

Fred Wilson: By 2020 Apple Won’t Be A Top-3 Tech Company; Google, Facebook Will - adidash
http://techcrunch.com/2014/05/05/vc-fred-wilson-in-20-years-apple-wont-be-a-top-3-tech-company-google-and-facebook-will/

======
millstone
It takes a special kind of investor to have lost money in AAPL in 2009, a year
where the stock more than doubled. Fred Wilson is that investor.

So consider the track record.

~~~
mikeyouse
[http://tech.fortune.cnn.com/2011/04/08/the-day-fred-
wilson-d...](http://tech.fortune.cnn.com/2011/04/08/the-day-fred-wilson-
dumped-aapl/)

    
    
        He had gone out to dinner with friends the night before
        and realized that none of them -- "I mean nobody" --
        believed the statements coming out of Apple PR about
        Steve Jobs' health.  "As good as the company is," he wrote,
        "I just can't own a stock when I don't believe the company
        is being straight with investors."
    

He called Apple out for lying about Jobs' health (they _were_ lying) and sold
all his shares. Hardly an indictment of his investing skill.

    
    
        "I don't regret my decision to sell $aapl."
        "When I think the company is misleading investors, I
        don't want to be a shareholder, no matter how much
        appreciation there might be in the future."
    

He was right when he said that devs should pick Android if they want to be 'in
front of the most eyeballs', but he was clearly wrong on the relative value of
those eyeballs.

~~~
fleitz
No matter how noble the strategy, poor returns are poor returns, and your
returns are your record of investing skill.

The counterpoint would be that selling the AAPL shares allowed the capital to
be invested in some other venture that had better returns, not the 'nobility'
of the strategy.

~~~
dragonwriter
> No matter how noble the strategy, poor returns are poor returns, and your
> returns are your record of investing skill.

No, skill is how well you achieve your objectives. If your objectives are not
limited to financial returns, then financial returns alone are not a reliable
proxy for skill.

------
georgebarnett
Apple detractors keep predicting its downfall due to availability of commodity
hardware, however Apple fans continue to purchase Apple gear because
everything else _is_ commodity hardware.

~~~
jayd16
The only reason they're relevant is the iPhone. If they didn't become the lead
platform in a market that exploded shortly after, they would hardly be where
they are today.

Once again they're losing marketshare to commodity hardware now that the path
has been paved. You can assume they'll strike lightning again but we'll see.

~~~
ricardobeat
And the iPad. Oh, by the way, Apple has been on and off as the top PC vendor
in the world for the past 3 years...

~~~
dragonwriter
> Oh, by the way, Apple has been on and off as the top PC vendor in the world
> for the past 3 years...

Sure, Apple makes more desktop/laptops than any other manufacturer; but far
less than the entire Windows market; they are a great hardware manufacturer
and remarkably durable there, but they have a history of establishing a market
and then receding in relevance as a _platform_ even if they remain the biggest
single hardware manufacturer. Microsoft's OS did that to them in the PC
market, and Google's may well do it to them in the mobile space.

~~~
anko
You're right, but this round developers are also considering how much 1)
people are spending on each platform, 2) how fragmented each platform is

If people are spending 80% of software sales on a platform with 15% of the
market, with 5% of the support costs (due to lack of fragmentation) it's still
a compelling platform for developers.

I haven't looked up the exact numbers, I'm just saying that there are some
combinations which are pretty compelling as a developer and actually make a
platform more relevant even if it has a small percentage of the market's
install base.

Lastly, the market is growing rapidly - Apple still has the highest customer
satisfaction which means people are more loyal to the brand.

~~~
dragonwriter
The fragmentation and brand loyalty issues were real, frequently cited, and
considered by developers in the PC market as well. Heck there are still forms
that do Mac-only development in the PC space for that reason, and this was a
lot more common in the first decade and a half or so of the era of personal
computers.

