2008 predictions from the From Istanbul To Sand Hill Road guy -Baris Karadogan


I read Baris’s blog and also have a feed alert and he is pretty good with this predictions. Picked a good piece from his blog. I have been a student of technology and remember the, "Heisenberg uncertainty principle" ( In quantum physics, the Heisenberg uncertainty principle is the statement that locating a particle in a small region makes the momentum of the particle uncertain, and conversely, measuring the momentum of a particle precisely makes the position uncertain.)  I borrowed this from a Wikipedia entry for more information click here.  So without much ado – I share this with you folks.  Sounds exciting..or????

2008 Technology Predictions

It’s becoming customary among VC bloggers to make predictions for 2008.  At the risk of educating my competition, here are my technology predictions for 2008.

1) The Success of Google’s Android and the Open Handset Alliance:  This means that handsets will become more like PC’s and wireless carriers will become more like landline DSL providers.  This is a bold statement because both handset makers (like Nokia) and carriers (like Vodafone) don’t want this to happen.  So why do I predict a change in an industry where dinosaurs were surviving for such a long time? 

Because a meteor the size of Texas hit the wireless industry in 2007 and it was called the iPhone.  For the first time in the wireless industry, the handset chose the carrier as opposed to the carrier choosing the handset.  The product was so impactful and well designed that some carriers agreed to share 30-40% of their data revenues with Apple in order to have the device on their network.  That could be a very meaningful $200 dollars to Apple.  Why did carriers agree to that?  BeFrom Istanbul To Sand Hill Roadcause the carriers did the math and the revenue share probably made up the customer acquisition cost that they no longer had to pay which, in the US, is about $200.  In return for that bargain they gave up ALL revenue from applications, ringtones etc.  The consumers wanted it, they gave it, and doing so opened up the market an catalyzed the next innovation which came from Google.

Android and the Open Handset Alliance, enables other people to quickly create new iPhones.  It creates an environment that let’s developers focus on what they do best, which is writing innovative applications.  So that somebody can come up with a device so compelling that it too will chose their carrier (if carriers need a nudge Google can share search revenues, if they need a punch they’ll fund an open carrier).  Once that happens, the carriers become a dumb pipe, but a dumb pipe with similar economics and no worries for churn. 

The second reason carriers may embrace Android, is so they don’t have to be hostage to Nokia which is exerting a bigger and bigger pressure on carriers.  They are even building an ad network and making carriers pay them a piece of their ad revenues.  Especially European carriers, are so dependent on Nokia that they may just welcome a cheap, Android phone that has a few killer apps built by young application developers.

Which brings me to my third and final reason why Android will succeed; the developers.  They are frustrated.  It is frustrating to write mobile apps if you have to test them with 100s of handset each running a slightly different OS, in slightly different carrier networks.  Getting apps and phones certified is a big daunting, time consuming and frustrating task.  Palm will attest to that as they lost 25% of their market cap because they missed certification.  Android, sets these developers free.

So between, independently innovative products, a tough supplier to the market, frustrated developers and a tough carrier business model, this industry is ripe for big changes, and I predict it will start happening in 2008.

2) Gaming Takes Off:  I think people will realize that they were all gamers all along.  Three things will make the non-gamer realize his or her true self only forgotten.

2a) Casual games become social:  When you play chess or any casual game on Yahoo, you are playing a stranger, all you know is his overall score.  You don’t know your record against him, you don’t know if he lives nearby, and more importantly you don’t know if you know him.  In contrast, you play Attack! on Facebook, you know a lot more about that person, you can play against your friends, and you know your overall score and your score among your friends.  Playing against a stranger is one thing, playing against an old high school buddy is another.  This is a big deal which makes games a lot more addictive, and it is happening full speed in 2008. 

2b) MMO’s become casual:  MMO’s will extend their experience beyond the main game.  You will be able to play a small version of WoW on your cell to win a small number of experience points.  The game will be different but it will be the extension of the overall experience.  So when you have 3 hours free you’ll play the real thing, when you have 30 minutes free  you’ll play a small casual game on your PC that counts towards your experience in the big game and when you have 5 minutes free you’ll play the mobile handset version.  A lot has been written about this and the best can be found here.

2c) Hardcore games become immersive:  Playstation 3 has incredible graphics, at times I can’t tell what’s real video and what’s computer generated, but you still have to use a very complicated controller.  The Wii on the other hand has unrealistic graphics but every body who gets within 5 meters of the box wants to play (I am serious).   Put the two and two together.  Superbly realistic graphics combined with immersive controls will make hardcore games a generalized form of entertainment.  What do I mean by that?  I mean, why would you watch an action movie, when you can be in it with your friends?  Hard core games with easy immersive controls can let anybody play and why would you give up interactive entertainment for passive entertainment.  Watching a game will be almost as satisfying as watching a movie and you’ll have to option to interact with it if you want to.  Why would you ever not?

3) Success of the TJ Watson Portfolio:  Five computing clouds are poised to deliver us most of what we need.  I wrote about this for GigaOm last month.  Google and Amazon give us consumer apps and infrastructure, Salesforce.com and VMWare give us enterprise apps and infrastructure and Akamai brings them all together.  I predict a basket of these stocks will weather any downturn much better than others simply because of their unique position in the industry.  I’ve put my money where my mouth is, you can follow the returns of this portfolio here.

4) At least one creative solution to the music industry woes will emerge in 2008:  There is where I risk educating my competition, but I will say this.  2008 won’t be as bad for the music labels as people think.  And it won’t just be because of embracing mp3, though that will help.  There are enough creative people in the industry, and hopefully by now, enough people who understand digital, that somebody will think outside the box.  That’s all I’ll say for this one.

5) Turks take over Facebook:  Last time I checked, Turkey was the largest non-English speaking country on Facebook with 2.1M users just behind US, UK and Canada and slightly ahead of Australia (which technically speaks English).  Surprised?  Don’t be.  There are 75M people living in Turkey, mostly young.  My estimate is that Turkey will surpass one of UK or Canada in 2008.  Why is this relevant?  Size matters.  At least it should for app developers looking for users, and perhaps for tourists visiting Turkey, but I digress.  Seriously though, until recently, traditional media was not democratized as it is on social networks.  The few people who controlled the media controlled what we believe the truth to be.  This could change on social networks where numbers matter.  This may have a big impact on certain countries who have not leveraged their size to sway public opinion.  Now they can.  A lot more on that later.

Posted By Digvijay "VJ" Singh Rathore

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