Five big tech stories to watch for in 2013

The big stories of this year will continue into the next. But maybe not in the way you expect them to.

We were dazzled by an array of smartphones. We were fascinated and then disappointed by Facebook's initial public offering. And we held our breaths as we awaited the verdict in the Apple v. Samsung trial.

But all that's so 2012. Let's talk 2013. Will we still be paying attention to patents, smartphones, and IPOs? The answer is "yes, yes, and yes," but not in the way you might imagine. The great thing about writing about the high-tech industry is its constant march forward. New companies get built on the bones of old companies, and new faces emerge while others fade. It's what keeps us going and sitting on those hard, wooden courtroom benches.

So what can we expect next year? We've been talking and writing about it a lot here at CNET, and we're running reporters' predictions on their beats through the rest of the year. But here are some predictions on the big tech trends we'll be writing about next year:


1. The competition reels in Apple
James Martin/CNET
It was inevitable, and in a way it's amazing Apple dominated for as long as it did in high-growth markets. But Samsung finally overtook Apple for the lead in smartphone sales. While that could reverse with a full quarter of iPhone 5 sales, it's indicative of where the market is heading next year. Apple is one company, and it can't beat back forever an array of just-as-resourced competitors building off the Android mobile platform.

This isn't meant as a dig toward Apple. And I find myself grudgingly writing this on a MacBook, while listening to music on iTunes as an iPhone sits on my desk. Rather, it's an acknowledgement that the competition finally has its act together. We've seen challenges to the iPhone's dominance come and go. HTC looked strong for a while. But collectively, the Android collection (and maybe the companies building on Windows Phone 8) will be an overwhelming if profit-challenged mass. And, yes, by the end of 2013, we could be saying about the iPad what we're now saying about the iPhone.

"This is a huge platform change; this is of the scale of 20 years ago -- Microsoft versus Apple," Google Chairman Eric Schmidt said in a recent interview with Bloomberg. "We're winning that war pretty clearly now." Schmidt added: "The core strategy is to make a bigger pie," he said. "We will end up with a not perfectly controlled and not perfectly managed bigger pie by virtue of open systems."

In other words, as we wrote yesterday , Google is gleefully doing to Apple what Microsoft did two decades ago: Bit by bit, closing the quality gap and flooding the market with cheaper competitors. Courtroom dramas or not, that's only going to accelerate next year.


2. The IPO market heats up again, but not for consumer tech
Facebook's less-than-dazzling entree into the public markets likely cooled Wall Street's enthusiasm for social media and consumer tech. It didn't help, of course, that overhyped companies like Zynga and Groupon (unlike underhyped companies such as LinkedIn and Yelp) looked so wobbly.
Groupon CEO Andrew Mason Dan Farber/CNET

Does that mean Wall Street isn't hot for tech? Not at all. The big tech stars of the last decade have created big problems and opportunities for the next generation of tech startups. We're talking less gee-whiz apps and more behind-the-scenes types working on big data, cloud apps, and open source.

As they say, follow the money. And in tech, you follow the venture money. Acquia, a Massachusetts company that's building quick-to-deploy content management systems built on the Drupal open-source project, is one of those companies. It closed a $30 million investment round at the end of November, bringing its venture funding total to $68.5 million. It grew about 100 percent last year and should grow another 80 percent next year, topping out at 400 employees. Executives hope to go public within the next 12 to 24 months.

"In 2010 and 2009, it was almost impossible to get venture investors interested in enterprise software. Some of them said it was dead," said Acquia CEO Tom Erickson. "Now you've seen a reversal of that trend.

Acquia isn't alone. In Bellevue, Wash., SmartSheet, a company that's taking spreadsheets and other types of business collaboration into the era of cloud computing, landed a $26 million funding round last month. And just two weeks ago in Silicon Valley, Cloudera, which has built big-data analytics technology based on the Hadoop Apache open-source project, raised $65 million.

They may not be sexy, and the people who start them are probably the last who will ever have a Bravo reality television show about them, but they're indicative of the future. The tech industry's fashion swings between consumer and business tech. Next year, expect it to swing a little further back toward the back office.


3. Things get even more interesting at Microsoft
Microsoft CEO Steve Ballmer James Martin/CNET
2012 should have been the year we were talking about the big Microsoft comeback in consumer markets. Windows 8 was all lined up. So was Windows Phone 8. There was a nifty new tablet in the works. The gaming business was still going strong, and so was that vast enterprise-software business to which few pay much attention.