------
glasshead969
PCs have been a commodity for more than a decade now and Apple is still
selling Macs at good margin. I think for Apple they like to view their
hardware as part of a experience which includes iOS,App store,retail stores
and of course the Apple brand itself. As long as they can move meaningful
number of devices to be relevant like Mac i think they will be fine. May be
not top 3 tech company but i don't think Apple should care about those things.

~~~
robg
_I think for Apple they like to view their hardware as part of a experience_

That's exactly it. And today that experience spans what I carry in my pocket,
what I use in transport, what I work with at my desk, and what I use in my
living room.

The retail experience is another world apart from the competition. I have
little doubt that experience will soon span what I wear and how I feel.

------
jerryhuang100
From a guy who dumped AAPL @ $97 5 yrs ago. And exactly 12mos later Steve Jobs
showed up to present the iPad (and iPhone4, Macbook Air...later on). I thought
the core value of a good VC is seeing the big trend, along with seeing the
financial potential.

Source:

[http://www.businessinsider.com/c/536798b6eab8eaa7579683e0](http://www.businessinsider.com/c/536798b6eab8eaa7579683e0)

[http://avc.com/2009/01/selling-apple-a/](http://avc.com/2009/01/selling-
apple-a/)

------
robot
I switched to Apple products completely, because the UI and experience is
_much_ better. In my opinion Google is the company whose UI really sucks. For
example try Google Maps today. It is a great product but when you click on any
point of interest, you will get a large popup on the left, that covers 1/3rd
of the screen. You won't be able to see the map anymore. The same kind of
dysfunctional UI philosophy is spread everywhere in Google products (see how
the dial pad on Android vanilla UI is made smaller, and hard to use, for sake
of writing more details to confuse the user). See how google contacts on an
Android phone contain all contacts thrice, and mostly irrelevant because they
are imported from gmail.

I know it sounds a bit one-dimensional to discuss who will be the "top tech
company" with UI or user experience differences, but that is ultimately what
made me pick one product line instead of the other.

------
sparkzilla
Why does he think Facebook will survive? Given the lack of concern it has for
its users it's more likely to be the next MySpace.

~~~
msandford
Agreed. When is a fad not a fad? I don't know. It might last 20 years from
start to finish but I can't see them solving their core business problem which
is they don't know how to make money any way other than ads and data
collection. The pendulum is going to swing the other way eventually.

~~~
mcintyre1994
Out of interest woild you say the same for Google or do you think they will
diversify more successfully? I think their ad/data business is more robust - I
feel like it benefits me and Facebook's doesn't, but if the problem is only
using ads and data that's a problem Google share.

~~~
msandford
Google has made giant piles of money that they are using to solve more and
more problems re: organizing the world's information. Facebook is figuring out
how to get people to upload more pictures? I guess there's Oculus and
Instagram. I don't see Instagram as much more than chewing up a potential
competitor. We'll see on Oculus.

I am not saying that making a self-driving car or a book-scanning machine or
any of that in any way guarantees that they will hit other big markets. But
they're trying on a pretty grand scale.

A VC who raises a fund and has some yearly burn rate for his operation will
eventually go broke if he doesn't invest. Google definitely is investing.
Facebook might be.

------
raheemm
Re Apple, I get his point about their cloud offering sucking and hence they
are losing out on the biggest trend. But Apple is also hyper-focused on user-
experience and design, which is a huge strength.

What I really don't get is his claim that Facebook will be one of the top 2
tech companies? Really?! Why? Because they are riding the cloud wave?!! FB,
the social network itself is so ready for disruption that I believe it'll be
dethroned just as easily as MySpace was. It's just a matter of someone
figuring Social Network 3.0.

------
jw2013
> by 2020, the biggest tech company in the world — Apple — will cease to be
> the most important, and won’t even be in the top three....he predicted that
> the top three tech companies, instead, will be Google, Facebook “and one
> that we’ve never heard of.

Okay, a couple of questions here:

1\. Is Apple the top three most important company even right now? Don't
mistaken me, I love Apple.

2\. Like many doubters here, I wonder if Facebook can even be relevant in
2020. Google succeed because it does not limit itself to its original service
(searching) and created tons of other cool services that a lot of people want.
The question is whether Facebook can pull that off? Not yet at least.

3\. If there is some company beating Google I am thinking of a company in AI
with some tech breakthrough. But then the question is, would Google have
enough smart people to "copy" it and make it better? I am somewhat awed at
what Google can achieve at this moment. Next Google please comes up.

~~~
goo
I'll broadcast my opinions on your questions:

1) AAPL is arguably the most important company, full stop -- not just in tech.
With the highest market cap in the USA, and a substantial share of mobile
phones using both its hardware and software, it is the top dog.

2) I'll take the other side of that bet without hesitation. Google makes
headlines because it does a bunch of cool shit, but it still makes its money
on advertising. (Something like 65% of its revenue comes from google.com
search:
[http://investor.google.com/financial/tables.html](http://investor.google.com/financial/tables.html))

I think the fact that Facebook has been leveraging its expensive stock to
aggressively counteract (i.e. buy) potential rivals makes me somewhat
confident that it will be relevant in 6 years. The fact that they are
investing in potential big future winners like Oculus VR increases my
confidence. At the very least it's cool shit, and that puts them in the
headlines :)

3) Who knows what future crazy tech breakthroughs will occur. There are
unknown unknowns, and they will change the world and make the pioneers
wealthy. Google embraces that possibility and continues to strive for more
breakthroughs. If none of them succeed, at least they have their 50 Billion
dollars of yearly revenue from advertising sales to fall back on...

------
Zaephyr
A VC who invests in software predicts that hardware will become a commodity.

I hope he's wrong. Cheap commodity hardware is such a pain over the long term.
Plus, a desire for quality goods bodes better for US manufacturing.

------
lquist
My bet is that Google and Amazon will come out on top. My thesis on each of
the big 4:

Google: Some investments in Google X and other technologies will pay off and
Google revenue stream mix will change. Size of pay-off will offset or eclipse
current ad revenues.

Amazon: Revenue growth will continue for the foreseeable future. They are
still a tiny fraction of their addressable market, and have a humungous moat.
Amazon will achieve profitability not by raising prices, but by squeezing
suppliers (a la Walmart).

Facebook: Zuck does not think the best use of capital is reinvestment into
core Facebook (see investment in WhatsApp + Oculus). That's fine, but has no
track record of success with this. Oculus is very promising, but I was much
more excited about it when it was a standalone company and John Carmack et al
were equity compensated. The addition of Abrash is exciting though. I think
this could be Facebook's Youtube if they play it right, but still not going to
change Facebook's 5yr+ trajectory.

Apple: I largely agree with Fred Wilson about commodification of hardware.

