Here’s the second part of a two-part look back at my 2020 tech predictions and how well they held up over the last 12 months. Part one can be found here, while the predictions themselves can be found here and here.
Prediction #11: Apple Bundles Some of its Content Services — And Maybe Other Things as Well
Apple (AAPL) unveiled its Apple One bundles in September, and launched them near the end of October. They’re priced between $15/month to $30/month, and bundle Apple Music, Apple TV+, Apple Arcade, iCloud storage and (in the case of the $30/month Premier plan) Apple’s News+ and Fitness+ services.
Apple hasn’t yet announced bundles that cover hardware upgrades in addition to services. But Tim Cook has made some earnings call comments that suggest Apple is at least considering such a move.
Prediction #12: Growth-Stage Software Firms Become More Eager to Join Forces
Verdict: Not Really
There were a handful of billion dollar-plus acquisitions involving growth-stage software firms: Notable deals include Salesforce-Slack and Twilio’s $3.2 billion deal to buy customer data platform provider Segment. But — in a year that saw business generally remain good for SaaS firms in spite of macro turmoil — there wasn’t any large-scale uptick in M&A activity.
Prediction #13: Enterprise Hardware Firms Explore Their Options
Verdict: Somewhat True
There weren’t any big M&A deals involving publicly-traded enterprise hardware firms in 2020. But as on-premise IT spending saw additional pressure thanks to COVID, a few major hardware vendors did carry out some head-turning strategic moves.
Dell Technologies (DELL) announced that it plans to spin off its roughly 81% stake in VMware (VMW) , in a deal featuring a one-time dividend that will reduce Dell’s massive debt load. Hewlett-Packard Enterprise (HPE) announced that it’s moving its headquarters to Texas to improve its cost structure and lower its tax bill, and (following a CEO change) IBM (IBM) announced that it plans to spin off its giant Managed Infrastructure Services unit.
Prediction #14: Google Search Sees Tough Antitrust Scrutiny
In October, the DOJ filed a lawsuit against Google (GOOGL) that alleged its search bundling and exclusivity deals violated antitrust law. And more recently, the EU floated a bill (called the Digital Markets Act) that imposes steep penalties on tech giants seen as giving preferential treatment to their own services on major platforms.
Google is also now dealing with an antitrust suit from 10 state attorneys general, although that involves its ad business for third-party publishers. In a nutshell, Google looks poised to see drawn-out fights with regulators on multiple fronts over the next few years.
Prediction #15: Online Grocery Sales Surge, While Restaurant Delivery Players Consolidate
I’ll attach an asterisk here, since a key reason why online grocery delivery and curbside pickup orders skyrocketed this year (COVID) was something I definitely didn’t foresee 12 months ago. With that said, 2020 clearly represented an inflection point for the online grocery businesses of retailers such as Walmart (WMT) and Target (TGT) , as well as for Amazon.com’s (AMZN) grocery delivery services. And it’s easy to imagine many first-time users of online grocery users continuing to use them in the coming years.
And yes, the U.S. restaurant delivery market did see some consolidation, as Uber (UBER) acquired Postmates. Grubhub (GRUB) , on the other hand, reached a deal to be sold to European peer Just Eat Takeaway after failing to come to terms with Uber.
Prediction #16: AI Services Relying on Natural-Language Processing Become Very Good
Verdict: Arguably True
One of 2020’s biggest AI-related breakthroughs involved the GPT-3 language model, which analyzes text patterns to generate its own natural-language text. Though by no means good enough to replace human writers, text generated by GPT-3 can at times sound very human-like. In addition, GPT-3 has been used to do things such as compose guitar tabs and to generate code based on text descriptions.
2020 also saw continued improvements for the popular BERT language model, which among other things is used by Google to help deliver search results. The massive and ever-increasing size of these models has been a boon for Nvidia (NVDA) , whose GPUs are quite often used to train them.
Prediction #17: Amazon Makes its Marketplace User Experience a Major Priority
Amazon did carry out some meaningful quality-control efforts for its sprawling seller marketplace. In June, the company launched a Counterfeit Crimes Unit to uncover and take action against counterfeiters selling on its marketplace. And a few months before that (when COVID was driving a lot of panic-buying), Amazon kicked thousands of sellers off its marketplace for price-gouging and/or making false product claims.
But at the same time, the shopping experience on Amazon’s website and apps didn’t change a whole lot. Search for something on Amazon, and there’s a good chance you’ll see numerous listings for similar products (if not the same product), and not much of an effort to deliver the kind of curated shopping experiences various rival e-commerce sites and platforms have begun providing.
Prediction #18: Asia Becomes a Key Growth Driver for Netflix
Verdict: Somewhat True
With the help of both traction in developed markets and the rollout of cheap mobile-only plans in emerging markets, the Asia-Pac region has become a bigger contributor to Netflix’s (NFLX) subscriber growth. But in a year that also saw Netflix significantly grow its North American and European customer bases, it didn’t become a truly massive contributor.
On an absolute basis, Netflix’s Asia-Pac paid net adds rose to 7.3 million during the first three quarters of 2020 from 3.9 million a year earlier. However, that only led the region’s share of paid net adds to grow by about 5 points to around 25%.
Prediction #19: Tesla’s Model Y Fares Well, But Elon Musk’s Autonomous Driving Promises Don’t
Tesla (TSLA) began delivering the Model Y crossover to U.S. reservation holders in March. And from all indications, the production ramp for the relatively cheap electric crossover has gone pretty well so far ahead of upcoming European and Chinese launches.
At the same time, Tesla clearly isn’t going to make good on Elon Musk’s 2019 promise that hundreds of thousands of self-driving Teslas will be on the road by the end of 2020. And judging by what the latest beta for Tesla’s Full Self-Driving software can and can’t do, that day is still probably a ways off.
Prediction #20: Facebook’s E-Commerce Momentum Accelerates
Verdict: Apparently True (But More Numbers Would Be Nice)
As COVID led e-commerce growth rates to inflect higher, Facebook (FB) both sold a lot of ads to online merchants and doubled down on its efforts to help merchants sell goods and services on its platforms. Among other things, the company rolled out Facebook Shops, a service that lets businesses launch storefronts (replete with in-app checkouts and integration with Facebook’s messaging services) that can be viewed across core Facebook and Instagram, and it also launched new in-app shopping features for WhatsApp.
But while uptake for these new services appears to be decent based on anecdotal observation, Facebook has remained pretty tight-lipped so far about just how many merchants are using them, as well as about just how much e-commerce activity they’re driving.
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