What Did And Did Not Happen In 2016

As has become my practice, I will end the year (today) looking back and start the year (tomorrow) looking forward.

As a starting point for looking back on 2016, we can start with my What Is Going To Happen In 2016 post from Jan 1st 2016.

Easy to build content (apps) on a cheap widespread hardware platform (smartphones) beat out sophisticated and high resolution content on purpose built expensive hardware (content on VR headsets). We re-learned an old lesson: PC v. mainframe and Mac; Internet v. ISO; VHS v. Betamax; and Android v. iPhone.

And Fitbit proved that the main thing people want to do with a computer on their wrist is help them stay fit. And yet Fitbit ended the year with its stock near its all time low. Pebble sold itself in a distressed transaction to Fitbit. And Apple’s Watch has not gone mainstream two versions into its roadmap.

  • I thought one of the big four (Apple, Google, Facebook, Amazon) would falter in 2016. All produced positive stock performance in 2016. None appear to have faltered in a huge way in 2016. But Apple certainly seems wobbly. They can’t make laptops that anyone wants to use anymore. It’s no longer a certainty that everyone is going to get a new iPhone when the new one ships. The iPad is a declining product. The watch is a mainstream flop. And Microsoft is making better computers than Apple (and maybe operating systems too) these days. You can’t make that kind of critique of Google, Amazon, or Facebook, who all had great years in my book.
  • I predicted the FAA regulations would be a boon to the commercial drone industry. They have been.
  • I predicted publishing inside of Facebook was going to go badly for some high profile publishers in 2016. That does not appear to have been the case. But the ugly downside of Facebook as a publishing platform revealed itself in the form of a fake news crisis that may (or may not) have impacted the Presidential election.
  • Instead of spinning out HBO into a direct Netflix competitor, Time Warner sold itself to AT&T. This allows AT&T to join Comcast and Verizon in the “carriers becoming content companies” club. It seems that the executives who run these large carriers believe it is better to use their massive profits in the carrier business to move up the stack into content instead of continuing to invest in their communications infrastructure. It makes me want to invest in communications infrastructure honestly.
  • Bitcoin found no killer app in 2016, but did find itself the darling of the trader/speculator crowd, ending the year on a killer run and almost breaking the $1000 USD/BTC level. Maybe Bitcoin’s killer app is its value and/or store of value. That would make it the digital equivalent of gold and the likely reserve currency of the digital asset space. And I think that is what has happened with Bitcoin. And there is nothing wrong with that.
  • Slack had a good year in 2016, solidifying its position as the leading communications tool for enterprises (other than email of course). It did have some growing pains as there was a fair bit of executive turmoil. But I think Slack is here to stay and I think they can withstand the growing competition coming from Microsoft’s Teams product and others.
  • I was right that Donald Trump would get the Republican nomination and that the tech sector (with the exception of Peter Thiel and a few other liked minded people) would line up against him. It did not matter. He won the Presidency without the support of the tech sector, but by using its tools (Twitter and Facebook primarily) brilliantly.
  • I predicted “markdown mania” would hit the tech sector hard and employees would start getting cold feet on startups as they saw the value of their options going down. None of this really happened in a big way in 2016. There was some of that and employees are certainly more attuned to how they can get hurt in a down round or recap, but the tech sector has also used a lot of techniques, including repricing options, reloading option plans, and moving to RSUs, to mitigate this. The truth is that startups, venture capital, and tech growth companies had a pretty good year in 2016 all things considered.

So that’s the rundown on my 2016 predictions. I would give myself about a 50% hit rate. Which is not great but not horrible and about the same as I did last year.

Some other things that happened in 2016 that are important and worth talking about are:

  • The era of cyberwars are upon us. Maybe we have been fighting them silently for years. But we are not fighting them silently any more. We are fighting them out in the open. I suspect there is a lot that the public still doesn’t know about what is actually going on in this area. We know what Russia has done in the Presidential election and since then. But what has the US been doing to Russia? I would assume the same and maybe more. If your enemy has the keys to your castle, you had better have the keys to their castle. And as good as the Russians are at hacking into systems, the US has some great hackers too. I am very sure about that.  And so do the Chinese, the Israelis, the Indians, the British, the Germans, the French, the Japanese, etc, etc.  This feels a bit like the Nuclear era redux. Mutually assured destruction is a deterrent as long as both sides have the same tools.
  • The tech sector is no longer the belle of the ball. It has, on one hand become extremely powerful with monopolies, duopolies, or nearly so in search, social media, ecommerce, online advertising, and mobile operating systems. And it has, on the other hand, proven that it is susceptible to the very kinds of bad behavior that every other large industry is capable of. And we now have an incoming President who doesn’t share the love of the tech sector that our outgoing President showed. It brings to mind that scene in 48 Hours where Eddie Murphy throws the shot glass through the mirror and explains to the rednecks that there is a new sheriff in town. But this time, the tech sector are the rednecks.
  • Google and Facebook now control ~75% of the online advertising market and almost all of its growth in 2016:

  • Artificial Intelligence has inserted itself into our every day lives. Whether its a home speaker system that we can talk to, or a social network that already knows what we are about to go out and purchase, or a car that can park itself and change lanes on the highway automatically, we are seeing AI take over tasks that we used to have to do ourselves. We are in the age of AI. It is not something that is coming. It is here. It may have arrived in 2014, or 2015, but if you ask me, I would put 2016 as the year it had its debut in mainstream life. It is exciting and it is scary. It begs all sorts of questions about where we are all going in the next thirty to fifty years. If you are in your twenties, AI will define your lifetime.

