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2011: Apple's Dominance, Facebook to Go Public, Groupon's Billions, Google: More than Ads?

Apple stock jumped again today. The company is now worth $336 billion. That is almost $100 billion more than Microsoft and well over twice the value of Oracle. They are now the largest technology company that has ever existed. Apple is also the largest content distributor and the largest mobile phone manufacturer in the United States. There are over 325,000 active apps in the App Store. They have been downloaded almost 10 billion times. Gartner expects the App Store will generate a stunning $27 billion over the next two years. With Verizon coming online as a carrier, 2011 is looking good for Apple.

2011 may be the year tech IPOs make a comeback. SEC regulations on investment will require Facebook to disclose detailed financials or go public by April 2012. Goldman Sachs puts their value at $50 billion. The worlds largest social network boasts over half a billion active users, each of which produce an average of 90 pieces of content per month. 20 million Facebook applications are installed by users every day. Use of mobile devices to access Facebook is rocketing. 200 million users access Facebook via their phone. I'm guessing 2011 will be the year mobile access to Facebook will surpass access via desktop browsers. That is already the case with social networks in Japan. I also believe Facebook will become even more distributed with a significant amount of access occurring via widgets on other sites. It will be the end of the walled garden.

Web companies like Groupon are raising enormous amounts of capital. Kleiner Perkins' latest investment puts Groupon past the halfway point in a $950 million round that puts their value at $4.75 billion. Apparently they weren't crazy to walk away from Google's offer. I think 2011 will be the year we see a massive push back from vendors. Groupon better figure out how to handle this or the folks who gave them their billion dollar round will be very unhappy.

In 2011 we will see Google put an enormous amount of its resources into graduating from being an advertising company. Advertising revenue currently dwarfs all other streams combined. I think 2011 will be the year of Google Apps, Android and Google location based services. This year Google Apps will become the defacto standard for email, calendaring and document management for small and medium size organizations. Thousands are switching every day. Getting the majority of larger organizations will take a little longer, but it will happen. No other company is in a position to dominate cloud based core IT infrastructure for the majority of companies in the world. Google has the platform (over a million servers that handle, among other things, over a billion searches per day), the technical expertise and the capital to make this happen. For this reason, and many others, I think they are currently massively undervalued.

Finally, 2011 will be the year Twitter is bought by Facebook, Google or Microsoft. I'm rooting for Google because I'd love to see real time search come to the search tool I use everyday.

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Comment by JK on February 16, 2011 at 10:44am
@Dan That's classic! :D
Comment by Daniel Leuck on February 16, 2011 at 9:58am

@Brian Those are good points. Cloud platforms create a strong vendor lock-in. I like Google's offerings so much I'm generally willing to live with that, but I'm interested to hear more about your cloud standards idea.

@Joseph Thank you. It will be interesting to see what happens with Facebook's email alternative. The other day my friend's daughter's response to his request for an email was very interesting. "Dad, I don't even have an email account. Email is so 2009." She communicates with friends entirely via texting, Twitter DM and Facebook messages. When my friend complained, "But I'm not on Facebook or Twitter" she responded, "Exactly." :-)

Comment by Brian on January 24, 2011 at 9:50am

You know I like Google and share many of your sentiments on these issues. Heck I'm a huge consumer of Google Apps and love the whole concept.

 

That said, I can't help but play a little bit of devil's advocate and think on history's lessons. Wasn't Microsoft our saviour from evil proprietary entities like Sun & IBM?

 

Cloud Infrastructures like Google are the ultimate vendor lock-in. And frankly I think it will continue to work out well - at least certainly in the short to mid-term. A lot of this could be mitigated through open cloud standards. I wonder if Google has any plans for such initiatives?

 

Otherwise... do no evil? hmm..

Comment by JK on January 20, 2011 at 11:13pm

Great post Dan. I definitely agree with your take on Google, it'll be interesting to see what direction Page will take the company in 2011. I'm also looking forward to Qwiki's launch and what their platform can to do with the whole 'information experience' thing. 

 

Mark Zuckerberg's presentation about Facebook's new messaging system was interesting. E-mail is going to be a thing of the past, maybe not in 2011, but probably sooner than we think.

Comment by Daniel Leuck on January 20, 2011 at 9:19am
@John - I really think Quora is well done and useful, I am not sure if TechCrunch needs to write 5 articles on it every week but it does provide a lot of value
I agree on both accounts. I like TechCrunch but they definitely have their fetishes. Quora is very useful. We finally have what Korea had with Naver Q&A 8 years ago :-)
Comment by John on January 17, 2011 at 8:43pm

It looks this is the year of massive VC investment

e.g., $30 million tonight for Cheezburger: http://techcrunch.com/2011/01/17/i-can-has-funding-cheezburger-rais...

 

btw, I really think Quora is well done and useful, I am not sure if TechCrunch needs to write 5 articles on it every week but it does provide a lot of value

Comment by Cameron Souza on January 8, 2011 at 10:42am
I wonder if Qora will really take off this year.
Comment by Patrick Ahler on January 8, 2011 at 6:51am
Watch out for duckduckgo.com
Comment by Daniel Leuck on January 8, 2011 at 12:19am
Thank you John.
Will 2011 be the year that a critical mass of people become dissatisfied with Google's search results?
I'm betting no because I think Google search is still the best around and they are well protected by a comprehensive search-related patent portfolio. Sure, as the articles you referenced point out, spam is an ongoing problem, but Google is always devising new techniques to battle black hat SEO tactics. I believe those problems will be mitigated by better technology over time. Any other search company that isn't relying on manual content gardening or a directory system will run into the same issues. That being said, I'm not sure why they aren't using the same Bayesian network approach that is so effective for spam identification in their email product to filter their search results. Perhaps this year they will.
Will the bubble burst? It seems pretty clear that the enthusiasm and valuations are getting out of control (not just the above but $18 million for online pants companies, etc.)
I agree. There are plenty of signs of 90s-style valuation craziness. Looking at previous cycles I don't think there will be a major correction this year, but as Mika frequently reminds me, I've been wrong before :-)
Comment by John on January 7, 2011 at 9:38pm

Dan, great post. A few related points:

- Will 2011 be the year that a critical mass of people become dissatisfied with Google's search results? There's an alarming number of people complaining about how spam is dominating search results (e.g., Coding Horror, TechCrunch). Google may be expanding into new areas but is it's grip on its core loosening?

- Will the bubble burst? It seems pretty clear that the enthusiasm and valuations are getting out of control (not just the above but $18 million for online pants companies, etc.). We've seen what happens when the bubble burst 10 years ago and we saw locally just last year with the fallout from killing 221. It may not happen in 2011 but is a major correction that far away?

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