2012 was an interesting year in tech, to say the least.
Apple (NASDAQ:AAPL) became the world’s most valuable company, topping $700 a share and has subsequently shed some 27% of its value. Microsoft (NASDAQ:MSFT) launched new desktop and mobile operating systems, and surprised everyone with a tablet of its own. Research In Motion (NASDAQ:RIMM) hit new lows, but began to pick up steam as the year closed out and anticipation grew for the long delayed BB10.
Google (NASDAQ:GOOG) completed its purchase of Motorola, then launched a line of tablets. Google’s tablet and Amazon’s (NASDAQ:AMZN) Kindle Fire prompted Apple to relent and release the cheaper, smaller iPad Mini. Intel (NASDAQ:INTC) finally cracked the mobile market (in a small way), but lost its CEO to retirement. And Facebook’s (NASDAQ:FB) IPO famously flopped. As a backdrop to all this, “frenemies” Apple and Samsung hammered each other in court.
With this as a prelude, 2013 also looks to be very interesting. Here are a few of the key stories I’ll be watching closely — and you should be, too.
Intel: The PC industry is stalled, and mobile is where growth is. At the close of 2012, CEO Paul Otellini’s resignation led to rumors of Intel talking with Apple to replace Samsung as CPU manufacturer for Apple’s mobile devices. Between the possibility of making ARM (NASDAQ:ARMH) chips under license and finally gaining some traction with its own mobile CPUs, 2013 could be Intel’s breakout year for tablets and smartphones.
Apple: Will it regain the $700 levels it hit earlier this year, perhaps going even higher? Or is the sell-off of the past few months a sign of things to come? Apple is coming off supply-chain issues and disastrous software debacles (primarily Maps) that saw a management shakeup. The market for premium smartphones and tablets (where Apple makes the lion’s share of its profit) is also becoming far more competitive, even as it grows.
Then there’s the ever-looming tease of a possible Apple TV. It didn’t hit in 2012, so maybe 2013 will be the year. When (and if) it launches, an Apple TV has the potential to be the company’s next breakout category. Or after years of heightened expectations, it could be an expensive miss.
Sony: During this horrible year, Sony’s (NYSE:SNE) TV division bled red ink, mobile phones and tablets failed to take off, the Vita portable gaming console struggled and a new e-reader lacked lighting, making it essentially a generation behind on release. Plus, Sony is selling a new 4k Ultra HD TV (with no content to speak of) for $25,000, and rumors have it that a next-generation Playstation will arrive in the fall. But with so few bright spots, Sony needs to show signs of innovation in 2013 — or it’s in big trouble.
Microsoft: Here’s another company that has the potential to make big gains in 2013 — or fall flat. Windows 8 is just rolling out, the Surface RT tablet is on the market, the Surface Pro (with high hopes of saving the enterprise market for Windows) is due for release soon, Microsoft retail stores are opening, a new version of Office is available and the highly successful Xbox 360 is due for replacement. There are rumors the company may release its own Windows Phone 8 smartphones, too.
A few home runs, and Microsoft could get at least some of its mojo back. But if the new stuff — especially the tablets and Windows 8 — fail to meet expectations, CEO Steve Ballmer will be on the hot seat.
Research In Motion: Everyone loves a comeback story, and 2013 will be the year that RIMM either recovers or dies. It’s unlikely to ever regain any position of dominance, but if the new BB10 operating system and devices running it are a hit in January, RIM could come back from the brink and settle into a solid third place in the mobile market, pushing off Windows Phone 8 and keeping a grip on enterprise customers. If BB10 flops, look for a patent sale and parts of the company to get sliced up and sold off on the way down.
- The tablet market will continue to be hot. Will bigger tablets be supplanted in popularity by 7-inch versions? Will Apple upgrade the iPad Mini to Retina display? What’s the big selling point going to be in holiday 2013 after tablets all went to HD display this year? Apple looks to be dropping below 50% tablet market share, but will that stabilize?
- Mobile payments have been a mess, and 2012 saw the waters get even muddier as more players tried to become the standard-setter. Everyone is waiting for the other shoe to drop: the iPhone. Will Apple release an iPhone in 2013 that supports near-field communications (NFC) wireless payments, the catalyst that’s needed to see digital wallets to take off, or will it continue to play the spoiler?
- Security has the potential to be a major story in 2013. The sheer mass of smartphones, the number of people using them as BYOD devices (thus having access to work networks and corporate assets), plus information like credit card numbers stored on them are making mobile devices an irresistible target for cyber criminals. It’s not a question of “if” such attacks come; it’s “when” and “how bad.” A nasty experience could sour consumers and businesses, and throw the mobile market into chaos until this issue is resolved and tighter security is implemented.
- China figures prominently in 2013’s technology stories. It’s a huge and largely untapped market, but it’s likely to be a tough slog for companies like Apple that are trying to sell premium devices in a country with a much lower per-capita income and where knock-offs and much cheaper alternatives abound. China is also front and center as the tech industry’s current labor leader, but it’s facing worker unrest.
- Related to the above, there’s a nascent movement toward “Made in USA.” Google was promoting American manufacturing when it floated the Nexus Q streaming device, and Apple made a splash with the announcement it’s moving a Mac computer line back to the U.S. for manufacturing. Will rising Chinese labor costs and/or consumer preference bring more tech manufacturing to the U.S., and if so, how would it affect pricing and corporate bottom lines?
- I’m eagerly watching to see how the battle over bandwidth develops. This one hits both home and mobile Internet providers, where consumer demand is pushing for faster access and unlimited downloads — at a time when providers are pushing back with usage caps. Bolstering demand is cheap, unlimited streaming video (which in turn undercuts paid content services from some of the network providers). But the companies providing those services run into problems when customers bump up against download caps and incur extra charges. Google is going around the problem (in an expensive way) by experimenting with laying its own network, and some lucky households now have a wicked-fast Internet connection to consume all the Google TV they want. Something has to give, and next year could be when one side (which one?) blinks.
- Will we see more big social media IPOs, or will the specter of Facebook and an ongoing issue about how exactly to monetize all those members cause Twitter, Pinterest and others to hold off on going public?
- Lawsuits, litigation and patent wars. In many ways, patent litigation was one of the biggest stories of 2012, with Apple winning a huge settlement from Samsung and companies going on patent-fueled buying sprees. Will 2013 see a slowing of the trend while tech giants turn their focus back to product development, or will courtrooms continue to be their chosen battleground?
Don’t turn your head away from this sector for more than a second, or you’ll likely miss something fairly momentous.
As of this writing, Brad Moon didn’t own any securities mentioned here.