So that’s my rundown on 2016. I wish everyone a happy and healthy new year and we will talk about the future, not the past, tomorrow.

If you are in need of a New Year’s Resolution, I suggest moving to super secure passwords and some sort of tool to manage them for you, using two factor authentication whenever and wherever possible, encrypt as much of your online activities as you reasonably can, and not saying or doing anything online that you would not do in public, because that is where you are doing it.

Happy New Year!

#AR/VR#blockchain#crypto#drones#enterprise#entrepreneurship#machine learning#mobile#Politics#robots and drones#stocks#Television#VC & Technology#voice interfaces#wearables

Comments (Archived):

  1. JamesHRH

    Fred, this is the best post you have written, possibly since I joined AVC.In particular:1) “It makes me want to invest in communications infrastructure honestly.” OMG that is so true. These knuckleheads running networks know SFA about managing content creation. Didn’t any of them pick up the phone and call someone @ SONY? Sheesh. If you start a fund, call me – I will help in anyway possible for 0.01% of the carry.2) ” He won the Presidency without the support of the tech sector, but by using its tools (Twitter and Facebook primarily) brilliantly. ” Given who your horse was in this race, this is magnanimous as well as accurate. Raising the FB fake news issue tied with this statement leads, I hope, to a prediction that MSM is in for a tsunami of a year in 2017.3) ” Google and Facebook now control ~75% of the online advertising market and almost all of its growth in 2016.” Everyone on the planet should be made aware of this fact. Its stunning.I hope the powder is chest deep and the GG has nibbles for noshing that never end.Happy New Year!

    1. obarthelemy

      The knuckleheads have a lock on the regulatory and political process, so their probably ill-advised forays into content won’t have any rapid repercussions because they’re well protected from competition..

      1. JamesHRH

        No, but Steve.Bannon ended up owning a piece of Seinfeld b/c Sony was desperate to get out of the content biz, of which they knew nothing.Someone’s going to pick up some stuff for a song.And, telco regulations may be something that aren’t quite so protective in 2017 & beyond.

    2. fredwilson

      We had a lot of powder in Park City this past week. I wrote this post on the plane to NYC where we just landed. We plan to ring in the new year in the big Apple!!

  2. creative group

    CONTRIBUTORS:A POTUS VR entry.—————————August: “President Obama watches a virtual reality film captured during his trip to Yosemite National Park earlier this summer as Personal Aide Ferial Govashiri continues working at her computer.” https://uploads.disquscdn.c…—————————-POTUS photos in view. (Very interesting gallery)http://www.bbc.com/news/in-…

  3. JimHirshfield

    Thanks for the memories. Happy New Year!

    1. JamesHRH

      I miss Bob & Bing & Frank’s joie de vivre.Happy New Year to you!

  4. Raja Bhatia

    Given the rampant rise of email hacks, another worthy New Year’s Resolution would be to consider all digital communication (email, messaging, et al) to eventually be public and shape your conversation accordingly.

    1. awaldstein

      in spirit I agree in practicality it is impossible.

      1. Raja Bhatia

        A link to the doc on a 3rd party service (DocuSign/Dropbox) where the document is time limited and eventually expires. iCloud’s email service even has the ability to attach a link to large files rather than include the file itself in the email body.

        1. awaldstein

          Maybe you are correct but this will require a massive behavioral change in how we work.Possible of course doesn’t mean plausible though.

          1. Raja Bhatia

            True, and to that point, expect many more privacy breaches and public leaks of emails in 2017…

          2. awaldstein

            Yup–but i do need a personal plan so I thank you for the nudge.

        2. LE

          This might work for younger people with great memories but older folks need access to documents at a later point. That is one of the benefits of email, memorializing things for later reference.

      2. PhilipSugar

        I agree. My rule is don’t ever put something on electronics that is worse than cringe worthy if it came out.And its not just if you get hacked you can screw up who you send it to.Last year I sent a text to a co-worker that said”I was able to get on the last flight tonight so I’ll be home a day early. Miss you, Love you”Now he was a bit perplexed at first, but then realized of course it was meant for my wife. He chided me about it, but no harm, no foul. Now if I put something explicit in there (I had been traveling for a week) that would have been much more uncomfortable.

    2. Sebastian Wain

      Happily, we have the tools to make these communications completely private. Not only that, there are a lot of people thinking about how to make them immune to new cryptoanalysis techniques. It is interesting to take a look at the Report on Post-Quantum Cryptography.

      1. Raja Bhatia

        Will take a look but I think the breakage is in the market adoption of hardened communication tools. Even PGP would be sufficiently good but the friction of using it makes it too complex for most comms.

