2015: The Year of the Resurgent Corporate Raider and Eight Other Predictions
1) More corporate break-ups are on the way
MTV, Rubik’s Cube, Pac-Man: The 80’s are cool again. It’s been 30 years since Gordon Gekko and Larry the Liquidator prowled Wall Street. Welcome back!
Activist shareholders influenced three corporate boards last year to break-up their companies: HP, eBay and Symantec led the way. In 2015, this resurgent trend will continue with more large-cap break-ups of tech companies than we saw last year.
Lots of speculation and social chatter about EMC, but maybe not JDS Uniphase (JDS Uniphase changed its bylaws). Who is on your list of candidates?
2) The “Cloud” strides forward on its inevitable journey to ubiquity and invisibility
August 6, 1991: The day the World Wide Web became public. Since then, many people envisioned a global computer network that was ubiquitous, invisible and intelligent.
We’ve been on a long slow march ever since and the latest incarnation is “software-defined everything” (servers, storage, network, devices, machines, etc.). This sector continues to attract investment by both VCs and the corporate buyers of these technologies.
In 2015, the modern day railroad tracks and steam engines will have been built (i.e. AWS, Google Compute Engine, Azure, IBM), providing a technological utility on which the vast array of applications can run and information will be globally accessible. The flow of capital will migrate towards apps that utilize cloud infrastructure.
3) Internet of Things will be the hype sector of 2015
Connected cars, home automation, wearables, drones, digital health … every year, there is always one sector that gets white-hot and my bet is that it’s IoT in 2015. The underlying trends supporting it are there: a plethora of low cost, widely available sensors, a continued miniaturization of compute platforms, big data technologies and cloud computing.
Plus, there have been highflying acquisitions and IPOs in this sector already, including Nest, Oculus, Basis, Dropcam, and GoPro. This always draws in more entrepreneurs and therefore, capital. If you have any question, just take a look at Matt Turck’s IoT landscape, which identified 199 companies in 2013. That number has now exploded to 612 logos.
The good news is that with the amount of capital that I expect to be invested in this sector and the entrepreneurial brain cells putting their minds to work, there are sure to be some fantastic inventions emerge in an increasingly robotic world with smart machines.
P.S. – Does anyone else think Zuckerberg read “Ready Player One” right before buying Oculus?
4: Big Data will fall into the trough of disillusionment in 2015, but the seeds of pervasive and invisible analytics will be planted
If you had any questions about which sector was hyped in 2014, look no further than Big Data, with Cloudera ($1.6B), Palantir ($500M), MongoDB ($150M), Hortonworks ($150M), and DataStax ($106M), all doing large raises in just the last 15 months.
In 2015, Big Data experiments will fail to produce the results that customers were promised. Enterprises will ask themselves what value can be realized from these new technologies. These questions will be thrust upon vendors, pushing Big Data into the trough of disillusionment.
As an example, take a look at Hortonworks IPO pricing, which has the company “dropping out of the billion dollar club.”
However, I’m a huge believer in the long-term promise that data will be the basis for competitive differentiation in the 21st century. Looking ahead to 2016 and beyond, what will emerge will be pervasive, invisible analytics. Artificial intelligence, autonomous vehicles, neural nets, etc., will all utilize big data technologies as the integral layer to perform their functions.
5) Security spending balloons and problems continue to compound
The latest incidents read like a plot for a new James Bond movie: Hackers steal confidential information about drug trials, acquisitions, and other information that could affect a company’s stock price. And the companies targeted in 2014 represent the bluest of the blue chips: JP Morgan Chase, Target, eBay, Apple iCloud, Google and so on. So far, the hackers have gone after user information or credit cards.
The next set of attacks will be ever scarier: Imagine someone logging into your bank account, transferring your money out and erasing all of the information about that account. When you go call your bank and ask where the money went, they’ll have no idea and won’t even have a record of your historical balance.
6) 2015 will be the pivotal year demonstrating Asia’s dominance in the mobile industry
PC makers are currently more profitable than mobile vendors, with the exception of Apple. So, while the PC is not dead, I’m not sure what to make of the tablet market.
Intel’s PC client group reported revenue of $9.2B in the third quarter, up 9% from the same quarter last year. Lenovo, now the world’s largest PC manufacturer grew its net profits in the second quarter to $262M, up 19% from a year ago. Meanwhile, two mobile industry goliaths, Nokia and Samsung have seen their profits decline precipitously in 2014. And what once was seen as the harbinger of death for the PC, tablets are now seeing a massive slow down.
Like the sands of the Kalahari, the center of the universe for mobile technology is constantly shifting. First it was Scandinavia in the 2000’s. This last decade was clearly in Cupertino. 2015 will be the pivotal year of Asia’s dominance in the mobile industry with Xiaomi and Huawei entering the US market in a more meaningful way than we expected.
7) Apple Pay will slam the door shut on competitors in the U.S.
Apple has broken through the chicken and egg problem that has plagued the mobile payments industry for years. Merchants, many of whom operate on razor thin margins, have been reluctant to invest in new payment terminals. Apple Pay will use the power of the consumer to lure merchants to invest in new NFC terminals and unleash the latent demand for mobile payments.
Shopping from our living room couches, hailing a taxi via an app or ordering dinner to be delivered to your doorstep, consumers, especially American ones, are all about convenience. For any of you who have used Apple Pay, it’s simply convenient. Plus, we are continually reminded that our credit cards and personal information are continually at risk. Apple’s solution to this: Store it only on Apple and they’ll secure it (tokenize your data), so your information isn’t circulating all over the place.
8) Google faces challenges in Europe & China over monopoly issues
It took more than twenty years to break up Standard Oil. Microsoft, after a long battle, ended up avoiding the same fate. The EU is making a lot of noise around Google being a monopolyand targeting the search giant is a bellwether for things to come.
Unlike China or Russia, the EU currently relies heavily on U.S. technology companies for many services. In an attempt to provide a market opening for local Internet services to grow, the EU will go after other foreign Internet services in 2015.
9) Net neutrality becomes an inevitable reality
Internet services such as Netflix, Skype, Facebook and Google are sometimes referred to as “over-the-top” or “OTT” services — they run on top of the Internet Service Providers (ISPs), such as Verizon, AT&T or Comcast.
ISPs own the wires or wireless airwaves and want to charge differently depending on whether these OTT services want to fly first class or coach. Seems reasonable, however, the OTT providers want to fly first class, but only pay for coach. If you or I tried to negotiate that with United, it wouldn’t work. Well, the OTT players tried it and it didn’t work either… obviously.
In 2015 net neutrality will become an inevitable reality as the OTT players now have lobbying muscle. This issue is a bit silly, especially for POTUS to get involved. Instead, I’d rather see the President tackle the really important issues this generation is facing, especially income equality, geopolitical issues (i.e. Russia, China and the Middle East) and our runaway social program costs.
Brian Wilcove is a Silicon Valley-based managing director at Artiman Ventures, an early-stage venture fund investing in white space companies creating or disrupting multi-billion dollar markets.
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