windows phone is gonna be HUGE next year. as will windows 8. microsoft is becoming more consumer-oriented than enterprise, as showcased by xbox and windows and all the new microsoft store. they dont need a “comeback” because they havent gone anywhere.

      • Bob

        It was going to be huge THIS year. Didn’t happen. Nokia should help next year but it’s not going to make much of a difference to MS’s revenue or profit. It might help MS-related sentiment a bit though, especially given how low it is currently.

        There hasn’t been much of a shift for MS away from the enterprise. It’s still where most of the revenue and almost all their profit comes from. The stores aren’t profitable and their revenue is small compared to MS overall. So again, not much of a factor. MS hasn’t gone away or experienced a losing year like IBM did back then, at least not yet. But if you think MS hasn’t experienced a significant decline in relevance and perception over the last decade, then we simply disagree (as apparently do most of the panel members above). And clearly growth and valuation have both suffered while others have managed to grow faster and in some cases faster, larger and now more valuable (Apple).

        • http://twitter.com/_Armo David

          Windows Phone will grow immensely next year thanks to Nokia, and as a result other manufacturers will focus on Windows Phone more as well. Also, Windows 8 will draw more interest into Windows Phone as well. In addition, if Windows Phone (and to a certain extent, Windows 8) grows, then Bing will grow as well. And Microsoft will be opening up about 70 more stores in the next 3-6 months I believe.

          Yes, they are becoming more consumer-minded but that doesn’t mean they are abandoning their enterprise money-making products. If you think Microsoft is inferior to any other technology company today than you must be crazy.

  • Anonymous

    Amazon prediction is pretty good.  My guess is they’ll partner with someone.  I work with a lot of companies who leverage their web-services (S3 Cloud-front, etc..) and I can tell you, they are going to rule the damn cloud in about 5 years.  Seriously.  I work with Google and Microsoft people in the same vendor circles and even though it is all “brand new” Amazon’s technology is much more mature.  They’ve been using it in-house for about 5 years before they released it.  It makes a big difference.  The customer isn’t the “beta” for AWS.

    And…. I got one of their Kindle Fires.  Nice.  

  • Gary Voth

    Anybody who’s used Windows Phone knows that Microsoft “has a shot” in mobile… it’s an incredibly elegant mobile experience.  OEMs and carriers haven’t gotten behind it so far (which makes it hard for consumers to discover), but Nokia could help change that.

    The boldest predction here is probably this one: “even as Microsoft transitions into a pure enterprise software company…”  (Tim, were those your words, or Dan Rosen’s?)  I’ll try to give that some consideration, but in the meantime, I’m going to go play with my 360…

    • http://twitter.com/_Armo David

      exactly. microsoft is becoming LESS enterprise-focused…finally.

  • http://twitter.com/_Armo David

    If Windows 8 and Windows Phone reach the level of success they are anticipated to, if XBOX continues to grow, and if Office and all of Microsoft’s current products continue to be successful, I don’t see how Amazon is going to pass them in market value. If Microsoft’s consumer efforts in the smartphone/tablet world are as wildly successful as we’re expecting, then their market value should skyrocket.

    Oh and Microsoft definitely won’t be buying RIM. They could, however, sign a deal with them similar to the Nokia one.

    Just my $0.02.

  • http://www.mainstreetchatham.com/ JimmyFal

    So how about some results from previous years “predictions”?

    • http://twitter.com/WhiiteSauce Nick White

      Second