        1. Sebastian Wain

          Signal, Telegram, WhatsApp, and other newcomers are already providing encryption for the masses in a way we never saw before and without friction. Also researchers are looking ahead to provide new tools against sophisticate actors.

    3. JamesHRH

      It says nothing good about Dem leadership that they did not follow this mantra, which someone explained to me in 1997.Duh.

  5. awaldstein

    75% of all advertising.Unfathomable really. How can Twitter survive?Happy New Year Fred.

    1. pointsnfigures

      Snap is coming. Snap IPO and Trump helps Twitter.

      1. LE

        Trump helps TwitterCould be but per my other comment could also be a negative halo.

    2. thinkdisruptive

      Twitter can survive by focusing on their JTBD, and not depending on advertising. Advertising is far too interruptive on Twitter, and diminishes the value of the platform. There are other (better) ways to make money, but they must focus on a few things that their tech can accomplish better than alternatives. They have gotten away from that and become less focused over the past few years. (Part of focusing on where their value comes from means getting control of the troll/abuse problems, as many others have noted.) Was glad to see Jack spend a few hours chatting with users — might signal some good things coming. Anil Dash had a great post about Twitter a couple of days ago: https://medium.com/startup-…Advertising is not their game to win. They can do quite well if they realize that and look elsewhere.

      1. awaldstein

        You obviously have more information than I do.Huge fan since the beginning but they have never understood their market. Still don’t as far as I can see.

        1. thinkdisruptive

          I don’t have any more info than anyone else. Only my opinions based on observing their behavior. My suspicion is Fred knows more than any of us.I agree with you about not understanding their market. When I speak of their job to be done (JTBD), that’s what I’m talking about, and it’s clear that they have no idea what jobs users hire Twitter to do or why. They have done damage to the product by focusing on what advertisers want, which ultimately hurts their position with advertisers if users spend less time with the tool or drop off the platform. It’s a common problem in multi-sided markets that depend on ad revenues.I still use it, and am a fan also, but it could easily go the other way for me if they don’t get their act together. I think a lot of people are in wait-and-see mode right now, hoping for the best.

          1. awaldstein

            There may be an exit that benefits some but the odds are that the social nets will change this year.They are missing something and the market is shifting.http://arnoldwaldstein.com/

          2. thinkdisruptive

            I don’t know about an exit. It’s hard to imagine who a buyer would be that wouldn’t destroy what’s good about the platform, or could fix/tune what’s broken. Your article is correct in noting that social media only captures distorted slices of reality, and to tell the truth, isn’t very social, but I don’t see that indicating a market shift. To get what you desire, we need “real” social networking — i.e. go to the pub and talk to people.There are things that Twitter is naturally suited to do that other media tools don’t do as well, particularly things of the moment where there is some urgency. It’s also good at broadcasting + distribution. It could be a lot better at real conversations, but like all social media today, it should stop trying to tell me what I should see (creating a bubble of agreement) and let me create my own filters (if I want them). They are over-complicating things, and trying to be more like other platforms rather than emphasizing the differences that make them valuable.

      2. Kirsten Lambertsen

        Seems like there are so many defensible revenue possibilities given Twitter’s unique position.I love Anil’s piece (and the YouTube analogy) and agree with a lot of it, but I think it’s time to think outside the advertising box.

        1. Drew Meyers

          “Seems like there are so many defensible revenue possibilities given Twitter’s unique position.”Such as?I still don’t get why they don’t charge users for the product… a bloomberg model. Small number of users, but much more vested interest. I’d certainly pay something.The ad game is broken…

          1. Kirsten Lambertsen

            Charging to use Twitter on a basic level doesn’t feel right (I wouldn’t like to lose the voices of, say, people in Syria trying to get their message out). But I would think there’s so much more opportunity to charge deeper-pocketed users for ‘premium’ things. And, of course, it’s not that they don’t. They do. But it feels like too much energy is spent on trying to figure out how to become a media company so that they can cash in on video advertising.I think they’d benefit from making advertising revenue much less important and putting that energy into the other revenue generating operations they already have and the growth areas those could branch into. They have GNIP, Fabric/Crashlytics, TweetDeck, Insights, etc. They could be acquiring more companies that leverage their data.There are also other revenue ideas being floated out there on the bleeding edge that are interesting (that tend to be associated with Bitcoin-ish micropayments). I’m not great at articulating them, but what I’ve seen tends to turn the model on its head a bit.Other ideas: What if I could choose to support certain Twitter users each month with a small subscription fee (like a buck or two), like Patreon kind of? (Maybe Twitter should buy Patreon?) Or even just chuck a fraction of a BC to a great tweetstorm? What if people could spot fundraise on Twitter? Maybe these are plausible ideas. Maybe they aren’t. But they fit more into the culture of Twitter, I think, than ads.

          2. Drew Meyers

            Anything/everything is better than ads. Platforms/products which have an incentive to get you to spend more time staring at a screen generally just end up pushing more and more crap/garbage at you to look at. I’d rather their incentive was to solve their customers problems (and I assure, spending more time on a screen is not a problem people are trying to solve).Buying patreon would be smart… I keep hoping/wishing a model like Patreon took hold in a big way (I’m considering using it for horizonapp.co actually).

