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.
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
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
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
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
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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