So what the heck happened? It's too early to grade sales of Windows 8. But early returns seem to indicate so-so. The same could be said for the Surface tablet, which has received mediocre reviews. Even more noticeable: Steven Sinofsky, the guy responsible for both, will be teaching at Harvard Business School next year instead of running the Windows division.

Yes, Microsoft finds itself in an unaccustomed role: It's the undisputed leader of a market that's not expected to grow , PCs. Yet it's the upstart in two fast-growing markets, smartphones and tablets.

And since Sinofsky left, Microsoft is climbing up this hill without a clear leader of Windows development. Don't be surprised if Microsoft's center of gravity shifts further toward Xbox and Skype, which seems underutilized by Ballmer & Co. since it was acquired in 2011. Could that be more deeply integrated into other Microsoft products without scaring away longtime Microsoft users?

Most of all, you can expect pressure to mount on Ballmer to prove his company is more than a middle-aged titan looking more and more like a slightly smaller version of IBM. And you can expect investors to start asking if, with Sinofsky gone (and it's doubtful he was ever a realistic alternative), there's any sort of management succession plan.


4. Facebook will continue to tick us off and we will continue to love it
Perhaps this is what a difficult love affair looks like: A company upsets its users, they lash out and swear they'll never use the company's product again. The company apologizes (sometimes it says it was just misunderstood), and everyone forgets about it a few days later.

Welcome to Facebook's sometimes dysfunctional relationship with its users. I say "users" rather than "customers" because, as CNET's Nathan Bransford wrote two days ago, Facebook's users are its product. It's real customers are the advertisers. The latest dustup was over what exactly Facebook's Instagram unit could or would do with users' (not customers') photos. Facebook ended its community voting system because of anemic turnout. In a case of cyberlife imitating real life, it seems we like to complain but we don't like to do much about it.

Here's a bet: There will be at least three more of these confrontations in the coming year. Facebook is a publicly traded company now. Wall Street expects growth, and once you've topped 1 billion users, the law of numbers is bound to catch up with you. So Facebook will continue to tweak and sometimes tick off as it searches for more profits. And why shouldn't it? We'll keep coming back.


5. Patents will still plague us, but solutions will emerge
Tuesday afternoon, I finished a year-in-review piece that said patents were the big story of 2012. Wednesday morning, I helped write a story about how a consortium of companies ranging from Intellectual Ventures and RPX to Apple, Google, and Microsoft was spending $525 million to acquire Kodak's imaging patent portfolio . Do you see a trend here?

There's little reason to expect anything different next year. Apple and Samsung have another trial scheduled for 2014. Lawsuits involving called nonpracticing entities (that's a nice way to describe a patent troll) will continue to increase, and big tech outfits will continue to spend billions to acquire patent portfolios. There is nothing on the radar that indicates this will change. Heck, the outgoing head of the U.S. Patent Office even thinks all these lawsuits indicate the system is working just fine.

It would be easy to complain about the patent system and how it needs reform. But here's the reality: It was reformed last year, and by the time years of negotiations became law, the solution was a watered-down compromise that didn't make much of a difference. The conundrum facing patent reformists is pretty simple: There are "twin sisters" of tech. One is high tech and the other is biotech/pharmaceuticals. On the high-tech side, allowing a patent owner to sit on a patent without doing anything with it doesn't make much sense.

But on the biotech side, it makes perfect sense. High-tech folks often forget, in their rush to keep up with product cycles that rarely last more than three years, that biotech product cycles can be measured in decades. Moving an invention through regulatory approval and testing is a long, expensive process, and patents are often the way to offer hope of a return on that big investment.

Should software and Internet concepts be unpatentable? Interesting idea, but unlikely to happen, and do you then disallow the many software and Internet patents that have already been granted? Regardless, any regulatory change will take years.

There is, however, a market solution any techie libertarian would love. You may have noticed in the Kodak sale announcement that a company called RPX was mentioned. RPX, in San Francisco, is trying to act as a clearinghouse for patents. Yes, like Intellectual Ventures, it acquires patents. But unlike Intellectual Ventures, it promises not to sue. Companies subscribe to RPX and pay a rate based on their size and income. Big companies pay more than little ones. Seems fair, right?

By the end of next year, we can hope that RPX and companies like it start bringing some sanity to the state of tech patents. It's a classic tech opportunity: A problem in need of a solution. And no one should expect the government to solve it.

 

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