News Column

Tech Trends to Watch in 2013

January 7, 2013

Peter Delevett

Technology 2013

A year ago, the eyes of the tech world were fixed on Facebook's initial public offering, fueled with hopes that it would rocket skyward and lift the rest of Silicon Valley with it.

Yeah, didn't happen.

But with a new year upon us, venture capitalists and other startup experts are focused on other tech trends they think could become the Next Big Thing.

And while social networking startups may have lost their luster, other buzz-heavy phrases from last year -- like mobile, cloud and big data -- are still getting plenty of love.

"I do think 2013 should be a time for people to try to figure out how to make money on mobile," said Ted Schlein of venture firm Kleiner Perkins Caufield &Byers.

While he and others note that mobile startups have been sprouting fast and furious, Schlein said they've been mostly "little app of the day" companies, subject to the fickle whims of consumers.

His partner at Kleiner Perkins, Chi-Hua Chien, paints the market opportunity in grander terms. "Somebody," he said, "will be the Facebook and the Google (GOOG) of mobile."

While both those Internet heavyweights have struggled to reap fortunes

from their mobile offerings, Dan Greenberg, CEO of video-advertising startup Sharethrough, thinks Facebook could be on the right track. "Native is the answer to the mobile ad problem," he said, referring to the way social networks like Facebook and Twitter are letting marketers insert messages into users' activity streams.

Greenberg thinks Yahoo (YHOO) and major media companies will integrate content akin to Facebook's "Sponsored Stories" into their mobile offerings. Targeted posts from marketers, he said, are more effective than old-school banner ads.

Digital advertising firm Solve Media agrees, noting that a recent poll of more than 200 media buyers predicted double-digit growth in such spending this year compared to 2012.

Satish Dharmaraj of Redpoint Ventures even goes so far as to predict Google will buy Twitter in 2013 in an effort to master the world of sponsored posts.

Ross Fubini, a tech entrepreneur and investor who recently joined Menlo Park venture firm Canaan Partners, pointed to another way mobile phones will increasingly become marketing machines: Through what he called "cookie-ing people" in the real world, much as Internet browsers use bits of code called cookies to keep track of people in cyberspace.

"I'm right now walking on the streets of San Francisco, and my phone is constantly dropping in and out of various cellular towers," Fubini said. Mobile carriers and advertisers can follow those shifting signals to know where a person is, then target him or her with services such as restaurant suggestions, traffic warnings or e-coupons for nearby stores.

With so many new uses for cellphones, John Cioffi -- the Stanford engineering professor known as the father of DSL -- thinks the number of mobile and connected devices like smart TVs will double in 2013. Meanwhile, he said, demand will slow for cable and other home-broadband links.

Michael Harries, chief technologist at the Citrix Startup Accelerator in Santa Clara, predicted new competitors will arise to challenge iPhone and Android devices. Microsoft's Windows 8, for instance, was expressly designed for smartphones and tablets, "and Mozilla's about to bring out a low-end phone," Harries said.

The explosion of devices, he and others agreed, will make life more challenging for corporate information technology departments. The "BYOD," or bring-your-own-device, trend is giving individual users more control over what hardware they use in the workplace.

And increasingly, the same is true of software. Schlein and Fubini both note that software-as-a-service companies like Box and Splunk offer "freemium" pricing to entice individuals users, hoping enough will sign up that their IT directors will spring for additional bells and whistles.

With more options for customers to choose from, software companies will have to make their products more user-friendly, Schlein said -- and even develop multiple versions of their products for different programming interfaces.

Fubini added that the trend may undercut the dominance of one-size-fits-all software giants such as Microsoft and Salesforce. Startups that can devise the next gotta-have-it business app will be in demand as acquisition candidates. But Fubini said some -- following the example set by Pleasanton's Workday -- will resist and try to go public.

Schlein predicts the stock markets will continue to be very choosy about tech IPOs in 2013. He called that "a good thing" because it ensures only top-quality companies can go public.

Mark Heesen, head of the National Venture Capital Association, was more optimistic, pointing out that of the 51 companies that went public between late 2011 and late 2012, the lion's share have recently been trading above their opening prices. "Usually," he said, "it's about 50-50."

Venture capital analysis firm CB Insights notes that there are nearly 500 venture-backed tech companies in the U.S. with projected valuations of more than $100 million. Companies selling wireless infrastructure and enterprise software could be well positioned for IPOs in 2013, said CB Insights founder Anand Sanwal.

Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.

THINGS TO WATCH IN 2013

MOBILE MONEY: Investors will be looking for new ways to monetize mobile, whether via new forms of advertising, or an increase in "cookie-ing" people in the real world (i.e. keeping tabs on them via cellphones and targeting location-specific offers to them). Also, the number of mobile devices is predicted to keep burgeoning. SOCIAL REACH: Social networking tools becoming more ubiquitously sewn into all kinds of software, and more sophisticated "big data" being developed to help companies mine all the information being generated by the social explosion. SOFTWARE REVOLUTION: The ongoing penetration of SaaS (software as a service) with "freemium" pricing plans, together with the increasing trend toward BYOD (bring-your-own-devices to work), means people are going to have more and more choice in what software they use at work.


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Source: (c) 2013 the San Jose Mercury News (San Jose, Calif.) Distributed by MCT Information Services


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