Technology Predictions for 2013 – The Year of Going Vertical

on December 31, 2012

The theme for my 2013 predictions is going vertical. The writing on the wall has been seen for some time now and I believe 2013 is the year we will see it officially come to fruition. There is absolutely no denying the success of Apple’s vertical model. In a mature consumer market, being vertical is simply the most sustainable model–if executed properly– by way of differentiation, competitive advantage, and a host of other long term strategic reasons. Many parallel industries and the vertical nature of the businesses in them point the way for this reality.

1. Samsung Invests in Its Own Future
Right now Samsung is the most dominant Android smartphone manufacturer. However, they do not fully control or dictate the directions of agenda of Google as it relates to Android. Because of this Samsung is dependent, to a degree, on Google for their future success. In a quickly verticalizing industry, this is a point of concern for Samsung. Samsung once invested in their BADA OS, but I believe they will further invest in owning their own software platform in order to fully unify their screen strategy. The most logical candidate is the Tizen OS they have been working on but are yet to release.

2. Microsoft Gets Into Smartphone Hardware
Microsoft signaled their intent to be a PC hardware company when they launched the Surface. By doing so they strained relationships with their partners and went down a path which is hard to turn back from at this point. The next logical step is for them to get into the smartphone hardware business, or acquire someone like Nokia or HTC, and begin controlling the hardware for Windows Phone. I believe Microsoft will officially get in the smartphone hardware game in 2013.

3. Apple Makes Large Investment in Its Supply Chain
Apple is more vertical than any company right now in the personal computing landscape. Other companies have some of the parts, but are yet to fully go vertical and show that they can execute as a vertical company. Apple has already proven it is a well oiled vertical machine and I believe they will further invest in that by using their massive stockpile of cash to invest in owning key parts of their supply chain. The key reason for this is to maintain their margins around hardware but also to relieve many of the supply chain bottlenecks that they deal with on a yearly basis. These investments could be in owning a key display manufacturer, hardware machining factories, and even investing or co-investing in a foundry to manufacture their own semiconductors for all their computers.

4. Google Goes Fully Vertical with Motorola
Because Samsung is Google’s largest partner, and in many of the same ways Samsung depends on Google, so does Google depend on Samsung. The reality is that Android would not have the market share it does today without Samsung. So by Samsung investing more in its own future with a software platform, Android will be weakened. The only logical response is for Google to also officially go vertical with Motorola and take their hardware future into their own hands. They can do this by focusing Motorola on the high end with a Nexus like strategy or they can focus on the lower end and go for more volume than margins. I can see either scenario playing out.

5. RIM is Acquired
To be entirely honest I have some hope for RIM. I do think they will make a modest rebound in 2013 with the release of BB10 devices. But to fully take a significant share of the handheld market they will need help from someone else. It makes the most sense in my mind for RIM to consolidate with someone who has the marketing and the hardware vision. Perhaps Samsung would acquire RIM and make BB10 its proprietary OS if Tizen doesn’t work out or any other number of the growing Asian OEMs who could use a better business platform and a better and unified localized OS for China.

Some Anti-Predictions

Here are a few things others believe may happen in 2013 that I don’t see happening, call them my anti-predictions.

1. Amazon Does Not Make a Phone
We have all heard the rumors and some tech blogs have even proclaimed an Amazon phone as a fact. I personally still find this move hard to swallow. The business around mobile phones is an entirely different beast and one that operates uniquely amidst other personal computing segments. Given Amazon’s business as a retailer, I have a hard time finding the value in extending that model to a segment where actually purchasing is still done at a minimum if at all by most of the mass market.

For me to believe Amazon has a shot with success in the very difficult economics of mobile phones, I would need to be convinced of the business value for them to do so. Something that I have not heard a sound argument for yet. At this point, however, I don’t see it happening.

2. Apple Does Not Release a TV Set
It seems as though the hottest rumor that keeps surfacing is Apple and the apparent holy grail of an Apple TV set. I’ve argued before that I don’t see Apple designing and shipping a large piece of glass as Apple TV. I remain convinced the set top box strategy is the most dynamic, sustainable, annually innovative, and logical approach. A set-top box can be refreshed in a more regular fashion and there is nothing you can’t do with a set-top box that you can do by integrating technology into the TV set. Given the way technology is advancing for next generation TV display technology, it is becoming to clear to many who know and understand the industry that glass is glass and it will contain some smarts but the best approach is to put innovation into the box that sits next to or is somehow connected to the TV. Apple will continue down their current path with Apple TV and will make strides toward moving it from a hobby to a business but it will not be by releasing a large piece of glass.

I have mapped out a number of scenarios for 2013. I’ve shared a few with you here but my full industry outlook includes many more including some related to the economy which I will turn into some columns here soon. 2012 has been an incredible year for Tech.pinions and its because of our amazing reader and commenter community that our site has become a recognized source of technology industry insight and perspective. We appreciate you all greatly and we will continue to serve you with many new features and exclusive content in 2013. Happy New Year to you all and may you have a prosperous 2013.