PREDICTIONS: Top Digital Trends For 2010

Wed Jan 6 2010, 08:46 AM

Everyone is hoping for better things in 2010 after what proved a tough time in 2009. Digital media will continue to evolve as fast as ever this year. Expect more innovation, more disruption and lots more hype. Here's some analysis regarding the top trends in 2010, some startups to keep an eye on and some things that will and won't happen this year.

GOOGLE VS MICROSOFT

Windows Mobile is set to struggle during 2010 and Microsoft's wobbly position is likely to be drawn into sharper relief by an Android explosion during 2010. Mentioning the Nexus One in Microsoft's Washington HQ six months from now may be a mistake. Putting its brand on a phone and working in close partnership with HTC to produce the handset is Google's most explicit foray into hardware yet and could prove one of the most significant launches of the year.

But Microsoft is unlikely to retreat from mobile. Instead it will seek to amalgamate its mobile assets and adopt a coherent strategy. As with the PC market it needs to make some software vs hardware decisions and balance innovation with keeping up with Google. Intriguingly, 2010 may illustrate whether Google vs Apple is actually a more compelling mobile battle than Google vs Microsoft. But whether the Nexus One can prove as iconic as the iPhone is another matter.

Although Google will definitely continue to dominate the search market during 2010, Bing will increase market share at the expense of all the other players, including Google. On the other hand Microsoft is set to lose a far bigger browser market share than it will gain in search. Chrome will take a big bite out of the browser market and Internet Explorer is in danger of being squeezed from both sides if Firefox continues to grow its usage. Equally the Chrome OS could swiftly gain market share in the netbook space if early indications that it has ironed out the kinks that so irritate Windows-based netbook users are true. The Chrome OS is arguably Google's most direct attack on Microsoft to date and could prove hugely disruptive.

WILL TWITTER COME OF AGE?

This year should prove a pivotal one for Twitter. It's all well and good talking about building a platform and a user base before concentrating on revenues (never mind consistent profitability), but now Twitter needs to put its money where its mouth is. Or perhaps money into its mouth. The platform's built and more than 60m people are happy using it. What is Twitter's business model was a persistent question during 2009: 2010 needs to be the year in which it's answered. Twitter is still tight-lipped, but it's likely to involve advertising and search in some form, and corporates rather than consumers expected to cough up. On a side note, the volume of startups trying to build a business around Twitter is not sustainable. During 2010 many will collapse.

THE E-BOOK READER HYPE

Will they take off in 2010? iPhone aside, no device received as much hype in 2009 as the e-reader, but it didn't really achieve the sort of mass-market penetration the buzz merchants would have you believe. After all how many people do you know who own an e-book reader? Or want one? Compare that to how many people you know who own or want a smartphone, a games console, a laptop, a satnav or even one of those USB keys shaped like R2-D2.

Sales should grow modestly during 2010, but unless readers seriously decrease in price and e-books are made significantly cheaper than physical books (and just as available) mass-market traction will prove tricky to achieve. E-book readers should make some inroads in certain academic and professional contexts, but smartphones, laptops, netbooks and tablet computers are likely to provide fierce competition when it comes to consumers as a whole. In particular, Apple's Tablet offering when it arrives could shake up the entire e-book sector.

TABLET COMPUTERS: IS THE FUTURE REALLY FLAT?

The tablet computer will be this year's e-book reader in terms of hype, but far more significant and influential. In fact, it threatens to make the e-book reader obsolete. Currently, e-book readers have two advantages: their screens and battery life. But this may not be the case for much longer. Pixel Qi, for example, now produces an LCD screen, which mimics e-ink for legibility and can be used in laptops. If tablets use similar screens a key e-book differentiator ceases to exist.

Tablets should certainly make much more of an impression in terms of sales in 2010 than e-readers did in 2009, but don't be surprised if they don't quite shift the units everyone suggests. After all, they're going to be expensive at launch. Apple's tablet or iSlate (rumoured to cost USD1,000) will hog the headlines, but the proliferation of devices that come to market in 2010 may confuse consumers and fragment the space.

MAKING SOCIAL NETWORK ADS EFFECTIVE

Brands embraced social media with gusto during 2009, creating communities and building brand awareness in the process. This trend will only be further cemented during 2010. But how much of this activity directly translates into sales? Advertising is always relatively difficult to quantify, but social advertising seems especially so, perhaps because it's using a different marketing mindset and tactics. Some advertisers see the money they pour into social media as disappearing into some sort of internet vortex. During 2009 they did it because it was cheap and everyone else was doing it. During 2010 the penny will drop across the board, but advertisers will become far more discerning and demanding. They want a way to gauge a return on their investment. Expect lots more analysis and attempts to measure the effectiveness of social campaigns. But don't necessarily expect meaningful data.

REAL-TIME AND SOCIAL SEARCH

Search will become more focused on real-time and social media-related results. What does this mean? In theory, it will provide more relevant results and more effective advertising in new formats that take advantage of social media data. In practice, it also means a lot more meaningless tweets and random Facebook profiles are likely to turn up in your search results. Think of the early days of Gmail, when a simple email to a friend about where to go for a drink would generate ads about inflatable bananas, edible underwear and sky-diving lessons.

