Five Predictions for 2011

I started to write a retrospective on 2010, but  decided that we all lived through the year and there are some great photo essays that are much more interesting than my thoughts.  Instead,  I’m going to make  five predictions on tech, social and digital media trends in 2011.

1. Exponential growth in the U.S. smartphone market

Mobile is my current fascination, and the growth that we’ll see in 2011 in the U.S. market promises to make it the rest of the country’s fascination as well.  I wrote a post about this recently, and recognize that people have been predicting the year of mobile for a long time. But looking at the current environment makes it easy to see, from my perspective, that 2011 (or 2012 at the latest) will be the year that mobile will start to compete with the web for most relevant technological innovation (read Fred Wilson’s post to get the pro’s perspective) in the world.

Right now the early adoption is complete.  The iPhone skimmed the market for the high-end tech enthusiasts and the coastal hipsters.  The people who want the next thing have it, but they had to buy AT&T contracts in order to get it and, overall, the iPhone is an expensive investment when you start looking at the data plans.  Broader market penetration will happen with the growth of the Android platform; which will become the device- and service provider-agnostic operating system that will allow low-cost producers to offer smartphones to the price-sensitive consumer.   The increase in availability of these phones, I predict,  will actually lower the cost of data plans as well.  This is a  trend that is bound to continue as the fixed costs of building data delivery infrastructure is recouped and competition brings the supply of data networks up and the cost of the service down.

2. An increase in mobile gaming, but a decrease in pay-for-app models

Angry Birds was worth $20 million to EA, and for good reason.  Electronic Arts currently owns over half of the top 10 spots in the itunes App store and Angry Birds alone has sold over 6.5 million copies.  Mobile gaming is going to continue to grow, and it’s going to pull in a much broader audience in 2011 (see prediction #1).  With the growth of the category, however, I’m not confident that we will continue to see the pay model that currently exists in the itunes store , and I’m not entirely convinced that social currency will support the marketplace either.  I’ve been in the app marketplace for a while now and I’m surprised at how few apps have really embraced the ad-supported model that has driven the web economy for so many years now.  It’s possible that mobile advertising simply hasn’t developed enough to sell performance, but on a CPM level, I’m surprised that more advertisers aren’t clamoring to get into people’s smartphones.  If this changes with the broadening of the market, I think we’ll start to see more social gaming on mobile devices, and gaming publishers similar to Zynga and RockYou on mobile devices.

3. Continued adoption of web-based productivity apps by businesses

Google is going to take a few more swipes at Microsoft in 2011, and they will continue to pull share from the leader with the improvement of Google Apps for business and education.  Cloud-based apps just make sense for most people, who really don’t use much processing power to accomplish the majority of their tasks.  It’s also far easier to synchronize email, calendar, contacts and documents when they’re in the cloud.  Based on prediction #1 (above), it makes sense that more and more companies will move to the cloud for their business application needs because people are going to increase the number of screens that they use, and hence have a greater demand for easily synched solutions. Google Apps are the best cloud-based productivity applications in the market. Microsoft Live is a few years too late and a few features too underwhelming to be particularly useful.

4. Fragmented social networks

Facebook is now the place where you have the most connections that have the highest variance in value (mom, girlfriend, junior high-school acquaintance).  Facebook is now sort of a mashed up wall of brands, bands, friends, frenemies, places and games.  While Facebook continues to do a amazing job at delivering a platform that can be customized and controlled by its users,  I believe 2011 will be the year that people start signing up for smaller communities and networks that are relevant to a particular passion or activity.  Path is trying to fill this gap with a social network that only allows you to share photos with 50 people , and Instagr.am is filling in a void for hipsters and the visually curious to filter their photos with lo-fi effects.  These communities are built on top of the Facebook platform, but a different a slightly different value proposition and will start to syphon off some user attention.

I believe that music isn’t getting a fair shake in Facebook and that money is being left on the table in that space.   We’re going to be releasing a product in 2011 that will try to fill in some of the holes that Facebook misses in the music business and I’m looking forward to seeing entrepreneurs take on similar strategies.

5. Flat adoption of mobile coupons, despite the inevitable heavyweight user war.

Mobile coupons seem to be the trend that just won’t stick…yet.  I believe it’s going to take a little more time than people are hoping for consumers to start really using mobile coupon offers.  Media agencies are starting to experiment with QR codes and companies like Foursquare continue to make the push for location-based discounts (although I’ve struggled to  find a relevant advertisement in my experiences with the platform thus far).  Facebook PlacesHotpot and  Google Places are also diving into this space head first.  While Google, Facebook and Foursquare will trade punches like heavyweights in a royal rumble this year, I suspect that users will be decidedly absent from the fight.  2012 will be the year of mobile coupons, 2011 will still be the year of the Groupon.