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The Next Five Years

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 {complink 11480|Amazon.com Inc.}, {complink 379|Apple Inc.}, {complink 10867|Facebook}, and {complink 2294|Google}), 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.

27 comments on “The Next Five Years

  1. Barbara Jorgensen
    November 17, 2011

    Sounds like a fantastic conference and breakout session. The Google vs. Facebook question is fascinating. I don't see it as an either/or, but I am woefully unsavvy regarding the vision of these two companies. They are undoubtedly the forces to be reckoned with over the next five years, and what investors intend to do is as good a “crystal ball” as any to use as a planning tool. For the supply chain, the bottom line is there will be hardware opportunities here. I'd stop short of adding “if you back the right horse.” I'm not sure it has come down to that–yet.

  2. stochastic excursion
    November 17, 2011

    >will a company — let's call it WidgetsMaker — be happy being known in cyberspace as http://www.facebook.com/widgetsmaker , or will it buck this trend and demand to be known on Facebook as http://www.widgetsmaker.com/facebook ?<

    I don't think Facebook will accept being a level down from a member domain name.  It's still very much Mark Zuckerberg's baby and ego-driven cool-consciousness is still very much a part of its business model.

  3. saranyatil
    November 17, 2011

    The conference sounds interesting and indeed some insight.

    Looks like 2012 is gonna face some jolt with respect to sales need to see something different may happen during th end.

    Hold your horses if you are rooting for Google to win over Facebook.

    For the cap that facebook is wearing its difficult for google to take over i liked the way you phrased it. I am wondering what the rest of investors looking at in the next 5 years some magical service.

    If we look at next 5 years Apple , Google, Microsoft,Blackberry will be holding a tugg off war amoung their smartphone OS and Tablets. Apple may loose its market share and may be some other company may take over. People would have saturated in investing time and money to buy all the new technology gadgets and which telecom provider they need to make a choice.

    over all automation industry may take a different shape with companies trying to automate every single entity from their homes, cars till their office table.

  4. saranyatil
    November 17, 2011

    Yes its a valid point Facebook would never want to step down and be called as http://www.widgetsmaker.com/Facebook, its difficult for the users to digest such a change.

  5. bolaji ojo
    November 17, 2011

    @Stochastic excursion, Right. That brings up the question, if Facebook will not bend to these companies, will they move to another platform? Can they afford to shift to another platform, what is the cost of attempting to do this and how feasible would it be? In the end, one side will have to give up ownership of its marketing message.

  6. AnalyzeThis
    November 17, 2011

    Just some thoughts on the future of Facebook versus Google specifically…

    If I had to place bets on which company is more likely to be better off five years from now, I'd sink nearly all my money into a bet on Google.

    Here's the key difference: Facebook is really pretty much a social networking site. And the audience can be fickle. Look at how quickly MySpace collapsed. If Facebook experiences a few privacy breaches or somebody comes up with a, “Facebook… only cooler,” they could be overtaken.

    Alternatively, Facebook's appeal could wear off. People may get tired of spending so much time on Facebook and use it less and less. It's the type of thing some people will grow out of.

    Google, on the other hand, is much more established and does a bunch of other various things. They could completely lose their search engine business today and they'd be fine. Really, if Google blocked everyone from searching on Google.com… not a huge deal. They're still the biggest player in online advertising. They have things like GMail and YouTube. They're working on viable self-driving cars and other technologies we're probably not even aware of.

    Anyhow, that's just my opinion… I'm not saying I think Facebook will disappear within five years, just that I wouldn't be shocked if “Facebook Fever” isn't nearly as strong five years from now.

  7. bolaji ojo
    November 17, 2011

    @DennisQ, I would place my bet with yours as far as the Facebook-Google standoff is concerned. The points you made were on my mind when the folks in the room at the conference were voting and I must admit to being surprised most people weren't seeing Google as a stronger company. Google is already in most of the businesses Facebook plays in and even though Google+ may not be as dominant today as Facebook, I would give it a good fighting chance for surviving, thriving and expanding five years from now. Today, Google also announced its competing program to the iTunes music market.

    Google's other interests in smartphone and tablet PC operating system (Android), TV, automation, maps, You Tube, etc., make it a stronger player than Facebook, which is still a one-trick pony in my opinion.

