As Yogi Berra once said, it's tough to make predictions, especially about the future.
About a year ago, I offered 20 tech predictions for 2019 -- the first 10 can be found here, and the second 10 can be found here -- that covered everything from smartphones to CPUs to social media to M&A. Today, some of those predictions look good, and others not so much.
Here's a candid look back at the first 10 of those predictions. A review of the second 10 will be coming soon.Prediction #1: Facebook's Pain Is Google's Gain
The exact prediction here was that Alphabet/Google's (GOOGL) ad business would benefit as Facebook's (FB) ad business went through a transition period. But each online ad giant ended up having a pretty good year.
Google followed up a disappointing Q1 report with stronger Q2 and Q3 reports, and continued reporting high-double-digit ad sales growth for its own websites and apps. Facebook's ad sales have been rising at a mid-to-high 20% clip -- slower than what was seen last year, but better than what many feared. Slowing growth for Facebook's core news feed ad business has been offset to an extent by Instagram's strong ad growth, including for its Instagram Stories services.
Prediction #2: Chip and Software Firms Remain Eager to Consolidate
Verdict: Generally True
While trade tensions might have affected chip M&A activity a bit and elevated valuations might have done the same for enterprise software M&A, a lot of transactions involving publicly-traded firms were still inked.
Notable 2019 chip industry M&A deals included Nvidia/Mellanox, Infineon/Cypress Semiconductor, ON Semiconductor/Quantenna, and Rudolph Technologies/Nanometrics (the post-merger company decided to humbly name itself Onto Innovation). There was also NXP's $1.76 billion purchase of Marvell's Wi-Fi/Bluetooth chip business and Intel's acquisitions of chip startups Barefoot Networks and Habana Labs.
Major software transactions included Salesforce.com's (CRM) purchase of Tableau Software, VMware's purchases of Pivotal Software and Carbon Black, Broadcom's deal to buy Symantec's enterprise security business and the acquisitions of Ultimate Software and Ellie Mae by private equity firms.
Prediction #3: AWS Signs More Giant Enterprise Deals
Verdict: True (But the Same Held for Others)
Amazon Web Services (AWS) has had another good year. Though AWS' annual sales growth has slowed a bit this year, it was still at 35% in Q3, and the public cloud giant is now on a $36 billion revenue run rate (well above that of any rival). And certainly, AWS hasn't stopped racking up large data center migration deals with Global 2000-type firms.
But Microsoft (MSFT) and Google's public cloud businesses also did well for themselves in 2019. Microsoft's Azure growth remained north of 50% during the first three quarters of the year, and while Alphabet doesn't break out the Google Cloud Platform's (GCP's) revenue, its commentary suggests GCP is still growing faster than AWS and Azure, albeit off a smaller base.
Also, though politics might have had a little (or a lot) to do with this outcome, Microsoft did land a $10 billion Department of Defense cloud contract that was widely expected to go to Amazon.
Prediction #4: Snap Explores Its Options
While Snap (SNAP) still has more work to do to become cash-flow positive, the Snapchat parent has performed better than many expected this year. Annual revenue growth was above 40% in both Q2 and Q3, and daily active user (DAU) growth, which was slightly negative in late 2018 and early 2019, improved to 8% in Q2 and 13% in Q3.
Snap did end up raising cash this year to help cover its ongoing cash burn. But it didn't need to go looking for a white knight. Following a better-than-expected Q2 report, Wall Street was comfortable providing Evan Spiegel's firm additional funds, and thus the company carried out a $1.1 billion convertible debt offering in August.
Prediction #5: Waymo's Lead Becomes More Apparent -- And Maybe Leads to New Deals
Verdict: Not Quite
Elon Musk's robotaxi promises notwithstanding, no one leapfrogged Waymo in 2019. But as the Alphabet unit gradually expands the limited commercial service it launched in the Phoenix area in late 2018, it's also fair to say that Waymo didn't make a leap either. In general, there has been a reset of near-term expectations for autonomous driving adoption, including for Waymo.
