Some predictions for the 10′s

by Elie Seidman on January 3, 2010

Prior to Oyster, I spent nearly a decade in the telecom industry. At Epana, we were early adopters of the Blackberry which we used to replace pagers to alert us to network outages and the like; I wish I had invested in RIMM. For our infrastructure, we were early adopters of Sonus softswitches – telecom switches using VoIP instead of traditional time division multiplexing technology (TDM). Once revolutionary, VoIP is today the standard and TDM continues to be phased out though it is far from entirely removed from the telecom network. Many things that were novel in the late 90s and early part of the 00′s  became widespread and it was pretty obvious that they would become so. As Om Malik points out, perhaps no change was more significant than the adoption of high speed Internet access. I still remember well the Covad SDSL line I had installed in my apartment circa 1999 and then replacing it with Time Warner cable. Speed of connection like monitor size and CPU speed is something that you don’t regress on – once y0u get speed, you don’t go back. Today, with my apologies to those still on AOL dial-up, the Internet is not really usable on dial-up.

Having observed and in some cases successfully predicted the changes of the past decade, here are my predictions for the major changes in the coming decade:

  • Pervasive urban high speed (1.5Mbps to 10Mbps) mobile bandwidth such as what Sprint is doing with 4G/WiMax. The current ~1Mbps 3G network – offering the speed I had on my Covad SDSL line in 2000 – is not anywhere near fast enough for todays internet and is – as evidenced by the numerous complains about AT&T’s network – the limiting factor for a lot of the mobile internet. The limited bandwidth also dictates engineering decisions when developing for mobile hence the apps – instead of  browser based services – for the iPhone. Like Fred, I’m excited about mobile – and Android in particular but until we see higher speed connectivity, it will remain a bad version of the Internet.
  • We do NOT all migrate to one mobile device. The keyboard and hand feel of a Blackberry makes it ergonomically suited to do certain things that the iPhone’s larger touch screen simply cannot do. The gating factor here is NOT technology but rather the human body and the hand in particular. I used the Verizon Droid and it’s too much of a compromise: typing on it is nowhere near as good as typing on the Blackberry and browsing on it is not quite as good as the iPhone. I believe that it will remain hard or impossible to create a device that is both great for typing and as good for browsing as the iPhone is. For those who need to type and browse on a mobile device, two devices will likely be the norm – everyone else will choose the application that is most important for them and choose a device based on that. I have an iPod touch and a Blackberry – since email is my most important application and the iPhone is basically not a typing device – no matter what Apple fanboys may claim – I put up with the lousy Blackberry browser in order to benefit from the better hand feel.
  • Handheld computers will increase 30% in size and at least double their screen resolution – it’s hard to overstate the importance of screen resolution. An iPod that has 30% more surface area but twice the resolution is worth the size tradeoff.
  • Mobile computing has its limits – like so many technology fads – and there have been many – the early adopters who are vocal get really excited about the new thing while it’s novel only to leave the latest and greatest thing behind when the novelty has passed – RSS and push technologies are but two of the examples that stand out in my memory. Mobile computing, while clearly far more substantive than other fads of the moment, is in that euphoria period. If you have not used a desktop PC or Mac with a 30″ monitor, you should – it will be hard to use anything smaller afterwards. As the monitor on our wall (currently called a TV) starts to serve double duty – both lean forward and lean back UI experiences – a larger portion of the population will have access to very high resolution screens. The mobile device is nice but 2000+ horizontal pixels, 100Mbps+, and a real keyboard and mouse blows the iPhone out of the water. Unless I have to, I don’t use my mobile device (Blackberry and iPod Touch) – it’s not nearly as good as a laptop or a desktop.
  • Mobile computing hardware commoditizes. An incredibly powerful desktop PC has less than 500 dollar of parts in it so why does an Apple iPod Touch cost 200 to 400? There is a reason why Apple has such amazing margins. Apple has set a great example – but not a standard – for others – notably Google – to copy and copy it they will. Google has a huge incentive to commoditize the complement – they benefit when more people use mobile computing so they want to bring the cost of mobile computing down. Apple needs to sell devices to make money – Google does not.  It will get interesting when Google dramatically lowers the price of an Android device that is nearly as good as the iPhone/iPod touch. With the Droid they’ve gottten very close to doing that. Apple’s margins are going to be compressed. It’s hard to get excited about shorting Steve Jobs but I believe that on the backs of the incompetence of the risk averse corporate cultures of Nokia, Motorola and Microsoft, Apple has built a temporary advantage that will disappear over the next two to four years as others – Google in particular – race to copy them. For mobile computing to go really mainstream (billions of users not 10s of millions) the device needs to be 50 dollars, not 200 to 400 – and I believe Google Android is going to make it happen with a great OS that any hardware manufacturer can use. Expect 50 dollar Android devices by early 2012. Amazon and Google will partner to make a seamless digital content buying experience that is as good as what Apple offers with iTunes.