THE PRIVACY DEBATE

The more data we give away about ourselves the more effective online advertising can be in terms of targeting. But the more that websites demand, extract or sell data about their users - and the more this is publicised - the more wary the public will become. Step forward governments, which may well look to intervene in the form of legislation. This is a highly sensitive and confused area and 2010 is likely to see a muddled approach, both from advertisers and regulators.

PUBLISHERS AND PAYWALLS

This debate is set to run and run in 2010. It's not a new one and in a sense has been running ever since publishers put their content online. Rupert Murdoch is very publicly leading this drive and 2010 is likely to end with a confused and split publishing industry. Some will erect paywalls, others won't, and consumers will react, well, like consumers. If they perceive enough value they may pay, but the majority won't and certain brands will decline accordingly. Across the digital spectrum content providers will persist in experimenting with ways to get consumers to pay for content they have grown accustomed to receiving for free. And most of this experimentation will, somewhat unsurprisingly, not work.

STREAMING VS DOWNLOADS

Could streaming music kill off downloads during 2010? Potentially. Legal and illegal download volumes may decrease due to the rise of cheap subscription and ad-based music streaming services. Subscribing to services where users can access their personal playlists from any device, anywhere is convenient and compelling. With its acquisition of Lala, Apple appears to be moving towards embracing streaming, meaning the whole of iTunes could soon start working on a subscription/streaming model.

Spotify, with its much anticipated launches in the US and China, is the music streaming poster child, but don't necessarily expect 2010 to prove an easy ride for the startup. It could do a MySpace. It's taking too long to really open up to the rest of Europe and the US, and if not careful another player will come along and wrest the current advantage from its hands. Realistically, it would take longer than a year for it to fail, but it's a very important year for Spotify in terms of maintaining momentum In a sense, with free music, it's competing with BitTorrent and filesharing, rather than iTunes and Amazon and that's not easy.

As a side note, the concept could easily extend to video and DVDs could be replaced by streaming video. Next year is maybe too early for this to occur, but DVDs won't be around for ever.

ONLINE VIDEO VS PAY TV

Despite the evident growing consumer appetite for Hulu in the US and the iPlayer in the UK, online video is not likely to overtake pay TV any time soon. Forget the issues related to viewing quality, bandwidth and internet-ready TVs, the chief reason online video is not yet ready to take over the TV viewing world is that finding a particular programme on the internet is so much more hassle than via a traditional pay TV service. Consumers are lazy and like the easy option. Combine this with advertiser ambivalence, confusion and the lack of an alternative compelling business model and existing pay TV looks to have legs for some time yet. That said, pay TV providers have pretty much reached customer saturation, so their next moves during 2010 will be interesting.

THE IPHONE EFFECT

Expect more and more iPhone clones. Enough emerged last year as handset makers panicked, learned from the iPhone and put out versions that didn't quite catch the consumer zeitgeist in the same way. In the absence of any conceptually groundbreaking handset innovation from other quarters, expect more of the same during 2010.

THE GROWTH AND GROWTH OF MOBILE APPS

Apps are not going to go away. They're simply going to become more useful, more sophisticated and more ubiquitous. And expect any relevant players who didn't launch app stores in 2009 to do so in 2010. The app store bandwagon is set to keep rolling, but usage and downloads is likely to vary widely. Developer preference will be a key factor, as will the popularity of the device(s) the app store aims to complement.

Most app stores will struggle for profitability in 2010, with some high-profile exceptions. Android apps will explode in volume and by the end of 2010 should be firmly established. This doesn't mean iPhone apps will stop stealing the spotlight. Again, the volume of available iPhone apps is set to increase enormously.

Twitter-related apps, particularly those that filter or monitor Twitter feeds will continue to be in vogue, but the majority are likely to have no clear business model. Advertising (as ever) will be seen as a miracle salve when it comes to funding the content, but exactly how apps and advertising will work is set to evolve during 2010.

AUGMENTED REALITY

Expect to hear a lot more about augmented reality this year. Mobile app developers in particular will experiment and innovate. Some will actually prove useful, some will look impressive but be ultimately pointless, while others could (oh dear) hark back to the virtual reality days of the nineties. Apple and the iPhone's involvement in this space will seriously help kickstart it, but we're not quite at the Minority Report stage yet. Oh...and the hype about augmented reality will go into overdrive.

WILL 2010 FINALLY BE THE YEAR OF MOBILE ADVERTISING?

Industry experts and analysts have been salivating over and making bold mobile advertising predictions for years. However, Google's USD750m acquisition of Admob, coupled with continuing growth in a new generation of smartphones and accompanying platforms from Apple with the iPhone, Google with Android and RIM with its latest BlackBerrys makes 2010 a more likely candidate than previous years.

THE M-COMMERCE QUESTION

In much the same way they've championed mobile payments year-in, year-out, people have been predicting mobile payments to take off pretty much every year for the past decade. The hype surrounding the sale of a few Coke cans from a vending machine via SMS in Finland in 1998 has never really gone away. But equally nothing that's come since has really lived up to that early hype. Or has it? 2009 saw Apple's App Store explode and suddenly there was some actual evidence that people were quite happy to buy content and services over-the-air via micropayments.

