Technology and 3D printing
1. 3D Systems ($DDD) and Stratasys ($SSYS) both see 50% growth in stock price, if not significantly more. The reason: an increasing number of investors are realizing the revolutionary potential of 3D printing with regards to manufacturing and distribution of plastic (and eventually all) goods. Revenue and earnings growth has been about 25% for both companies. Even if neither company see a strong ramp in growth, I still expect their stocks to both outperform significantly as investor demand grows.
2. Apple substantially reduces cycle time between product launches. Apple's greatest competitive weakness today is the annual cycle time between product launches. During the first 6 months after a product launch, the device sells extremely well. In the latter 6 months, sales tend to slow because people are concerned about buying a product that they know will be obsolete soon, and because competitors time their product launches to take advantage of the 6-month oldness. I'm not sure if Apple can cycle down to 6 months for all of its products, but I do expect to see an acceleration across the board. This would also provide a unique competitive advantage that almost no one else can achieve because Apple is backwards integrating into chip design and production and tooling (see monumental cap-ex growth over the past 2 years).
3. RIM BB 10 doesn't take off. If Microsoft, the mother of all software companies, couldn't pull of a platform refresh starting in October 2010, there's no way that the beleaguered RIM can do it in 2013. They are simply too little, too late. Although early impressions are positive, the platform is decidedly non-revolutionary, just as Windows Phone has been. Some hardcore BlackBerry fans may upgrade to BB 10 proudly, but that market is quickly eroding, and developers won't jump onboard.
4. Windows Phone 8 doesn't take off in the US. It may begin to gain some traction in other markets where the iPhone is less prevalent because Windows Phone can serve as a viable alternative to Android.
5. Chrome moves firmly ahead of Firefox as a % of people who browse the web. (I made this prediction for 2012. Chrome ended up flatlining to be about equal with FireFox for the latter half of 2012. In 2013, Chrome will move firmly ahead).
6. Chrome continues its upward march past 60% of all pages viewed on the internet. Although Chrome is only used by 20-25% of the internet-browsing population, Chrome users consume significantly more web content, enabling Chrome to jump past 50% of desktop/laptop web traffic in 2012. I expect this trend to continue into 2013 as Chrome continues to grow.
7. Apple Television is released. I had predicted this for 2012. I am almost certain it will happen in 2013. See my post on the Apple Television for more details on this subject.
8. Intel-based smartphones begin to make a dent in the smartphone market. Although Intel was able to prove power efficiency prowess in 2012 with 32NM based Atom processors, they failed to garner the attention of OEMs because of the lack of integrated 4G/LTE. Intel is expected to release an updated 22NM based Atom SoC with significant power savings (putting it further ahead in the performance/watt race), along with reference designs that OEMs can use to reduce R&D costs. Although the 2013 models will lack integrated 4G/LTE, Intel will still garner a few notable OEM wins with the raw computing performance and power efficiency lead. I expect the first devices featuring this SoC to receive heavy promotion and sell quite well.
9. AMD continues to flounder. They may file for bankruptcy if no one wants to acquire them.
10. US passes 65% smartphone adoption. Learn more.
11. Netflix continues to struggle, with little hope for change. Their business model is fundamentally worthless because they are a middle man with virtually no valuable assets, and thus no pricing or negotiating power. Because Netflix is a public company, it's financials are public. It's key suppliers, the 5-6 major movie studios, will continue to collude and raise their prices in accordance with Netflix's subscriber and revenue growth. Credit to TJ for laying out this thesis in fall 2011. It still holds true today.
14. Repeat number 11, but change "Netflix" to "Spotify" and change "movie studios" to "record labels". Although Spotify is private, it receives enough public attention that the record labels have a pretty realistic sense of Spotify's revenue and subscriber subscriptions and growth rates.
13. Apple's stock passes $800. Full disclosure: I am invested in Apple.
14. Android passes 1B cumulative activations. I expect Android to pass Windows in total actively used devices in 2015.
15. The consumer web bubble pops. VCs shift focus to enterprise-oriented startups, because enterprise are actually willing to pay for valuable services.
16. Square becomes the widely recognized leader in the race to become the dominant xRM service for small retail merchants across the country. The other primary competitor in this space is Groupon. However, Groupon's biggest challenge is that it doesn't have data on non-Groupon retail sales. I expect to see Square eventually encroach on GroupOn's territory (marketing and customer acquisition), but I don't think Groupon will successfully be able to encroach on Square's turf (payment processing, cookie-cutter sales data analytics for small merchants). This may not happen in 2013, but I expect to see Square compete more directly with Groupon by utilizing its vast trove of consumer purchasing data. I will write another post on this soon.