          3. Kirsten Lambertsen

            Wow, look at HorizonApp.co! Looking good 😀 All my activist friends should know about it, because they’re always crashing on couches! Contact the Green Party 😉 I see PeaceCorps there — makes so much sense.

          4. Drew Meyers

            Thank you! Any help getting the word out to activists would be greatly appreciated.There is also a AVC group I setup, though not sure if there are many in it.. unless someone has the secret code, there is no way to know it exists or to join it.The group unlock code is “avcinsider”

          5. thinkdisruptive

            All good ideas Kirsten.Twitter’s data is very underutilized. It could be packaged via purpose-built tools for market research, for academic research, to feed any number of information filtering + presentation tools, as well as being a formal paid channel for publishers. There is no reason that with some good UX design work, Twitter also couldn’t replace or challenge tools like BusinessWire and other news distributors like Reuters and AP. They are all ripe to be disrupted with the right business models.Twitter proved themselves an unreliable development partner a few years ago, which caused a lot of 3rd party developers to switch horses. This could/should be corrected with a clear statement from the top about how Twitter views their ecosystem and back it up with a recruitment effort and access to their r+d team to support companies that want to build products on top of it.Doing these things + making it easier to onboard new users, cleaning up the abuse problems once and for all, and attracting 3rd party products to innovate on their platform would quickly reignite growth and create numerous non-ad-based revenue streams that would make them a much stronger company with a clear market position.The key is to open it up for users and developers to get more creative and get more value from it, and not try to be a me-too platform. It just takes a bit of imagination to think of dozens of things you could do with the data and the streaming news ticker.

      3. LE

        Was glad to see Jack spend a few hours chatting with usersTo repeat my point, needs to talk to non users. A much bigger audience.

    3. Salt Shaker

      Unloaded my TWTR stock last week. Was trying to be patient but they continue to be in disarray w/ mgt defections and no clear growth strat. The best thing they have going for them is DJT. They will be bought but likely not on desirable terms.

      1. awaldstein

        I simply don’t think they now or every really understand who they are. Unfortunate as there is something behavioral and unique.

      2. LE

        The best thing they have going for them is DJTThat could play out a few ways. There could be new users and interest or there could be a negative halo ‘don’t want to be a member of that club’. One of those things that’s easy to speculate on but hard to predict how it will play out.

    4. William Mougayar

      That’s scary. Yup, Twitter needs to up their game. Did you catch @Jack’s Twitter discussion about getting feedback from users?

      1. awaldstein

        Yup caught that.Kinda pathetic that that it’s news that a massive public social net is talking to its users as if this is an event or a strategy.

        1. William Mougayar

          With you there. Like Jack woke up 15 months after being CEO.I’m praying for Twitter.

          1. awaldstein

            I want and have wanted them to win for a long time.Unlikely model wise. Unlikely that the status quo will continue.I have no insight into cash out but as a user and web thinker i’m not seeing it.Gonna be a lot of changes in the soc nets world this year.

        2. LE

          that a massive public social net is talking to its users as if this is an event or a strategyAgree. I think he must be thinking he is (or were) following the Apple/Jobs/Henry Ford playbook of “customers don’t know what they want”.

      2. LE

        @Jack’s Twitter discussion about getting feedback from users?Sure, talking to your customers, it’s the hail mary strategy in business!Taught in every business school: “When things are getting really bad you have nothing to lose by asking your customers what they think!”In all seriousness though one obvious point is that they need to talk more to people who don’t use twitter at all (or use it rarely like me) not people who would respond to a question by Jack Dorsey. No doubt they already know everything the active group of people think.

        1. William Mougayar

          Yup. And following that, prioritizing, and executing.

    5. Dave Pinsen

      By facilitating commerce among its users rather than selling ads. So many organic opportunities for that, some of which I mentioned here: http://seekingalpha.com/art…Another idea: delay its feed by 1 or 2 minutes and realtime access for big money: http://seekingalpha.com/art

      1. awaldstein

        Yes and no.This is a company that can’t market to its consumers, can’t build partnership with the developer community and the are going to pioneer a sharing economy amongst their base?Maybe but on the face of what I can see from the outside, unlikely.

        1. Dave Pinsen

          I’m not saying they’re going to do it, but they can and should facilitate commerce (not sharing) already taking place on the platform and profit from it.

          1. awaldstein

            Got it, thanks!

          2. Drew Meyers

            But do people go to Twitter to buy things? I certainly don’t.Versus Amazon, I always go there to specifically buy something. Google I always visit with specific question/problem in mind — some of which are commerce related.

    6. Drew Meyers

      “How can Twitter survive?”They can’t?

      1. awaldstein

        It’s easy to be a critic from the outside.There is much I don’t know obviously.

