8 Tech Trends for 2011

This being January it is fitting that we take a look at the next twelve months and consider themes that will likely come to define the new year. Given the intense pace of innovation across IT broadly, I’ve kept these themes at a fairly high level.

Last month, we looked over our 2010 predictions and conducted a fairly detailed post-mortem. As such, let’s jump right into a discussion of the themes and trends that I believe will characterize 2011.

1. Globalization:  While many appeared not to notice, some of the biggest names in consumer internet enjoyed robust growth in international and emerging markets in 2010, in some cases dwarfing their US numbers. Expect venture investors in 2011 to spend a great deal of time thinking about globalization, studying the best practices of companies executing successfully overseas, and paying particular attention to web services that can scale effectively across both emerging and mature markets.

2. LBS 3.0: As I touted in my recent piece on the Consumer Internet revival, Location-Based Services is entering what could be considered its 3^rd wave of innovation—one defined not by “check-in” gaming mechanics, but by robust applications offering rich, customized user experiences via applications residing at the intersection of location data, identity and content with mapping technologies and couponing/revenue incentives as the connective tissue binding it all together. Travel is the most obvious segment, but expect to see LBS-driven tools and products penetrate a number of new and interesting markets in the coming year.

3. Demand Aggregation/Social Buying penetrates unconventional markets. Groupon and HomeRun are successfully focusing upon restaurants, salons and other SMEs that lend themselves particularly well to discounted group buying. Expect to see a number of new entrants cleverly leverage social buying/demand aggregation mechanics in less obvious ways. Examples of emerging categories are Travel and Events, where start-ups are developing ingenious ways of enabling emerging music acts to aggregate their global fan base to pre-sell venues in advance of tours—mitigating the risk of financial loss from engagements that don’t sell enough tickets to cover costs. If successful, this approach could revolutionize how live events are produced, promoted and underwritten. Are you listening, LiveNation?

4. Dramatic growth/influence of ad platforms/exchanges. I expect 2011 to be a watershed year for online advertising given the impressive growth and continued innovation in display ad exchanges, bidding platforms and the increased effectiveness and monetization of online marketing campaigns. Direct marketers are being more effective at reaching their customers than ever before. Moreover, traditional media buyers that until only recently eschewed some of the early exchanges and bidding platforms are refocusing on these channels and more readily embracing social media strategies and “promoted” ad campaigns and putting significant resources behind them. 

5. ‘Institutionalization’ of Secondary markets. Many regard 2010 as a year when the secondary market began to gain credibility as a legitimate exit path for companies, early employees and for direct investors themselves. While there appear some clouds on the horizon—i.e., potential regulatory entanglements and frothy valuations/new entrants putting a squeeze on performance—expect 2011 to further institutionalize the asset class. The stigma that was once often attached to being involved in a secondaries transaction seemed to lose its sting as well-known private equity names tapped the secondary market to either provide much-needed liquidity to their investors and/or to “rightsize” their portfolios to prepare for new investment vehicles.

6. E-commerce is sexy again. A new generation of innovative e-commerce companies has emerged in the past year that is pushing the proverbial envelope and turning the notion of traditional e-commerce on its ear. The two micro-themes behind this renaissance in e-commerce are The leveraging of the Social Graph and Customization/Long-Tail Economics.

Shopping online should be fun; it should be an experience of discovery, of sharing, and of leveraging the wisdom of crowds–ideally, crowds of people users already know and trust. A number of  startups are developing ecommerce platforms that cleverly stack recommendations and opinions from friends across one’s social networks with past order history; get instant feedback before the purchase decision; and, then layer in group buying/daily deal mechanics to drive urgency. 

7. Big data has its day: More data is becoming available as more computing devices come on-line through public and private networks. Moreover, the nature of information processing is changing as more analytic work (business intelligence, data mining, decision support) is being leveraged for competitive advantage.

