By all indications, 2012 will be a tough year for the electronics industry and most other players in the global economy. Rather than improving, the fiscal and debt troubles in Europe seem to be spreading. The news that borrowing costs for Spain and France have soared to 10-year highs adds to problems in Italy where newly-appointed premier Mario Monti has declared the nation is facing an emergency.
In the electronics industry, most of the leading OEMs and component suppliers have issued dire warnings about their outlooks for 2012. (See: Infineon: Cooling Off for 2012 and Siemens Reports Growth but Expects Slower 2012.) One would safely assume investors are fretting and seeking safe havens for their money in this environment, but that view would be only partially correct. In fact, the focus of an investment conference I attended recently in New York couldn't be more different. Instead, the participants were looking farther out and discussing issues, platforms, companies, and strategies that they believe will dominate the economy in the near future.
The subjects discussed -- it was a private meeting and I can't disclose names or other details -- included the future of technology platforms (think Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL), Facebook (Nasdaq: FB), and Google (Nasdaq: GOOG)), retail metamorphosis, the cloud, and whether educational institutions would "adjust enough to meet the hyper personalized demands of prospective students or see an acceleration of routing around institutions." Participants also discussed technology issues such as the future of Google's Android operating system and whether Microsoft would be "able to penetrate more successfully," and "what investors should know about the various ecosystems."
At a session I attended on the competitive landscape involving Google and Facebook, many participants (and these, believe me, are either authorities on the field or investors) dissected the future of the two companies and weighed in on the numerous challenges as well as opportunities facing the two platforms. (Another session focused on Amazon versus Apple.) Facebook, they said, will continue to be troubled by the tension inherent in its inability to decide whether it wants to be a "private or public platform" and the possible eventual wearing off of its "cool" factor.
Also, critics wondered whether businesses will be happy yielding proprietary ownership of their brands to Facebook. In other words, will a company -- let's call it WidgetsMaker -- be happy being known in cyberspace as www.facebook.com/widgetsmaker, or will it buck this trend and demand to be known on Facebook as www.widgetsmaker.com/facebook?
Hold your horses if you are rooting for Google to win over Facebook. Participants in my session voted on which of the two companies they would put their money into five years from now. The quick poll asked participants to make one of four choices: one, Facebook only; second, Google only; third, both Facebook and Google; and lastly, neither. The results were stunning. Only a handful in a room of more than 40 people would put their funds in either company alone five years from now, while half the room would invest in both companies within the same timeframe. The other half is looking for and expecting something else, something new.
The problem Google faces, according to some participants, is that its search engine -- the main source of revenue at the company via advertising support -- is clashing with the march of technology. The Web was a chaotic place when Google made its debut, and the company has made a fortune out of bringing some order to the Internet by digging up information for users. However, with the advent of smartphone and tablet apps and social media outlets like Facebook -- which don't lend themselves as easily to search -- Google is hitting a brick wall. So much unsearchable data that the company cannot catalogue and categorize now resides outside the walls of the Internet. If apps win over the Internet, Google is "screwed," as one participant said. But that may not happen if Google transforms itself. If it fails to do this, the slide may not be that apparent for another five years.
All of this got me thinking about the future, and especially the next five years. Here are some additional questions from the conference. What platforms will dominate the technology market by 2016? Which companies will be the Zeitgeist (today's Apple)? Would Facebook and Google still be as dominant? Would telecom service providers still be able to control customers' use of broadband? What new products will emerge as must-have similar to smartphones? What would be most important to enterprise IT customers and the equipment and consulting services vendors? And, critically, which five IPOs of 2011/2012 will prove to be great companies with great business models, and which will reveal mediocrity?
Five years ago, the iPhone made its debut before powering on to dominate the smartphone market, the tablet PC segment had not gone mainstream because the iPad had not been born, and Android was just a word associated with aliens from another planet. So, let's collectively project another five years into the future. Let me know what you think the technology landscape would look like five years from now and which new products we might be talking about.