A sign displays the Twitter logo on the front of the New York Stock Exchange ahead of the company's IPO in New York, November 7, 2013. Twitter Inc could face volatile trade in its debut Thursday on the New York Stock Exchange, analysts said, but they remained enthusiastic after the money-losing social media company priced its IPO above the expected range. The microblogging network priced 70 million shares at $26 on Wednesday evening, above the targeted range of $23 to $25, which had been raised once before. The IPO values Twitter at $14.1 billion (8.8 billion pounds), with the potential to reach $14.4 billion if underwriters exercise an over-allotment option. REUTERS/Lucas Jackson (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY TPX IMAGES OF THE DAY)

AFR 09-11-2013

Floating of the social media juggernaut Twitter created a media storm in the tech world. Photo: Reuters

Is it the beginning or the end? As 2013 hurtles to its conclusion, the debate on 2014 has just begun: is the tech industry on the verge of a renaissance, or is the bubble about to burst?

The glass-half-full types point to Twitter's titillating float; the other half insist that's when investors cashed in on social media's hype. The truth, as always, is somewhere in the middle. It's indisputable that Twitter's public offering will usher in a wave of floats. But the payoffs may not match the froth of the micro-blogging service, forcing would-be float candidates to seek corporate suitors.

Indeed, Twitter shares are hovering near $US65 ($73), up 44 per cent from its opening day of trading, November 6. The social media storm comes against a backdrop of wrenching changes.

Tech's old guard - Microsoft, Hewlett-Packard, Dell and Cisco Systems - continues to wrestle with the slowly dying PC market; smartphone sales, meanwhile, are expected to top 1 billion in 2014. (By early October, there were more than 1.5 billion smartphones in use worldwide.)

The fertile mobile advertising market - expected to more than double from today to $US25 billion in 2016 - is inflating the boom, creating the promise of profitable companies at warp speed. Venture capital firms will raise more money in 2014 than the $US28 billion in 2007, says Venture Economics.

''Consumers are spending much more, percentage-wise, on technology. It is evolving at a pace I have never seen in my 30 years in the field,'' says Tom Kilroy, executive vice-president of sales and marketing at Intel. ''The 'Internet of Things' is what we used to call embedded technology - in cars, hotels, billboards.''

Boom II is different on several fronts, however. Incubators, angel investors and individuals are ploughing cash into start-ups, sparing consumers from being burnt. Several themes bear watching in 2014.

 

Changing of tech guard

Behind an avalanche of products and ads, Samsung Electronics has put itself on the precipice of supplanting Apple as Silicon Valley's leading consumer-electronics brand. In other industries, this would be considered a defining moment, akin to Pepsi overtaking Coca-Cola. The moment has had an air of inevitability among some industry experts after months of watching the $US288 billion Korean behemoth ''kill it'' with a barrage of ads, the Gear smartwatch and a burst of new smartphones and tablets. Analysts estimate Samsung will ship more than 350 million smartphones this year.

''Could Apple ever lose the cool, innovative tag to Samsung?'' asks independent analyst Jonathan Yarmis. ''It's not out of the question. And it would be a cheaper alternative.''

Samsung lacks star power but is built on an intricate hierarchy, and slowly but surely intends to raise the profiles of executives. ''In 2013, our Galaxy S and Note series of smartphones achieved sales of 100 million units, and we expect to be No. 1 in both shipments and revenue for handsets and smartphones this year,'' says J. K. Shin, head of IT and mobile communications at Samsung.

 

Crisis of confidence

Two years after the death of Steve Jobs, Apple has quietly - and intentionally - distanced itself from its mythical co-founder. The company is reluctant to comment on Jobs' lingering impact, and officials are visibly uncomfortable when his name is uttered.

The reasoning mirrors what Disney went through after the death of Walt Disney: it's unfair to the executive team, and it reminds the American public of the not-so-distant glory days. Don't cry for Apple, however. It not only has a mountain of cash (about $US150 billion) and just inked a multiyear deal with China Mobile, but enjoys a huge edge in design, user loyalty and perceived ingenuity.