        1. Drew Meyers

          There is much I do not know too 🙂

  6. pointsnfigures

    2017 gonna be interesting. Given the hints the Republicans have made about deregulation, and a 20% decrease in corporate taxes. The duopolies in tech might get very busy with M+A. Maybe the Exit alimentary canal starts to clear. Would love to see AI predict terrorism before it happens-attack in a Turkish nightclub on NYE.

  7. William Mougayar

    A good stitching of the macro tech environment. Pretty much everything that touches consumer Tech has been covered.Telcos will always be telcos. I don’t know of one that has broken the mold & evolved from there. Maybe their getting into content will trip them. I’m paying more to my telco than ever before, and I feel they are milking us, more than ever. Maybe one day we’ll have a new generation of communications infrastructure that is truly global, kind of a Bitcoin-like utility that is the same for everyone on earth.Happy New Year! Got to go, a Perrier-Jouët Grand Brut is calling me 😉

    1. Cyril Bertrand

      “I don’t know of one that has broken the mold & evolved from there.”> Free in France seems to be on to something. Picked a different strategy though – the Easyjet of European Telcos. Inflicted a substantial disruption in the market, passed the 5M sub mark and now 3-4 years in the game, still growing and agile (so it was more than a short lived coup).

      1. William Mougayar

        Ah, genial. Merci.

  8. rick gregory

    “[Apple] can’t make laptops that anyone wants to use anymore.”Stopped right there. Yeah, the weeks long backorders were all because no one wants them. it must be true, the echo chamber says so.

    1. thinkdisruptive

      Blackberry insisted they were doing fine for 4 years past when they really were, and even then insisted that their next product was going to put them back in the game. Continuing to sell products does not mean the company is doing well, or near the top of their game. Kmart and Sears (who have closed 200 stores in 2016) are still making sales.I don’t live in an echo chamber, but I do have a house that has more than 2x the number of Apple devices as it has occupants. I am questioning whether my next computer should be from another source.

      1. rick gregory

        Seriously? Blackberry faced a paradigm shift in smartphones. Nothing like that is happening in laptops. Plus, Fred’s comment was that “no one wants them” which is directly contradicted by strong sales. A vocal contingent that talks a lot on Twitter != everyone. Bluntly… $ > blather.Question – WHY are you considering a different computer? Are you simply swayed by online commentary? Or are you identifying action things that you want to do or need to do that the current MBPs don’t do? I ask because I can see two things that they don’t have that people can reasonable object to: 1) 32g RAM option and 2) USB-C only. But VERY few people really need 32g of RAM and while some people who routinely connect a lot of legacy stuff to the MBP might balk at the adapters needed, that’s a transitional thing.

        1. thinkdisruptive

          “Paradigm shift” is an excuse for poor strategic management. Blackberry faced a failure to understand where innovation was required. They had the upper hand, if they had made the correct decisions early, but 4 years after the iPhone were still insisting that consumers wanted a keyboard, and IT preferred their security. They rested on their laurels and believed their market share was unassailable.Apple has been resting on their laurels and milking old technology for profits. They haven’t kept pace and haven’t done anything truly innovative since Steve stepped out of the day-to-day prior to his passing, and it shows. You can’t hold the margins that they have without maintaining a significant qualitative lead.Clearly when you ask whether I’m swayed by online commentary, you don’t know who you are speaking to. I am swayed by my needs and by my own analysis when it comes to personal choices, and look at the market objectively when analyzing it at the macro level. In addition to the Apple hardware, we also have a couple of PCs, and I personally use a Blackberry (obviously not swayed by what others are doing). Removing ports and other accessories that people use is not useful innovation that addresses any jobs that I need done, and Apple hasn’t made any qualitative improvements to the Mac Pro or Macbook Pro (my personal toys) for 2-3 years — an eternity in tech — that justify continuing to pay a premium for them.”no one wants them” is a deliberate use of hyperbolic exaggeration for effect, not a statement of fact. Obviously at least one person wants them. However, it is my belief that Apple has peaked, and the lack of attention to innovation in their core products, and especially in the desktop and laptop lines is going to bite them badly as people consider their options next time a replacement is required.When you speak of what others “need”, it’s wise not to assume too much or denigrate the reasons people make their choices. That is exactly what Blackberry did. Obviously you feel current products are good enough for your uses, but you are one person, not a market, and don’t represent all use cases or reasons that others choose what they choose. When you pay the premium that Apple asks, you expect a lot. Quality is not what it used to be. There have been many bugs and bad choices in recent software releases. And innovation leadership has left town. I don’t care to explain why I might consider alternatives beyond that — the specific details are irrelevant to most people.

          1. rick gregory

            My point about Blackberry is that there WAS the iPhone. It radically changed how people considered smartphones and opened up the market to people who didn’t see the need for what Blackberry offered. There’s nothing like that in the laptop or desktop sector. Those are mature markets where, frankly, there’s not much innovation space left. For a segment, things like the Surface are interesting but there’s a reason why the MS commercials for it overwhelmingly show creatives and people whose use for a computer is served well by being able to have a touchscreen on the laptop. They might be able to do their work on an iPad Pro, but there’s obviously an advantage to having that capability on a regular OS for some people. However… how many animators and set designers are there?The rest of your analysis rides on the Blackberry similarity which is specious IMO. On the ports… people always bitch about changes like this but there are very real advantages too. For example, on the old models, you had 2 USB ports. Only need 1? Too bad, you have 2. Need 3? Sorry, you have 2. On the new MBP (aside from the entry model), you have 4 ports any of which can be a USB port… or none if you don’t need them and want to use them as, say video or networking ports. This is an essentially backward looking argument which is ironic given your Blackberry concern.

