The five biggest tech news stories of 2014

I thought I’d try a different spin on the familiar “Year In Review” stories we see at this time of year and outline what I think the five biggest tech news stories of 2014 were and why.

Apple: Watch Announcement, September

The biggest story regarding Apple was the Apple Watch announcement, which was only one of three major announcements made at the last event, along with the iPhone 6 and 6 Plus and Apple Pay. But the Apple Watch is, to me, the biggest news regarding Apple this year for several reasons. Apple Pay, as I’ve written before, will turn out to be hugely important for mobile payments but it’s going to be a slow burn success, taking several years to really be transformative for Apple, its customers, and the industry. It’s also not going to have any significant financial impact in the near term for Apple. The iPhone 6 announcements were also significant, but mostly incremental in nature, and so not as groundbreaking. The Watch announcement, however, was significant for several reasons:

• It’s a brand new product category for Apple, the first in four years, and also the first under Tim Cook. As such, it’s the greatest test yet of Cook’s ability to follow in Steve Jobs’ footsteps and yet make Apple his own.
• It has potential to return Apple to stronger revenue growth, especially when seen alongside the new iPhones. I could see Apple selling 20-30 million Apple Watches in the first year, generating $10 billion or so in revenue. That’s another few percentage points of growth on top of what is already going to be a strong year.
• Strategically, I think the Apple Watch is the most tangible symbol of the strategy Apple is pursuing at the moment of reinforcing the iPhone as the center of the Apple universe, and of its users’ lives. The Apple Watch will be an extension of the iPhone in many ways and is one of several products and services, like HomeKit and Apple Pay, for which that is true.

Google: Nest Acquisition, January

Google’s most significant news of 2014 was the Nest acquisition, announced right at the beginning of the year. Google announced a number of new products and services in 2014, among them, the trifecta of new Android flavors (Wear, Auto and TV) announced at I/O, as well as a new version of Android (Lollipop), and the Android One initiative. I think each of these is significant, but I think the most far reaching of these may end up being the Nest acquisition for several reasons:

• Nest is becoming the hub of Google’s smart home strategy in two distinct ways: the Nest APIs are where all the connective tissue for Google’s smart home ecosystem lives, while Nest the company is the vehicle for Google’s smart home acquisitions, including Dropcam. As such, Nest isn’t just a standalone, one-off acquisition, but a foundation for a much broader strategy.
• Nest is also emblematic of the new sets of data Google will be building, acquiring and integrating into its broader data sets going forward. Whereas much of Google’s past data gathering work has been focused on information about the world around us, its current thrust is information about its users, with Google Now the most obvious outlet. Nest devices already detect when their users are home, but Google’s other smart home technology and activities will generate ever greater amounts of data about user behavior both at home and on the go.
• Nest represents the next phase of Google’s hardware strategy. Google has, of course, dallied in hardware before. Not just with its relatively brief ownership of Motorola Mobility, but also with the Chromebook Pixel, the Nexus Q, and Google Glass. But none of these products has been a huge success, especially among mainstream users, and Nest is the first time Google has owned outright a successful device brand, along with a very capable and experienced team who can benefit the rest of Google too. Though I expect Google to continue to focus on the Nexus strategy for certain device categories rather than making its own hardware, I also think we’ll see more devices from Google off the back of the Nest acquisition.

Microsoft: Office for iPad, March

Microsoft had a year of big news, starting with the appointment of Satya Nadella in February, the closing of the Nokia devices acquisition in April, the announcement of Windows 10, and much more. Picking one of these stories is somewhat arbitrary and one might argue Nadella’s appointment is the driving force behind many of the other announcements. But I think the Office for iPad announcement is again emblematic of the broader shift happening within Microsoft, some of which was underway before Nadella’s appointment, and some of which is a direct result of it. I chose the Office for iPad announcement because it represents several things: a new openness to cross-platform development, even for Microsoft’s crown jewels; a consistent approach to development on all platforms; a willingness to experiment with new business models; and an approach which fits the user experience to the device. All of these are, in some measure, new for Microsoft but I think we’ll see more of it in 2015. Specifically, the business model innovation Microsoft experimented with not just in March but with the November Office announcements will have broad-ranging repercussions.

Amazon: Fire Phone announcement, June

Amazon didn’t have masses of big announcements in 2014. It released incremental improvements to its Kindle lines, it launched the Fire TV box and stick, along with the Echo and Dash devices. But I think the most significant was the Fire Phone. Unfortunately, it’s not significant because it was such a resounding success. As I wrote about earlier this week in my piece on Amazon in 2015, Amazon has been trying and failing to replicate the success of the Kindle line in other hardware categories but these other devices haven’t shared the fundamental characteristics that made the Kindle a success. The Fire Phone is the best example of this failure: over-priced, under-differentiated, designed to help sell more other stuff rather than necessarily be a huge money spinner in its own right, and so on. As such, it’s symbolic of Amazon’s broader hardware struggles and that’s why it’s so important: until Amazon begins to focus again on what it does well in hardware, it’ll continue to struggle.

Samsung: financial announcements, July and October

Samsung’s biggest announcement wasn’t a product, a feature, or a new service, but its financial announcements, especially those relating to the second and third quarters. In those quarters, the trend some of us spotted long ago finally became painfully apparent in the numbers Samsung reported to investors. Samsung is shrinking, and its profits are plummeting, because it failed to build sufficient differentiation to sustain its success beyond a brief period when competitors were playing catch up. Now that Chinese vendors are attacking it at the low end and in the mid-market, and other Android manufacturers and Apple are strengthening their premium offerings, Samsung is struggling. Just as no single product was to blame for the decline, no single product can get Samsung back on track. The fourth quarter has just ended and so in the coming weeks we’ll see whether Samsung has been able to turn things around at the end of the year. But I’m skeptical we’ll see much change in the fundamentals and I suspect things will actually get worse for several more quarters.