17. Zynga continues to struggle. It, like Netflix, has no reason to exist. Its games are not special, and are too prone to being quickly copied. It delivers no fundamental value, and has no unique and valuable assets. With increasing competition in the social games space, Zynga is struggling to find new players, and keep them meaningfully engaged for an extended period of time. I don't foresee any fundamental changes that will reverse this trend. The only potentially saving grace for Zynga is online gambling, which may sustain the company, but this growth will stall quickly.
Healthcare IT
1. Athena sees strong subscriber growth as more providers realize that they nor their staff can keep up with increased scrutiny and regulations, especially considering the upcoming shifts to ICD10 and capatation-based payment models. I will write a whole post about Athena's business model at a later time.
2. Epic continues its dominance. From what I understand, they are re-writing their back-end in .NET. I don't think the re-write will be publicly released in 2013. I think that will happen in 2014.
3. Allscripts continues to flounder. Their inpatient solution simply isn't competitive, and they don't have a good track record.
4. HIEs continue to prop up, and fall down a short time later due to sustainability issues, barring any major regulatory changes. The #1 driver of this phenomena is that none of the parties connecting to an HIE have an incentive to contribute to its sustainability. They all enjoy reaping the benefits, but none of them care enough to pay. This is a classical public goods problem. One of the most effective solutions to this problem is government mandated taxes...
But, as health systems further integrate and evolve closer to the integrated delivery network (IDN) model, they will have an incentive to effectively own and manage HIEs. The large health systems and IDNs will never be able to bring all hospitals and providers onto a single database anytime in the near future, so they will need an HIE platform to share information within the health system. Perhaps, as this infrastructure is built out, they will also develop interoperability between HIEs as the marginal cost will be significantly less than setting up the HIE to begin with. I will write a whole blog post on this subject at a a later time.
5. Small EHR vendors begin to die or are acquired in increasing numbers. As healthcare providers continue to consolidate and the big EHRs get better, there's simply no reason for many of the smaller vendors to exist.
6. Personal Health Records (PHRs) and other patient-engagement driven HIT products continue to fail to gain any substantial traction. Most people don't want to manage their healthcare. They just want to be healthy at all times. When they get sick, they may care enough to engage with their doctor briefly, but after they're better, they quickly forget about their health until they fall ill again (I've read that 1/3 of new prescriptions are never filled). I do recognize that I am generalizing about people, especially Americans. There is significant number of people, perhaps 10% of the US population, that does care. Within this 10% crowd, the vast majority of people are already in good shape and don't need the additional patient-engagement tools to help manage their health, though the apps do provide some value even to that 10%. For the 10% that care today, the current tools are good enough.
7. Most patient-facing healthcare IT companies continue to fail to establish real business models. Of those that currently exist, only a few have devised a scalable revenue model, and even those are hardly "engagement" tools (for example, ZocDoc). Although lots of patient-facing healthcare startups are being founded, very few will establish a scalable revenue model. In my view, almost all of the money in healthcare IT is to be made by improving healthcare delivery and reducing administrative overhead costs, not through patient engagement tools.
8. Larger hospitals and health systems continue to experiment with cloud technologies for smaller applications, but virtually no progress will be made in moving ERP and EHR systems of larger organizations into public-cloud, multi-tenant databases. In fact, I don't think that larger organizations will ever move to this model because their vendors (Epic and Cerner) won't. They will, at most, transition to private-clouds to take advantage of economies of scale, infrastructure-as-a-service (IaaS) cash flow, and outsourced IT management, but never to Amazon Web Services (AWS)-esque public clouds. However, I don't think private-cloud migration will happen in 2013. It may begin to pickup steam in 2014, but I expect the market to really begin large-scale transitions to remotely hosted private clouds in 2015 and beyond, once EHRs and meaningful use stage 3 are firmly understood and completed.
9. Cerner experiences at least 3 major publicly reported cloud outages. If AWS had 4 major outages in 2012 I don't expect Cerner to do much better in 2013.
10. The HIT market in the UK lights up as NHS trusts ink deals with Epic and Cerner. Virtually no other American Hospital Information System (HIS) companies will see any success in markets outside the US. Internationalization of software and deployment across time-zones and language barriers are enormously difficult (even Cerner has failed at this many times), and these 2 companies are the only ones that large international organizations can trust, especially after witnessing the awry national NHS project that was almost entirely wasteful.