          2. thinkdisruptive

            The mere existence of the iPhone was not enough to win. Blackberry had to make several predictable mistakes and ignore what the majority of consumers who didn’t use their product would have told them. I am not providing detailed “analysis” here, simply keeping you honest about history and about the way markets develop and disruption occurs.Apple is making themselves vulnerable by literally doing nothing but milking a cash cow.Regarding market maturity, what dictates that is not technology, but the applications it can be put to. There are still underserved niches, particularly at the high end, and those markets are not mature. Moreover, computers (desktop + notebook) have become consumer products that are routinely replaced in a 3-5 year cycle. When that cycle comes up, most people look at their current needs and evaluate alternatives at that time — and they don’t stick with the same vendor if they aren’t keeping up or perceive better value elsewhere. Doing nothing for several years does not go unnoticed. Nor does releasing crappy products when the reason your customers have always paid a premium is to get headache-free quality products.The similarity between Apple and Blackberry is in hubris at the top and lack of innovation when it was needed. The same thing that happened at Microsoft when Bill left Ballmer to tend the store.

          3. mplsvbhvr

            Never made the connection to BB myself – but these are all VERY good points. Well put.

      2. SubstrateUndertow

        Really your comparing Apple to Blackberry !Apple is in a very predictable lull for the next year or so.Mounting security/privacy risk awareness by users and the totally predictable lag time for the apple-watch-hardware/ecosystem to continue evolving, while others get short-term cold feet and stall their vision/commitment, will soon allow Apple to emerge uncontested when the next generation revolution of truly must have personal sensors and actuators start arriving to goose Apple-Watch sales with little to no serious competition.

        1. thinkdisruptive

          Yes, I am comparing Apple to Blackberry. Blackberry looked like a great company (to most people) and had fantastic numbers, right up to the day they didn’t. Android has thoroughly disrupted iOS, and will soon start whittling away at Apple’s huge margins. Blackberry had very good engineers, but lousy vision and lousy leadership. Today, Apple’s engineers are no better than Blackberry’s were, but under Tim Cook, Apple has shown no evidence of vision, or leadership, and has a lousy track record of innovating sans Steve. In fact, AAPL looks more like MSFT under Ballmer, while MSFT under Nadella looks more like the old AAPL.The Watch is treading water. It’s entirely possible they’ll come up with a viable use for it, but there is no evidence to suggest they understand the reasons people would want/need one, so I’m not betting on it. But, accidents do happen.

      1. JamesHRH

        Daughter got one from Santa.Will report back in a month. Initial reaction – tres geeked.

      2. rick gregory

        You’re seriously going to use consumer reports opinion as a counter to actual heavy demand indicators? T hat doesn’t even support your argument that no one wants them. It merely talks about wild variances in battery life.

        1. fredwilson

          everyone i know who has bought the new macbook pro hates it. that’s a sample size of about a dozen people. it is a shit product. terrible. awful. my daughter is so pissed that she spent so much of her own money on it and is stuck with it now.here is Joel Spolsky on it https://uploads.disquscdn.c

          1. rick gregory

            And I have one and like it a lot. As do the other 4 people I know with them. Anecdotes != data

      3. Eric Wilson

        Great post.Re: Apple, haters gonna hate. It’s not a perfect product by any means, and probably more of a stepping stone to something significantly more perfect in 1-2 years. So yes, it is polarizing. But according to Slice Intelligence (http://bgr.com/2016/11/08/m… ), “four times more revenue has been made fromMacBook Pros in two weeks than Surface Books have generated in a year.” I actually see Apple applying some focus – shutting off product lines like their Thunderbolt displays – and playing the long game with respect to what they think is the right strategy, critics and press be damned. I admire that, and there are no hard numbers that can prove them wrong at the moment. I don’t own an Apple Watch yet personally, but feel like I probably will within 2-3 years. Another wild card that remains is their “car” strategy. It could be something mind blowing like AR projected onto the windshield. I guess we’ll find out soonish.Re: Bitcoin, yes – value store may have been the killer app all along – just waiting for external events (India demonetization, China currency shenanigans, Venezuela inflation) to catalyze it for another speculative hype cycle. If you haven’t seen this recent article on Medium, it’s worth reading: https://medium.com/@mcasey0

        1. Drew Meyers

          The Apple TV is where it’s at…a blend of media + gaming. It’ll take awhile, but I believe there are major major dollars for Apple in that.Agree the car — and i’d add the home — are major long term opportunities for Apple’s app ecosystem.

      4. SubstrateUndertow

        Consumer reports are terribly shallow and continually do poorly structured/weighted testing.I have stopped listening to any of their reconditions !