  • Mobile device-specific apps lose their importance and are replaced by simpler and better standards for web browsers on mobile devices. The mobile browser standard will also be able to deal with off-line scenarios though off-line scenarios will be fewer and further between as mobile data networks improve. For the likes of Yelp to have to write not only for the PC based browser but also an app for the iPhone, Blackberry (with the myriad versions BB OS and hardware levels) and Android makes no sense. We are supposed to be getting away from device dependent development and we will. A core advantage of the iPhone – the early lead in apps derivative from the broad adoption of their first to market innovative device – wanes. Blackberry and Google both benefit from eliminating that Apple advantage and will invest heavily in doing so. It becomes harder for Apple to maintain an advantage with more innovative – and better looking – hardware though it’s very hard to bet against Steve Jobs. If Steve’s health issues recur, all bets are off and Apple could lose 10s of billions in capitalization much faster than is conceivable today. With a mobile computer replacement cycle of two years or less, it does not take long for someone else to come along and take Apple’s share. I find it hard to forget that the first Mac that I had in 84 was supplanted by a Windows PC. Apple’s design and pricing arrogance (but not its constantly failing hardware) has been it’s advantage so far but will be a liability in the years to come.
  • Voice and data will not be sold separately on landline internet connections or on mobile devices - packets are packets and they won’t be priced differently. My iPod touch – connected to WiMax or WiFi – will do just fine as a phone and why should I have to buy my minutes from the mobile DATA network.
  • Extreme high speed (100Mbps+) landline internet dominates. Verizon with FiOS has an early lead and will likely come to be seen as having been very prescient. The existing cable networks are going to be crushed by unicast video. The FiOS network will be able to keep up without a problem. We have Cogent 100Mbps Internet access at the office in NYC (for $1000/month) and it is a total game changer relative to my – quite fast – Time Warner cable modem.
  • Twisted pair copper phone networks (traditional plain old telephone service (POTS)) will be largely – but not entirely – phased out. Landline voice will continue to exist but will run over VoIP and the VoIP does not run on a twisted copper pair infrastructure. Phone companies that don’t invest in an infrastructure able to handle all forms of high speed IP traffic lose to their competitors who do.
  • Unicast video ala AppleTV, Cable TV video on demand, Hulu and NetFlix on demand instead of broadcast where certain shows are shown at certain times. The DVR market is largely dead by the end of the decade having been replaced by unicast video on demand. It’s about to get much easier to watch video downloaded off of the Internet on your TV in lean back mode.
    • Microsoft figures out how to leverage the broad deployment of the Xbox
  • Professional content remains extremely important, particularly in video. Creating bad video is very easy  - those who are good at creating something worth watching will continue to be paid for making it though not as much as they used to and as consumers we will be willing to pay for it (via watching ads or direct payment). The fact that the distribution mechanism has changed does not change the fact that skill is needed to produce high quality content. No, user generated content (UGC) does not take over the world. It remains important but more and more it coexists with – and comments on – that which is produced by experts. Have you made your way through reviews in Yelp lately? Here is how it goes: “I loved it, I hated it, I loved it, I hated it”. I’m obviously putting my money and my time where my mouth is on this one because after reading 20 reviews on most any UGC site – with the exception of Amazon’s reviews on specific consumer electronics and on some books – I’m typically more confused – and more tired – than when I started and when I speak with the normal people I encounter (normal here is defined as not working in Silicon Valley and not a major contributor to a UGC site) I hear the same thing. How did Paul Kedrosky choose which dishwasher to buy? He went to Consumer Reports. And contrary to what Paul thinks he experienced, it was not a search issue but rather a content issue – deserving of a post onto itself.
  • We rely on editors more and more to help us navigate through the noise. Those editors will use new mediums such as Twitter and Facebook to disseminate their insight but the role of the editor will be similar to what it has always been – to make it less work to find interesting things. The world is obviously not going to regress to the three network TV stations of old but the few are still going to produce content for the many. As it is, my Facebook and Twitter feed is already a 90/5 balance – 90%+ of the content I see in it is produced by fewer than 5% of the people I’m connected to. I expect this to further polarize as the novelty of these new platforms starts to wear off over the coming one to three years.
  • We see massive upheaval - we are in the 2nd inning of Internet innovation with the critical 2nd to 7th innings to be played during the coming decade. The Internet has only been a mainstream consumer service in the US for 3 to 5 years depending on how you are counting. Take a look at Michael Arrington’s end of 2005 summary of apps he could not live without – does it surprise you how many of those sites are not particularly important just four years later?
  • Social is important but has its limits - Social online is actually not that new - electronic communications mediums have been social since they were first invented. In fact, long before the browser came along and started to popularize the Internet, those who were online in some way were using things like BBS and chat rooms. We will find that the 30 to 70 year olds of 2020 are about as social online as the average 30 year old is today (today’s 30 year olds grew up with the Internet). Unless you are hyper social, under 25, or live in Silicon Valley or New York, you won’t check in at a bar with FourSquare or its ilk – you will just go up to the bar and order a beer. The Internet will, thankfully, not replace the real world. Contrary to what Fred believes there is to learn from the (decidely offline) San Telmo market in Buenos Aires for the online world, I think there is relatively little to learn because they are dissimilar experiences. Going to a mall or a market is social experience in that it is a way to interact with others by being in their presence. It can be a largely passive social activity while still being social. The web requires active social engagement to create a social environment because there is no equivalent to the offline scenario of being around other people without engaging with them. If you and I are both on Amazon but don’t interact with each other, we don’t engage with each other – the end. If we are both at the farmers market on Union Square, we do engage with each other even without interacting with each other. The majority of commerce on the web will remain a non social experience.