Does this herald a sea-change? The jury's out, but throw in Twitter founder Jack Dorsey's latest venture, which turns the iPhone into a credit card reader, as well as similar offerings from Verifone and Mophie and NFC-enabled handsets in Japan which allow users to swipe their mobile to pay and it's clear there's momentum. Essentially, as mobiles continue to better replicate the traditional online experience, the more the lines between e-commerce and m-commerce will blur.

THE IPO BLACK HOLE

Fewer venture-backed companies went public in 2008-2009 than in any two-year period since 1974-75. While some high-profile IPOs are mooted for next year (not least of all in the social network sector), they are likely to be few and far between. Yes, liquidity looks to be returning, but M&A is likely to remain the main exit route for tech investors. Major corporate buyers are likely to start evaluating those companies that have come through the past year of economic chaos with resilient business models and proven customer bases.

THE LURE OF CLOUD COMPUTING

The cloud won't entirely replace businesses traditional IT systems during 2010, but it will increase its influence with many enterprises investing in private cloud computing services that sit alongside existing resources. Cloud computing cuts costs and improves efficiency, but comes with security and reliability risks. These contrary factors will encourage IT managers to implement a mixed approach. The competition to sell cloud computing tools and platforms will intensify during 2010, but private clouds should prove more popular during 2009 than public or third-party cloud services that corporations don't have the same degree of control over.

SOME THINGS THAT WON'T HAPPEN IN 2010...

> iPhone 'killer' launches.

> Twitter stops featuring in headlines.

> Apple releases a dedicated gaming device.

> Yahoo! wows Wall Street and begins to seriously compete with Google.

> Newspaper print circulations rocket.

> YouTube 'killer' launches.

> Nokia's Comes with Music overtakes iTunes.

> People reach a consensus on what constitutes a micropayment.

> Rupert Murdoch decides the online world would be a better place if everything was free.

> Nokia buys Palm.

> Google loses top spot in search market share.

> Facebook is lauded for its approach to privacy.

> Book publishers gush over deal with Google.

> Device makers stop suing each other over patents.

> Facebook stops growing.

> Music industry achieves record sales.

> MySpace overtakes Facebook.

> Journalists stop prefacing every sentence with something about the 'downturn', 'financial crisis', 'recession', 'economic climate', 'credit crunch' etc.

...AND SOME THINGS THAT PROBABLY WILL...

> Spotify and other ad-funded music services lose their shine.

> Digital advertising continues to grow.

> More and more people carry more than one mobile device.

> Internet usage increases among the over-50s.

> More high-street retail brands go bust.

> Mobile advertising spend increases.

> EMI goes bust or gets bought (again)

> Disney rinses as many digital Marvel-related products out of its new asset as it can dream up.

> Many people you know still use mobile phones that can't access the web.

> The Facebook film with Justin Timberlake (due Oct 15) is overhyped and flops.

> MySpace finds some direction.

> Hulu launches a premium subscription service.

> iPhone exclusivity ends in practically all territories.

> Total ad spend doesn't return to pre-recession levels.

> Android OS grows market share on the back of growing industry support.

> Motorola finally gets rid of its handset business.

> There continues to be startling growth in the amount of content available online.

> More local newspaper go bust, certain nationals could follow suit and many more publications go online only.

> Thanks to Avatar more 3D films and TV offerings are unleashed on an unsuspecting public. And yes, for TV at least, you'll still need 3D glasses of sorts.

> Movie and videogames continue to collaborate and integrate on topics and releases.

> Cisco continues to make moves into the consumer space.

> The lines between digital and traditional ad agencies further blur as integrated online and offline campaigns grow.

> Companies carry on blindly ploughing money into display ads that simply don't work.

> Spotify's US launch happens later, rather than sooner.

> Social gaming continues to grow.

STARTUPS ON THE STRATEGYEYE RADAR IN 2010

bit.ly (URL shortening), Cha Cha (SMS search), Clicker (internet TV), Flat World Knowledge (online textbook), GetJar (mobile apps), Meebo (online advertising), Mog (music streaming), Rdio (online music), Rummble (mobile location-based services), Square (iPhone payments), Superfeedr (real-time feed service), TweetDeck (Twitter), UberVu (social media aggregation), Voddler (video-on-demand), Voxeo (VoIP), Wolfram Alpha (search), Zynga and Rock You (social and online gaming)

HERE'S WHAT EVERYONE ELSE THINKS WILL HAPPEN THIS YEAR

ABI Research, ABC News, AdAge, AdWeek, All Things Digital, Business Insider, CCS Insight, ClickZ, CMS Watch, CNBC, The Daily Telegraph, eMarketer, Enders Analysis, Forrester, Gartner, The Guardian, IDC, Juniper Research, LA Times, Lunsford Group, Mashable, MediaShift, New York Times, PaidContent, PC Mag, ReadWriteWeb, SMB Group, VentureBeat