      5. Twain Twain

        The DNA of Apple suggests they may do something in AI much better than what Google and FB have been able to do — which, yes, lets them do algorithmic ad targeting based on clicks and shares more efficiently than everyone else BUT which is too weak as AI to deal with fake news, fake clicks, fake content.http://appleinsider.com/arthttps://uploads.disquscdn.c

      6. LE

        Consumers reports good for some things for sure (a toaster or oven) but I am thinking they wouldn’t place NYC as a great place to live if they rated places to live. Or probably both cars that I drive.The battery issues will be worked out obviously.

    2. William Mougayar

      Microsoft is coming back strong, based on what I’m seeing. Just got a Windows 10 mini PC as an HTPC, and really liking it.

      1. SubstrateUndertow

        Which one ?

        1. William Mougayar

          Minix NEO X5.

      2. rick gregory

        I agree. If someone is open to using Windows (or prefers it), the Surface line is interesting too. But it’s amusing to watch people slag Apple for the 16gig RAM limit and talk about the Surface… which is also limited to 16gig.But to me your statement is fundamentally different that Fred’s and other anti-Apple fear mongers. Saying MS is turning out some very nice stuff that serves a segment of people well and perhaps even better than Apple’s products doesn’t mean no one wants the MBP.

    3. Dave Pinsen

      Microsoft has stolen a march on Apple with its Surface laptops.

      1. rick gregory

        For some, yes. However, they’re not perfect (they’re also limited in RAM, etc) and for some people the touchscreen isn’t relevant (me). However, I know several people who do use it and like it a lot. I tend to agree with the Apple stance that touch and pointer UIs are best served separately but that’s an opinion, not ironclad fact. For people who want or need to mix touch and standard computing in one package, the Surface line is a good one.Computing isn’t zero sum here though. There can be more than one really good kind of product in the market.

  9. thinkdisruptive

    Good summary.re: Fitbit. I don’t believe that fitness is the ONLY application for a computer on your wrist, but it is the only one that has had sufficient focus to be moderately successful. It is absolutely clear that a watch, with controls too small to be useful, that costs too much and needs to be replaced every 18-24 months to stay current is a dumb idea. Fitbit is the only product that successfully targeted a JTBD that was obvious consumers would want to get done, and which came at a reasonable price. Pebble watches also had the functionality right, but the bad design and clunkiness doomed them as well (something you’re going to wear all the time, and as a watch needs to look good). There are several applications where this form factor makes sense, but the interface needs to be redone, and the products need to get a lot more elegant.re: Apple. It is becoming increasingly clear that Tim Cook is a good operations manager but lacks a vision for product innovation that can support the premium price strategy that Apple has always pursued. That strategy cannot be successful if you don’t provide inspiring products that represent the best in design and appeal to early adopters and trend setters. They are very vulnerable to disruption now that everyone else has caught up to them (and in some cases passed them), with nothing new in the trick bag and products priced far too high. When you think about Apple, ask whether Steve Jobs would have allowed the Watch to be released without any clear reason that someone should buy one, and kept it restricted to working only with iPhones when Android is nearly 90% of the market. Cook is Apple’s Ballmer. If he stays, AAPL is in trouble.re: communications infrastructure. Couldn’t agree more. Other countries are lapping us with speed, bandwidth and price while our carriers practically abandon the business, but want to be paid handsomely for doing nothing. This will come back to bite us when innovation that requires better infrastructure is done elsewhere (interesting that Canada’s CRTC has just mandated 50Mbps for everyone as a “basic service”, while the majority of the US is somewhere between 1 and 3Mbps, with a lot still on dialup or without any service). This is definitely a market space where there is huge opportunity to do a lot better. and it would be nice to see someone try. Communications infrastructure should be viewed the same way we view the interstate highway system, and if we treated it that way, it could bring similar economic benefits to the country.You know you’re a redneck if ….

  10. Salt Shaker

    AT&T’s growth strat makes a lot of sense. They can now layer in incremental assets (e.g., DirecTV, HBO, WB movies (theatricals & originals) and bundle to consumers broader and more appealing sub based services (tiered or not). I can also see AT&T exploring original programming, a la Amazon, Netflix, etc., while Verizon’s growth strat doesn’t make much sense given the ad market is a duopoly (GOOG/FB) and their recent acquisitions deliver questionable value. If Amazon gets into sports rights, which they are exploring, their Prime offering could compete w/ AT&T (and Netflix) on the OTT entertainment/sports spectrum (not e-commerce).

    1. JamesHRH

      No non-creative acquirer has successfully acquired content creation,None. Ever.

      1. Salt Shaker

        Can you clarify for me, pls?

        1. JamesHRH

          Studio buys studio, works out.Non studio buys studio, culture incompatibility leads to divestment. Every time.