    I disagree, though, about the search market. Google does search better than any other company and its algorithm sets it apart although Bing and others are fighting hard for market share. The search functionality is one of the factors giving Google the great edge it has in online advertising. Without search and the ability to “organize” web content for users, Google will have its wings clipped. Nevertheless, given a 5-year span, I would pick Google over Facebook anyday.

  8. AnalyzeThis
    November 17, 2011

    @Bolaji, yes, perhaps I was being a bit too casual regarding the importance of search to Google's business. Obviously, shutting off search WOULD not be some insignificant event: even if the business wasn't hurt too badly, there'd be a lot of angry users out there including myself, at the very least. Although Bing isn't all that bad…

    That being said, Google's advertising revenue would probably be effected less than you'd probably think: their Doubleclick products wouldn't be impacted, Google AdX and AdWords would still be just fine (just would lose a bit of inventory). Same with AdMeld, Invite Media… there are tons of Google products that have little to no dependence on search.

    But again, yes, I was underselling the importance of search to Google. My point was just that I believe that Google could survive and thrive at this point without the part of their business they're best known for. Facebook, on the other hand, wouldn't be much if you took away profile pages.

    Glad you agree with me on the rest of my post, though!

  9. Mr. Roques
    November 17, 2011

    Well, what would Google be without its search engine? Gmail, Google Talk, YouTube… while YouTube can drive a lot of revenue, it definitely takes a lot to maintain. Facebook hasn't expanded beyond their social network but I think it is equally important to both.

    The questions asked are very interesting, maybe you should post that as a separate poll for EBN!

  10. Wale Bakare
    November 17, 2011

    DennisQ,

    Google, on the other hand, is much more established and does a bunch of other various things.

    Absolutely that's a big difference between Google and Facebook. And i believe in very nearer future, the gap would be too much open to be mindful for facebook. If i may ask, is Google on the verge of becoming EVERYTHING EVERWHERE?

    Anyway, am wiating to see Google's:

    1 – Global Distribution System to kick off soon

    2 – Driverless vehicle, like you reported quiet few people not aware of. This might take time though.

  11. jbond
    November 18, 2011

    If I had to choose, I would take Google over Facebook. Facebook does have many offerings, but is still a networking site. Facebook is also alienating many members with its constant changes and their way of thinking they know what you want and need.

    Google on the other hand has a dominate presence, Google+, and now a music platform to compete with Itunes. I believe in the long run, Google will stay strong and survive. 

     

  12. Houngbo_Hospice
    November 18, 2011

    @jbond: 

    Could Google succeed in becoming a “master of all trades?” Is “pecking” everywhere the good way for Google to stay competitive? For now Google+ is not meeting users' expectations and I wonder if a Google music platform could really be an alternative to itunes. The android market seems to be taking off, but I fear that in a few years Google might lose its dominance in the search engine business.  

  13. JADEN
    November 18, 2011

    I believe facebook will be bigger in five years than google is right now.  Facebook will grow without needing to cut into Google's core business of text ads, which are still 99% of Google's profits.  Even if every facebook user performs just as many searches with Google as ever including Google instant, mobile search, Youtube, etc., Facebook will inexorably grow as big as google is today and may be bigger.  What I mean by bigger is that Facebook already has more page views than Google, people already spend more time on Facebook than Google.

  14. Anne
    November 18, 2011

    Facebook is nothing but a friends list with photo sharing and a new feed. People come to Facebook to laugh with friends and waste time, nothing more.

  15. tioluwa
    November 18, 2011

    The next five years? Why that's like trying to pridict the next two days when it comes to the tech industry.

    For me, from my small end here, i think anything is possible. The only thing i know for sure is that we have no idea what the next 5years will bring, but any company that keeps operating the way it operates, maintaining grounds it thinks it has now and not looking for the next best thing, will have no place in the next 5years.

    Facebook has to become something more than facebook, google is already a whole lot more than google already, so i think they stand a bette chance, but still their strenght has to shift from searching to who knows what!

    i think we should also keep a look out for some underdogs from some unknown places, doing something new in a new way, the possibilites are endless.

  16. t.alex
    November 18, 2011

    Anne, i have the same thinking as you. However, it is always surprise when it becomes such a big company now. Who knows what will happen in the future. Facebook will buy over Google?