Marc Andreessen, who sits on the boards of HP and Facebook, has pointedly said Asian companies such as Samsung are hamstrung by a me-too business approach that favours the team over the flashy individual. The countdown for the rumoured Apple iWatch is on, too, with bets on a late 2014 release. Apple's biggest product launch since iPad in 2010 could go a long way towards cementing its status among consumers if done right.

 

The Next Big Things

Cryptocurrency and wearable computing devices captivated - and confounded - tech pundits and consumers. Despite scepticism about its value, Bitcoin prices topped $US1000 in November amid signs it was breaking into mainstream use. Start-up Gyft, a mobile gift-card company backed by Google Ventures, recently joined the fray with a holiday reward program tied to more than 200 retailers, including Amazon.com's Zappos and Gap.

''It's a commodity now, but it will be a phenomenal currency soon,'' says James Beshara, CEO of Crowdtilt, which has integrated Bitcoins in its mobile crowd-sourcing platform. Bitcoin prices have cooled since, closing at more than $US670 last Monday.

''It is an interesting innovation, but we have not invested in it until there is regulatory clarity and until these companies find a stable bank partner,'' says Alex Ferrara, a partner at Bessemer Venture Partners.

Meanwhile, Google's head-mounted Glass computer may have been derided for its retro-nerd look, but keep in mind it is a long-term work in progress. By the time it reaches its final form in a few years, it could be contact lenses, film coated onto prescription glasses or glasses that interact with a wristband.

Eric Hippeau, managing director at Lerer Ventures, an angel fund specialising in tech start-ups, envisions an era of connected devices, in which most apps will be built with the same technology. Cumbersome and expensive IT apps, for example, will be displaced, says Mr Hippeau.

 

Soaring to new heights

There seems to be no end to Google's trajectory. Fifteen years after it was started by CEO Larry Page and Sergey Brin, the search behemoth appears as inventive and financially stout as ever. It topped $US50 billion in sales for the first time this year, its stock eclipsed $US1000 a share, and it is rolling the dice on big ideas Mr Page calls ''moon shots''.

Projects range from Google Glass and driverless cars to robots, an anti-ageing start-up and high-altitude balloons that provide internet access to remote areas. ''The way Google runs is a sort of bizarre, bottoms-up innovation model, where people are encouraged to think outside the box,'' Google chairman Eric Schmidt said in an interview in September. ''These ideas actually came from the bottom up.''

Added Sundar Pichai, senior vice-president of Android, Chrome and apps at Google: ''Our goals are ambitious, some would say crazy, but we believe big thinking and constant innovation can lead to transformative technology that can help change people's lives for the better.''

Google alum Marissa Mayer oversaw a reclamation/rejuvenation project at Yahoo, with a slew of acquisitions, including Tumblr. And she may just be warming up. ''We'll keep you guessing even better next year,'' a smiling Ms Mayer said.

Shares at LinkedIn and Facebook, meanwhile, soared to records, a testament to strong financial results. Facebook, in particular, continued to refresh its product. The latest addition? Video ads, although CEO Mark Zuckerberg admitted the company did a poor job of bracing its more than 1 billion members for change. And then there was Jack. Square CEO and Twitter co-founder Jack Dorsey was the poster boy for tech in 2013 - just look at the cover of any major publication. Both of his companies moved into snazzy new digs this year and, with Twitter stock performing well, expect a Square float in 2014. ''I don't think of [Silicon Valley's current feverish climate] as a bubble or resurgence,'' Mr Dorsey said in September. The business models of today, are ''more substantial in providing value''.

 

Somewhere in between

While BlackBerry and Dell continued slides into irrelevance, PC juggernauts Microsoft and Hewlett-Packard soldiered on in a market increasingly dominated by smartphones and tablets. The PC is far from dead - just walk into any office building in America - but both companies are betting heavily on mobile devices. Microsoft Surface 2 sales showed signs of life, and HP reported better-than-expected fourth-quarter net income of $US2 billion on $US29.1 billion in sales. ''We're excited about things to come'' with new HP tablets next year, HP CEO Meg Whitman said after the 74-year-old company announced strong quarterly financial results last month. ''The innovation engine is alive and well here.''

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