And though Waymo was reported in March to be courting Volkswagen and other automakers for investment/partnership deals, no such deals materialized amid ongoing automaker concerns about surrendering too much control over their R&D and user experience to Waymo. Just maybe, Sundar Pichai's recent appointment as Alphabet's CEO -- a move that puts him in charge of Waymo and other businesses within Alphabet's "Other Bets" segment -- will help get the ball moving.
Prediction #6: Apple Car and Headset Rumors Heat Up
The Apple (AAPL) car rumor mill was mostly quiet during 2019. While Tim Cook's company continues working on autonomous driving tech and its CarPlay platform, no indication appeared that some other major automotive project is ongoing.
On the other hand -- in a year that saw Apple's existing wearables businesses register very strong growth -- the Apple headset rumor mill heated up in a big way. In November, The Information and Bloomberg both reported that Apple plans to launch an AR/VR headset by 2022, and wants to launch a pair of AR glasses that could be worn outdoors by 2023.
Prediction #7: 5G and Foldable Phones Will Intrigue, But Also Contend with Growing Pains
The first 5G phones launched in 2019, and they generally work just fine. But with the phones typically costing over $1,000 and network availability still very much a work-in-progress, sales were relatively limited. Things should be different in 2020, as network availability improves and 5G radios become a common feature on $500+ smartphones.
The first foldable phones, which have been priced well over $1,000, were even more of a niche item in 2019. Samsung's Galaxy Fold launch was postponed after reviewers reported major durability issues, and Huawei's Mate X just recently arrived in China. Samsung did eventually launch the Fold and sell some units, but they amounted to a tiny fraction of global smartphone sales.
Prediction #8: Interest in 'Accelerated Computing' Hits an Inflection Point
Reasonable people can disagree on whether 2019 served as an "inflection point" for interest in accelerated computing -- the use of chips such as GPUs, FPGAs and ASICs to accelerate server workloads. But interest did certainly continue growing, and it sparked some head-turning moves from chip developers and cloud giants.
Nvidia's (NVDA) $6.9 billion deal to buy high-speed data center interconnect provider Mellanox aims to help address system-to-system bottlenecks for its server GPUs. Intel (INTC) spent about $2 billion to buy chip startup Habana Labs in an attempt to better compete against Nvidia in the AI accelerator market. And Google and Amazon each rolled out new cloud computing instances that feature proprietary AI ASICs.
Separately, Intel unveiled oneAPI, a programming model that covers both server CPUs and accelerators, as well as CXL, a high-speed, cache-coherent standard for connecting CPUs and accelerators. AMD eventually gave its support to CXL, while also disclosing plans to offer a solution (first set to be used by a giant Department of Energy supercomputer) for pairing its server CPUs and GPUs using its high-speed Infinity Fabric interconnect.
Prediction #9: Google Makes a Big Cloud Acquisition - Or Two
In June, Google announced a $2.6 billion deal to buy analytics/data visualization software firm Looker, while stating it plans to add the business to its Google Cloud segment and more deeply integrate Looker's offerings with GCP. However, I'm adding an asterisk here since -- amid greater antitrust scrutiny of tech giants in general -- the deal is still being reviewed by regulators.
Prediction #10: SSDs Cannibalize Hard Drives at a Faster-Than-Expected Rate
The NAND flash memory market showed a high degree of price elasticity in 2019, with big late-2018 and early-2019 price declines helping boost both penetration rates and average capacities for solid-state drives (SSDs) in various end-markets. And together with major capital spending cuts, this price elasticity helped NAND prices stabilize in recent months.
Whereas Micron (MU) was forecasting in December 2018 that NAND industry bit demand would grow by about 35% in 2019, it was forecasting in September 2019 that full-year bit demand growth would be in the low-to-mid 40% range.Also, though it wasn't entirely a surprise, 2019 saw both Microsoft and Sony ( SNE) confirm that their next-gen game consoles (due by the 2020 holiday season) will rely on SSDs for storage.
Part two of Eric's look back at his 2019 tech predictions can be found here.