Why do I do this to myself? Bob's first predictions for 2018
About 20 years ago, when I started publishing a list of annual technology predictions, it just made sense to look back to see how I had done the year before. Alas, I made that decision without looking to see that nobody else in my line of work actually does that. But I was stuck and have found since that by being deliberately vague and putting a fair amount of thought into this stuff I’ve been able to keep my long-term stats at about 70 percent correct. We’ll shortly see if that trend continues, but first I want to discuss how this year is so different from all those others.
Nothing seems the same, does it? Maybe it’s President Trump. Maybe it’s just time for a revolution in tech and the economy, but this year feels unlike any of those others. I don’t know if it will make my predictions more accurate or less, but I have to tell you that I believe the context matters this year more than any other. I’ll get to that in a moment but first let’s see how badly I did the last time. You can read both of last year’s prediction columns here and here.
Prediction #1 for 2017 said there was going to be a cloud arms race between Amazon, Google and Microsoft with the other cloud players falling aside. I got the one right. Cloud market share for every company except those three have fallen. At the same time, those three companies, between them, spent more than $10 billion building their cloud capabilities in 2017. We’ll cover this more in one of my new predictions, but in terms of the public cloud it’s clear that nobody else matters.
Prediction #2 was the beginning of the end for buffer bloat, a term many of you read for the first time here many years ago. I wish this prediction was true. In a sense it is true, because buffer bloat, which makes the Internet difficult to use for streaming media while simultaneously messing it up for nearly everything else, is at east firmly in the modern technical vocabulary and there are technical solutions available, most of them free. But buffer bloat remains as much of a problem as before, I think, because we won’t upgrade our home routers. If everyone would just get a new router, buffer bloat would go away. But until that happens, I’ll continue to get this one wrong.
Prediction #3 said that Over-The-Top (that is Internet) streaming video was going to grow like crazy, leading to a real decline in both broadcast and cable TV. This was correct. 2017 viewing numbers for broadcast, cable, and even satellite viewers fell in 2017 while OTT providers like Amazon, Hulu and Netflix surged. This trend will continue in 2018 but with a twist as I’ll explain below.
Prediction #4 said that Intel would spin off its semiconductor fab. I got this wrong and now I don’t even think it is likely.
Prediction #5 was that Apple would make a big acquisition to give the company more focus. That didn’t happen, either.
Prediction #6 was a Come-to-Jesus experience for IBM, whatever that means. I’ll claim this one because Big Blue is in more trouble than ever (more on this later) and lost the support of Warren Buffett. In that sense, at least, Jesus has left the building.
Prediction #7 was that Bitcoin would finally find its place in both our economy and our culture. I believe the recent cryptocurrency boom proves that is the case so I’ll claim this as correct. But as I explained in my column How to get Rich Trading Bitcoin, it’s not happening the way most investors thought (or even think) it would. More on this in a bit.
Prediction #8 was the rise of Apple Video, which did happen.
Prediction #9 was the rise of inter-cloud services to protect customers from being too exposed to one big public cloud or another. This has certainly happened though it is hard to find a big winner in it, so I won’t be claiming this as a successful prognostication. I wish I could.
Prediction #10 was that nobody in 2017 would win the Google Lunar X-Prize, which goes out of business completely this coming spring. I think it is unlikely anyone will ever win that $20 million prize. Sorry, I got that one right.
Counting on my fingers it doesn’t look especially good -- 60 percent correct. I could maybe claim one of those I didn’t but that’s not how I roll. Maybe I am getting too old for this gig.
Now let’s turn to my predictions for this year. The big influences this year are the economy, the new tax law, and the rise of 5G wireless networking. The economy is booming, which oddly has allowed tech companies to NOT invest as much in new products and services as they might. A downturn increases competition which results in new stuff, but we haven’t had a downturn, so the cloud, for example, didn’t grow quite as fast in 2017 as it did in 2016. That could continue.
Another economic influence is the long time since we had a recession. It has been, in fact, the greatest gap between recessions in U.S. history. That doesn’t mean there has to be a recession in 2018 (in fact I don’t think there will be one), but I’d put money on a recession happening in 2019. That looming recession plus the recently passed tax law are going to make businesses do more financial engineering than ever in 2017.
Prediction #1 -- the rise of 5G networking will lead to a crash in broadcast TV. All the mobile carriers will begin rolling-out 5G wireless networking in 2018, though only about 22 percent of the country will be covered by the end of this year. 5G is interesting because it will bring a huge increase in wireless bandwidth that we don’t really need. How much wireless bandwidth do you really need in your home or business? I don’t do anything that requires more than about five megabits-per-second (watching 4K Netflix), yet the T-Mobile unlimited 4G LTE hotspot in my RV consistently gives me up to four times more than that. And 5G will reportedly give me FORTY TIMES more.
So what will all this 5G bandwidth be used for? I predict it will replace legacy broadband providers like telco DSL and cable ISPs. The telcos will feel this effect first. Every DSL vendor is ultimately doomed. There’s no fighting this trend so there will be a mad rush to 5G by these companies. Look for some of them to try to dump their wireline services entirely.
But wait, there’s more! 5G is mainly about streaming video and we’ve already seen a decline in broadcast TV viewing as OTT networks like Netflix take more and more viewer mindshare. Last year also saw an FCC reverse auction as TV stations sold some of their bandwidth to wireless providers -- an auction that produced less revenue than expected. In one sense you might look at this underwhelming return on the reverse auctions and predict that the TV stations might not want to do that again. But I see the situation differently. The broadcast stations are seeing viewer declines which mean the value of their franchises is falling. Broadcast will eventually go away, if not in 2018 then in some later year. Even with the lower-then-expected auction returns there’s an incentive to sell more bandwidth while it is still worth something. If the value of that bandwidth is already dropping, then there will be price pressure to sell sooner, not later. I think this will start in earnest in 2018 as more progressive broadcasters start to abandon the airwaves entirely, selling their remaining bandwidth and becoming Internet broadcasters. It won’t be a tsunami but it will be an unmistakeable trend that begins in 2018.
Prediction #2 -- the end of Windows supremacy. This is NOT a prediction that MacOS or Linux will take over from Windows. It’s more complex than that. What I am seeing is that Windows is becoming less and less important to Microsoft and as Microsoft’s focus changes so will our focus as consumers of personal computing. It’s not surprising that Microsoft is changing because desktop PC sales are down and Redmond can’t get much money anymore for Windows upgrades. So it has to find new sources of revenue. Under Steve Ballmer Microsoft was all about Windows, Microsoft Office, and Windows Phone. Under Satya Nadella, Windows Phone is gone and Microsoft’s concentration is on (in this order): 1) Azure (Microsoft’s public cloud); 2) Azure services like storage and -- to some extent -- Office 365; 3) Microsoft Office, and: 4) Windows.
That’s Windows going from first to fourth and Microsoft Office going from second to third. That’s huge.
The other day I bought for $99.99 a family license for Office 365. I didn’t even buy it for Office: I bought it for the five terabytes of cloud storage that came with the deal. Who wouldn’t pay $100 to store pretty much anything they could ever imagine in the cloud? It’s a kick in the head to Box, Dropbox, Google and others and reflects how important it is to Microsoft to get hundreds of millions of users signed-up for Azure services. Because once we do so Satya is pretty certain we’ll NEVER go away.
More predictions soon.