  17. Wale Bakare
    November 19, 2011

    I dont know if predictive analyst could come up with a forecast on this. One certainty, in the world today few players in technology are known for pacesetting which in sometimes leads to competitions. That has typified Apple and Google, but Facebook is currently in the heart of social networking website and i cant really place it there, I think! And facebook in 2016, are the millions of users wont get bored?

    Google's Android has so far caused 2 major problem in smartphone market: 1 – Nokia's symbia OS,  2 – Blackberry also got a fair share of maket effect. Which i also think Google's mobile wallet might follow similar direction in years ahead – competition in mobile payment amongst the mobile phone operators. 

    For instance, according to a report by the Daily Telegraph UK last week, mobile phone operators teamed together to launch a scheme called Project Oscar, this will provide a platform to simplify and accelerate the uptake of mobile market and mobile payments, which enable users to swap their physical wallets for ones based on SIM cards.

    In addition to that, Daily Telegraph reported the Project Oscar, would give British companies a chance of competing with Google's mobile wallet.

     

     

     

     

     

  18. bolaji ojo
    November 19, 2011

    @Hospice, I wonder too if Google isn't trying too hard to offer a bit of this and that. The extension of its operations to so many different sectors in high tech may initially be a good thing in that it expands and diversify sales but it could also result in brand dilusion or even brand perception problem. At some point, a company has to decide what its core message would be and this difficult task would only be made more daunting by the expanded operation.

  19. electronics862
    November 20, 2011

    I feel each has its own strengths and expertise respectively. I do not think that they can replace each other..

  20. bolaji ojo
    November 20, 2011

    @Wale, Innovation is important to success in the electronics industry and the winner is the company that can come up with the best product or outwit other players. The barriers to entry are falling faster than innovators can erect new ones, though, and that is a concern to companies because with each innovation, the window to gain profits from inventions is limited.

  21. Anna Young
    November 20, 2011

    @Electronics862, But how about a replacement for the two of them? If they won't replace one another, competitors aren't waiting to see them merely cannibalize each other. The competition is coming up with new things, new ideas and projects. We may get a platform that is easier to use and more versatile and, just as there was no facebook at the start of the last decade, it may exist only as a sidebar towards the end of the current one.

  22. Parser
    November 20, 2011

    When the two companies go head to head a third one needs to examine what these have done good and what bad and come up with a third solution. Was Apple able to do these comparisions very well in past? 

  23. bolaji ojo
    November 21, 2011

    @Parser, Apple actually prides itself on doing things others haven't thought of or done before. The company, reportedly, doesn't even do customer surveys to determine what its consumers might like. It just gives consumers what it believes they would like because, according to Apple, consumers really don't know what they like until they get it.

    I can't say I agree completely with Apple but as someone once told me, “test your ideas first, and then if they beat mine, I'll adopt yours.” Apple's strategy is tested so it's difficult telling the company to try something new. And, just refining what someone else has done or is doing won't make a company the best in its business. That's why Apple is selling the iPad at full price and RIM is selling its Playbook at a hefty discount!

  24. Parser
    November 21, 2011

    They don't do customer surveys, but each major Apple application like iTunes, iPhoto or Keynote has a pull down menu with Provide Feedback link, which takes you to Apple site where you can write what does not work or what you would like to see implemented. On the other hand I believe Apple engineers use their products themselves and discover cleaver ways to do things from a user perspecitive. 

    Some people say refining and others would say innovating like who would had put investment money into new cell phone when at that time Motorola, RIM and Nokia had already flooded the market. 

  25. Hawk
    November 22, 2011

    @Parser, You are right. Sometime we get fixated on “marketing and consumer feedback” we forget there are different ways to get consumers to provide information on what they want.

  26. Anna Young
    November 22, 2011

    Parser, Apple isn't doing traditional consumer survey but it is still getting feedback on its products from its customers. The company is getting information on the iPhone 4S not just from Consumer Reports but also from users directly. The information it gets may show up in the updates to the products or as a new product.

  27. Ms. Daisy
    November 30, 2011

    @Parser, the “Provide Feedback link” is an excellent feedback loop for Apple that is in real time. It cuts out independent polling groups and gives the viewer opportunity to visit the site. I applaud the use of Apple products by the design engineers. A real life experience and test of functionality at the same time. Thanks!

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