  • Learning from the young – particularly when it comes to the social Internet – has its limits - kids 10 to 25 are in a unique phase of life. They have limited responsibilities and are in a highly social part of their life. As people age, real life starts to intrude – friends move away, the responsibilities of taking care of their own kids (and parents) takes up more and more time, and work becomes more taxing. Look to those who are currently 24 to 28 to see how their internet usage behavior changes over the coming five years. I expect that in 10 years, those who are currently 24 will behave a lot like today’s 34 year olds (most of whom were early adopters of the internet having gone to college when the browser first came onto the scene). I’m reminded that even though Apple always focused their Mac marketing on the young with the expectation that the young would eventually become the old and take their Mac’s with them, it never worked. Young people don’t become older people with the behaviors of their youth – they become older people. You can’t understand the older people of 2020 by looking at the youth of today.
  • Email is not dead – email is not going away, far from it – it’s here to stay.
  • Entrepreneurs will not learn to be be very weary of early adopter behavior as an indicator for figuring out what to build - what works for an early adopter like Michael Arrington may well not work at all for a mainstream consumer.
  • Google remains dominant in search but search becomes marginally less important. As Internet brands and the consumer Internet mature, we will direct navigate to more and more sites or direct nav to a site via Google [Nikon D700 Amazon]. This already happens with a few select brands like Amazon, NewEgg (if you are a computer geek), Ebay, Zappos and others. My expectation is that as the Internet matures, each sector – books, electronics, computer parts, etc. – is going to have one to three well known brands in it.
  • SEO will go the way of spam – spam used to be something that was front of mind – the spammers did it because there was money in it and consumers suffered. Today, spam is largely – but not entirely – under control even though domains – like the Oyster.com domain – get massive amounts of spam (about 99% of the email to the oyster.com domain is spam). I expect that the opportunities to spam search engines with various SEO tactics will largely go away and success in search will be closely related to success with real customers. Those who create value for real customers will do well in search and it will be hard to find exceptions where sites win in search despite offering limited or undifferentiated value to consumers. Basically, Google – or whoever beats them – will be better than the spammers at figuring out what is content and what is spam. The basics of SEO – such as making your site crawlable by search engines – will be well understood by most anyone building a website. Everything you need to know about SEO will be readily available – as it basically already is – from Matt Cutts or whoever is doing his job at Google.
  • The Yellow Pages and 800Free411 go out of business entirely. You don’t need to call 411 (free or not) if you are near a computer and with mobile computing we will basically always have a computer nearby. To the extent that free411 is needed, it will be voice based search function that Google or Microsoft provide.
  • The price of Windows and Office get cut in half as a result of competitive pressure from Google.
  • New York City becomes more relevant in the consumer web - there is less and less reason to build consumer Internet companies in Silicon Valley.  New York City’s abundance of media talent, smart ambitious people (particularly young ones), proximity to educational institutions, and dynamic diverse lifestyle options will – for the consumer Internet talent – give the valley a run for its money. If you were serious about the the consumer web in 2000, you had to be in Silicon Valley (not even San Francisco) because that’s where the engineers who could build your site were located.  The list of New York based consumer Internet companies and personalities continues to expand from a significant base. Naming just a few of the existing players around which the community builds.
    • Fred Wilson and Union Square Ventures - one of the most successful early stage Internet investors anywhere and a prolific blogger. Perhaps the best known VC blog anywhere, Fred has gotten his success the old fashioned way – he worked for it. He’s a real mensch to boot.
    • Chris Dixon and Hunch - with Flickr co-founder Caterina Fake, Chris is the co-founder of Hunch. He is an outspoken blogger and booster of the NYC startup community.
    • Google/DoubleClick
    • Etsy
    • IAC
    • Founders Club
    • MeetUp
    • DonorsChoose
    • Erik Schonfeld - TechCrunch
    • Old media – old media has finally started to understand the Internet and old media – what’s left of it anyway – is based in New York City. The historical east coast/west coast divide with technology understanding and know-how on the west coast and content on the east coast will go away with the east coast folks understanding technology as a distribution mechanism the same way they understood paper and printing press tech. It will have taken them 5 to 10 years longer than the west coast to get with the program but this is a long game.
    • New York Magazine – what magazine has done a better job getting online than NYmag.com?
    • Venture firms that focus on the space. It’s impossible to compete with the Valley on this one but New York is getting better though the financial activity in the city is still predominantly hedge funds and banks, not the early stage venture capital that is needed. A few of the larger and more active investors with a local presence:

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Some Predictions For the 10’s
January 4, 2010 at 7:50 am

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