2011 has been a remarkable year for technology. Never before have we seen the power of technology on display more than in 2011. We’ve seen tech companies of both old and new stumble with their businesses. But we’ve also seen a crop of new companies rise to prominence. We’ve seen some competitors join forces while witnessing others fight to the extreme. We mourned the loss of one of technology’s most prolific innovators. But most importantly, we saw tens of millions use these same innovations to rise up against tyranny and change the course of history.
Join me as I count down the top 5 tech stories of 2011:
5) IPOs for Web 2.0 companies:
2011 was the year internet companies finally made a return to Wall Street. Other than Google in 2004, technology IPOs in the first decade of the 21st century were noticeably absent. That trend completely turned 180-degrees this past year, as numerous Web 2.0 companies headed to Wall Street. LinkedIn was the first Web 2.0 company to launch its IPO in May 2011, shortly to be followed by Pandora in June, Groupon in early November, and finally Angie’s List in late November. Zynga was also reported to have filed documents with the SEC in preparation for launching its own IPO, but the company put on the brakes in late August after the stock market crash during the summer. So far the year-to-date performance for these stocks has been quite bad, with Groupon down 18%, LinkedIn down just over 30%, and Pandora down a whopping 45%. Angie’s List is holding steady after recovering from an early drop.
Considering that all of these Web 2.0 companies are still in the red, (and especially Groupon), it will be interesting to chart their performance throughout the new year. However, these stocks will be considered small potatoes if Facebook launches its own IPO, as the company is expected to do sometime in Spring 2012. Unlike the aforementioned companies, Facebook actually makes money, so its stock is more likely to mimic the early chart of Google rather than these other Web 2.0 companies.
4) Netflix crashes and burns:
Flashback to December 31st, 2010. Netflix was on top of the world, fresh off another year of massive customer and revenue growth. Blockbuster was left for dead, and some media analysts wondered aloud if cable television could be next in line for the gallows. Netflix was hailed as the prime example of capitalism of utmost success. Long considered an innovator in the field of home entertainment, first by doing away with late fees and next by embracing streaming content well before its competitors, Netflix was poised to be the paramount media and entertainment company of the still young 21st century. All of this seemingly unstoppable momentum came to a swift and stunning halt following a now infamous press release (covered here by the New York Times) – Netflix was set to unexpectedly raise prices on DVD + streaming plans by a shocking 60%. The company hailed as the top example of capitalism in the first half of 2011 became symbolic of the dark side of capitalism so well highlighted by the Occupy Wall Street movement in the second half of 2011 – greed.
Feeling the heat from an intense customer backlash, Netflix attempted to gain the trust of its customers back by spinning off its DVD business into a new entity called Qwikster. However, much to the dismay of Netflix, this misguided service actually angered customers more, especially for those who still kept both DVD and streaming plans and would now have to maintain separate accounts (not to mention the dumbest service name ever). Qwikster was such a boneheaded business decision that many reporters likened it to Coca-Cola’s “New Coke” from the 1980s. Netflix finally made its first good decision in the second half of 2011 by quickly putting Qwikster out of its misery.
Unfortunately for Netflix, the damage inflicted by its attempt to exorbitantly raise prices seems to be here for the long haul. For the first time in years, Netflix actually lost customers in its most recent fiscal quarter (800,000 in total), and the company expects to lose more over the next several quarters. The stock price has plummeted to end 2011 at $69, a stunning drop of 77% from its 52-week high.
It’s possible that Netflix’s past immense growth was a red herring all along, as the company’s revenue growth was primarily based on content contracts that were extremely undervalued for production studios, allowing Netflix to charge a low monthly price for streaming plans and still make tons of money. As studios smartened up and realized the value of their content, they demanded significantly more money. Since Netflix had to continue to deliver content to keep current users and attract new ones, they had to pay up. And paying up means charging customers more for their plans, ultimately leading to a situation that occurred the latter half of 2011.
For now, customers are heading to other streaming content services like Hulu Plus and Amazon Prime, which are now cheaper than Netflix but for the same reasons Netflix was cheap in the first place – extremely favorable content contracts. Eventually, the luck will run out for Hulu Plus and Amazon Prime, leading to one of two outcomes – either customers will be willing to pay more for services and everything pretty much stays the same (except prices), or the entire cost structure for media programming will shift down, as people give up TV and movies and start to entertain themselves with other media formats – you know, like books and magazines. Hey, at least Amazon has the Kindle Fire.
3) Apple’s Patent Wars:
Apple’s crusade toward global dominance and against “third-rate products” entered beast mode in 2011. The company, long known for being aggressive in defending its patents, feasted on steroids this past year, continuing litigation against HTC and filing new lawsuits against Amazon and Samsung. While the defendants obviously claim they are within the law, several courts across the world have actually sided with Apple and gone as far as banning the sales of the Samsung Galaxy Tab 10.1 in Australia (though this decision was subsequently overturned). Apple did claim a sustained victory against Taiwan based HTC (and more broadly, Google) for infringing an Apple patent that covers “recognizable data structures”. Apple uses this patent to protect its iOS feature that generates usable links and functions from strings of text that resemble URLs, email address, and phone numbers, to name a few. HTC has stated it will remove this feature from all of its phones by the required date of April 19, 2012. However, if HTC chose to appeal or simply disregard the ruling, it’s likely that Apple would have filed an won an injection against the import of HTC products in the United States (where the initial lawsuit was filed).