The nature of data is changing as the number of “entities” in any given database has gone from millions to billions to, potentially, trillions.  Unstructured data is becoming the predominant data by sheer volume and is still relatively unaddressed. Traditional database implementations (Oracle, DB2, MS SQL Server) were not designed to handle these types of data, capacity or distributed nature. Finally, the success of Netezza, DATAllegro, Greenplum and others in taking on the big three (Oracle, Microsoft, IBM) and successfully returning value to their investors through acquisitions by IBM, MS and EMC indicate that there remains plenty of headroom in the sector. Companies such as Algebraix are well poised to exploit this market opportunity in 2011.

8. Tablet boom. The Apple iPhone was not the first smartphone, but it was an iconic, game-changing device that revolutionized the category and spurred a wave of innovation around software and services that is far from over. While consumers use tablets quite differently from smartphones, the tablet category is poised to continue on its torrid growth path in 2011. The Consumer Electronics Association estimates that some 30 million tablets will be sold in 2011, nearly double last year’s figure of 17 million. New entrants such as Motorola, Samsung, Acer and Toshiba either have tablets now in the market or will launch offerings shortly. Not surprisingly, expect to see a wave of innovation around applications and services delivered from and focused specifically on tablets.

The deepening penetration of tablets is impacting the launch of new applications and even new startups seeking to leverage the white space between smartphones and laptops. It is already evident that many companies consider tablets a clever way to extend their services and brands into environments where the options heretofore were unsatisfying. Companies such as Athleon, an online coaching and team management collaboration platform, are developing tablet applications that will enable ‘in-field’ use much more effectively than a smartphone application ever could.

Eco-friendly: Finally Going Mainstream?

I spent a fascinating morning with the founding team of green product e-tailer Runka.com and I’m happy to see how well this eco-friendly product category is developing. For years now, those of us on the “coasts” often fell into the groupthink or bubble mentality that drove the flawed thinking that products and services that got traction in markets like the San Francisco Bay Area or New York would be embraced by the rest of the country. People with an interest in eco-friendly products and practices were reasonably concerned that these were “niche” areas for investment. Outside the “dark greens” – those that might grow their own vegetables, compost their waste, and eschew most things one might consider typical of an American lifestyle – there were not that many customer groups that could reliably support many green-oriented products. This was particularly the case when most anything bearing the “organic” or “eco-friendly” label came with a 30-50% price premium over more mainstream, branded products.

Any reasonably talented farmer or craftsman can create an eco-friendly, organic, or fully biodegradable foodstuff or knicknack of some sort of another, but the reach of that product would almost always end up being fairly local and the market for it miniscule. The challenge has long been for more mainstream manufacturers to provide everyday products — batteries, fabric softener, etc — that were both environmentally sensitive and price competitive to branded products commonly and traditionally available for consumers.

Happily, I think we might be getting there. While garden variety ‘green-ish’ household goods like low-watt light bulbs and eco-friendly detergents have been around for some time, we are now seeing some exciting new product categories come along that offer a ‘green alternative’ for most any household good or clothing item imaginable. Even product categories that would appear to be by their very nature ecologically hostile — auto care products and supplies, for example — are now offering greener, cleaner and more sustainable options.

If Runka.com is successful it will be in large part because the “crunchy, hacky-sack” connotations eco-friendly products have long battled are slowly being shed. There is also the matter of the greater reliability of green products. Growing up, I remember trying household cleaners, shampoos and other products that were ostensibly environmentally friendlier. Often times, they were terrible. They smelled bad and couldn’t clean worth a damn. I yearned for my Clorox wipes and my Prell. Fortunately, product efficacy has come a long way just as attitudes have shifted. To be sure, Runka’s site needs further refinements and the company could benefit from a tighter product mix, but if there is room for a “green” Amazon.com, Runka could be as ideally suited as anyone to be that kind of dominant market player.

Dare I say it, the green movement is growing up. This May 1st will be the 40th anniversary of the first Earth Day. Not quite an overnight success, but a major accomplishment nonetheless.