          1. Salt Shaker

            Although I agree a commodity based biz, like a telco, is very diff culturally than a creative driven entertainment enterprise, they’re presumably gonna operate as independent units and only explore alliances w/ the Mother Ship when/where appropriate. There are no consolidation plans, or likely will there be meddling in the studio creative process. This isn’t Coke buying Columbia Pictures in 1982, which at the time made abso no strategic sense, but nonetheless turned out to be a short-lived, yet profitable, acquisition. Different time, different era. This is a sub based biz–AT&T–looking to enhance its value prop w/ incremental and complementary assets. The growth in entertainment and sports is via OTT services, plus the traditional studio model is antiquated and in need of reinvention. On paper it’s potentially a win-win, though your cultural concerns are not entirely w/ out merit.

          2. LE

            they’re presumably gonna operate as independent units and only explore alliances w/ the Mother Ship when/where appropriateI tend to agree with James for the following reason. [1]Lack of seat of the pants feel for the business hampers oversight and lends to judgement which restricts the creative process (‘better cover my ass’) It’s like my mother having the right to second guess my decisions and actions when she has no clue (once again seat of the pants, not read about or get advised) for the nuance of the business, risks and so on. [2][1] And of course nothing is absolute you do have cases where conglomerates have successfully done hands off.[2] And example is way back when she saw me (I was in my 20’s) on a Mac and she said “you’re playing with it”. Yeah, that’s the idea and that’s one of the ways you learn computers, by playing.

          3. JamesHRH

            Convince me with an historical precedent.Do you think there wasn’t a ‘looks good on paper’ plan behind other studio acquisitions?Why did Amazon build a studio in house, by hiring top notch studio talent?

          4. Salt Shaker

            And that’s what AT&T will do. When HBO, TBS, TNT and CNN–all part of TW–segued into original programming they didn’t rely on WB’s studio. They each created in-house programming depts and struck their own production deals. AT&T may become an outlet for WB studio programming, but it’s unlikely the studio will be used as a production arm for AT&T, though they could compete for their biz. There’s no fav nation treatment. Independent, autonomous divisions. (Note: I did marketing and program promotion for HBO for 4+ years.)

          5. Michael Elling

            Content silos work because of regulation. Distribution silos are never sustainable, even with regulation, because of rapid change in technology and infinitely diverse (marginal) demand.

  11. PhilipSugar

    .500 is an unheard of average. Two years in a row. .300 is All Star. Happy New Year.

  12. Fraser Harris

    “It makes me want to invest in communications infrastructure honestly.”Which makes Google’s lessened commitment to Fiber all the more confusing. What better use of $83 billion than literally laying the groundwork of a extremely long term cash cow?

    1. fredwilson

      i don’t understand their decision to move away from fiber at all. i think they just lost interest.

      1. Michael Elling

        Need to understand the role of balanced settlements north-south and east-west to figure out the communications stack.

    2. george

      Who is the Officer in Charge of CapEx? Does the timing of a new CFO play into the pivot…

  13. Vendita Auto

    The Edge 20th Anniversary Annual Question: As ever ones education gratefully continues “The Schitt” & much morehttps://www.edge.org/contri…

  14. jason wright

    Bitcoin, bloody bitcoin. It’s starting to look a little like an offshore haven. Reminds me of Apple’s untaxed revenues, value extracted from economies (and their societies) that is not working to innovate a better future. AAPL is a wealth transfer gig, a regressive tech tax burden on the unsuspecting.

  15. Tom Labus

    MSFT in 2017. Cycle turns again.

    1. William Mougayar

      I’m long on msft, definitely.

  16. george

    Overall great year-end recap. Perhaps one other notable item tnot mentioned but generated movement-gender equality and pay parity in the tech sector.Separately, I’ve heard this Apple susceptibility storyline for several years and yet, they just keep eating everyone’s lunch! Apple owns the profits in every key area where they compete and their Brand and customer value sits on top of all those you mention. Steady they go…

  17. Kevin Hill

    Re Bitcoin as digital gold.Yeah, it is hard to deny its rise, but store-of-value systems like gold are more likely to solidify the strength of large economic actors rather than disrupt it. We’ve seen some of this already in its use to get around Chinese currency controls and allow wealthy Chinese to maintain their economic advantage even in the face of government action. Also, 7 minute confirmation times aren’t really an issue when dealing with long-term value transfers.

  18. Vishal

    In your opinion, what would be considered prudent investments in communications infrastructure? I would think telco-influenced ‘micro’-operators who specialize in niche/underserved markets might make attractive investments. Do you think there is a long-term play for MVNO-type operators, or is owning your own infrastructure critical?

  19. alg0rhythm

    I’ve been saying that since steve passed- would they be able to innovate- doesn’t seem like Tim Cooks thing, but I knew it was going to a while before we really knew, brand momentum is a helluva thing. I watch would have surprised me. Phone and laptop/pad there’s a limit to tech you can use at once, and we are waaay over it.

  20. alg0rhythm

    News is ripe for disruption and I think political content.

  21. fredwilson


  22. JamesHRH

    I missed that one in my post.So, so, so bang on and, again, true but not easy for AVC to say publicly.

  23. alg0rhythm

    Yeah- I have FIOS- can’t tell the difference between it and the cable. Maybe houses with 4 stream netflix at once… or if you want to run a building off of one user…and then it’s business again