Apple’s patent wars, particularly aggressive in 2011, have initiated debate across tech experts and bloggers alike. Even Congress has gotten involved, with President Barack Obama stating that the fast growing patent disputes are threatening innovation and economic growth – a sentiment many tech experts agree with. Companies are allocating billions of dollars toward legal fees, not to mention the wasted time and effort of smart minds that should be creating the next revolutionary tech product instead of being involved in piles of litigation. Some companies are even merging with other companies solely for their patent holdings, in the pursuit of reducing the amount of patent litigation. Google acquiring Motorola Mobility in August for $12.5 billion in cash is the prime example of this.
Hopefully the passage of the “America Invents Act” by Congress this past September will start to cut down on the amount of intellectual property litigation for 2012.
2) Death of Steve Jobs:
When Steve Jobs passed away on October 5th, 2011, millions of people across the world mourned as if hearing a world leader or the Pope had just died. That alone is a testament to the immense contribution this co-founder and CEO of Apple made to the world. Yet Jobs was nothing like the stereotypical Fortune 500 CEO at all; perhaps that’s one of the main reasons Apple rose the become the most valuable company in the world in 2011. Famously eschewing the suit and tie for the iconic black turtleneck, blue jeans, and sneakers, Jobs meticulously guided Apple against the tide of corporate conservatism, instead fiercely embracing both innovation and trendsetting. Or simply, as Apple and Jobs put it, to “Think Differently”.
The famously stubborn, terse, candid, and abrasive Jobs didn’t navigate through life without enduring his share of mistakes and setbacks, most notably being fired in 1985 from the company he helped found. If anything, these setbacks only proved that even geniuses like Jobs are still human. Of course, as Jobs’s legacy will attest to, his successes far outshine any small bumps in the road of his life. Jobs personally saved Apple from extinction with the launch of the iMac. But it was Jobs’s embrace of consumer electronics that transitioned Apple from a niche company to one of the most recognizable (and valuable) brands in the world.
The iPod, launched in Fall 2001, started the digital music revolution (with apologies to the 32MB Rio Diamond). The launch of the iTunes store in 2003 shifted an entire industry and forced record companies to finally accept its fate that no longer would consumers spend top dollar for entire albums that featured only a few worthwhile tracks. The iPhone was the start of the smartphone revolution and has led the way of another consumer shift – that of function-specific applications over the vast openness of the Internet. And finally, Apple even had the last laugh with their launch of the iPad, a device that caused some tech analysts to say that Apple had finally lost some of its mojo. With total iPad sales reaching over 25 million for 2011 alone, it’s clear that Apple is a juggernaut still dominating the consumer electronics marketplace.
Apple’s immense success over the past decade should be primarily attributed to Jobs; however, not only for his individual genius, but also for his ability to surround himself with a team of senior executives that can be matched nowhere else. Lastly, Jobs’s success reaches beyond the walls of Apple, as he was at the forefront of Pixar during its early days and helped transform it into the most prominent animation motion picture studio in the world.
Steve Jobs has been compared to Thomas Edison and Henry Ford, two of the most influential inventors and businessmen in history. For his immense contributions to the world of computing and consumer electronics – contributions that have helped societies innovate, prosper, and even overthrow tyranny – those comparisons are quite appropriate.
1) Social Media & the Arab Spring
What started with one man’s death at the very beginning of 2011 blossomed into a global movement that altered the course of history forever. And quite frankly, much of the success of the Arab Spring is owed to technology. Indeed, it took extremely brave men, women, and children to risk the wrath of bullets and bloodshed for a chance at freedom. But dictators and authoritarian regimes aren’t overthrown without the aid of technology (see China and North Korea). The emergence of social media platforms like Twitter and Facebook, in combination with Internet-capable cellphones, enabled ordinary citizens to become journalists in the blink of an eye.
In the past, government abuses against its people were easily veiled. However, now in the 21st century, it is much easier to capture the abuse, torture, and killings. All it takes is a smartphone and a Twitter account.
But perhaps the most important usage of technology and social media is in helping people organize faster and safer than ever before. That fact alone is a major reason why the collective rise against oppression in the Middle East was so successful. When physical organization merges with digital organization, citizens are unstoppable in their pursuit of democracy. It’s a main reason why the massive protests at Tahrir Square in Egypt were so successful. Organized by social media for the Egyptians, documented by social media for the world. In less than a month, Hosni Mubarak was gone, and Egyptians had their country back.
Social media sites have documented other Arab Spring movements during 2011. Some – like in Libya – were also extremely successful. However, some – like in Syria – remain a massacre. Thankfully for the people of Syria, the Arab Spring movement (among other movements throughout the world), helped launch Anonymous to mainstream recognition. Anonymous has used its collective power to show solidarity with the people leading the Arab Spring, and the group has even helped out their cause by hacking Syria’s Department of Defense website to show videos and images of the torture and deaths carried out by the military.
The capabilities of social media to aid citizen movements was first highlighted in 2009 following the controversial Iranian election. While the situation within Iran is still tenuous, it is clear that given the right circumstances, social media and technology can help deliver freedom to people across the world.
For giving people hope, the use of social media in the Arab Spring movement is the number one tech story for 2011.