~~~
jp555
And what of the commodification of plastics & textiles. Nike still seems to be
able to carve out a big profitable chunk with them. In fact, how do you know
it's about hardware? What if Apple isn't selling hardware? Is Nike selling
plastic & fabric?

------
mark_l_watson
I don't agree with the premise of the article.

That said, Apple has done something that really alienated me: no iTunes
support for Android, like they provide for Windows.

I had my music set up very well using Apple's paid service, then discovered
that I was out of luck on my Android phone. A sister in law hit the same
problem, bought an Android tablet and had no easy access to her years of
iTunes purchases. It is on my todo list to export thousands of songs for her
to the Amazon Music Cloud.

So, I now use Amazon for music, Kindle, and Audible books. I also really like
iTunes and Apple's eBooks, but they lost me as a customer by not supporting my
Android phone. I use mostly Apple gear, but it is fun having an Android phone
for that different experience.

------
paul_f
Some are suggesting here that we ignore Fred Wilson because he sold his Apple
stock in 2009. Does this mean your opinion is invalid if you've ever been
wrong? I have a word for people who are never wrong - lucky.

------
ziadbc
This seems wrong from an engineering AND MBA point of view. As designing and
manufacturing electronics becomes more automated, the workflow for designing
computer hardware will be very similar to software development (it pretty much
already is).

From an MBA perspective, Apple just owns more of the value chain in software,
i.e. some of the silicon via the mobile processors, and the proprietary cases.
Other than that, most of the hardware follows pretty closely with the industry
standard tech [intel's roadmap]. They don't seem excessively tied up at all.

------
adventured
The only prediction of his I find interesting is the Twitter one. I think he's
extremely far off base. Twitter won't be a top 30 tech company by 2020,
they'll barely be relevant at all. They're losing steam now, and it's going to
accelerate dramatically over the next few years. Twitter failed at its
original mission: to be a communication platform. Mostly it's a one-way
celebrity gawking platform. WhatsApp, Snapchat, and numerous others
accomplished what Twitter was supposed to be, but never became, and in the
process they've made Twitter nearly pointless. In another six years, 140
characters will be viewed as a curious absurdity; teens in 2020 will laugh
when they realize it derives from limitations on messaging from the pre-smart
phone era 15 years prior. You'll know Twitter is sinking rapidly when they
lift the 140 limit out of desperation.

------
shmerl
Apple surprisingly remained in its mindset from the 90s. Such backwards things
like using proprietary ports in the age of ubiquitous USB really explains
Apple's way of thinking. I.e. complete lock-in, no interest in system
portability and etc. While it served them well in the past, it can also be
their downfall in the future.

~~~
pinaceae
which USB? USB, mini-USB, micro-USB, USB 3.0 Micro-B, USB Type C?

[http://en.wikipedia.org/wiki/USB#Connectors_types](http://en.wikipedia.org/wiki/USB#Connectors_types)

ubiquitous, indeed.

~~~
shmerl
Any of them. The main point they are all standard, so you can use convertors,
cables, chargers and so on. USB has U in it for a reason. Using proprietary
ports in this day and age is so backwards and user unfriendly, that it's not
even funny.

~~~
selmnoo
I'm more of an Apple(/Jobs)-hater than most on this site, but even I have to
admit the Lightning port is so much prettier and more user-friendly. You can
put it in upside down or downside up -- it works both ways!

Though, I vaguely recall reading that some future iteration of USB is going to
go that way, it'll be nice to get that finally.

~~~
shmerl
Lack of interoperability defeats the purpose. What use is there from such port
if you can't use a commonly available charger or USB cable when you forgot
your Apple proprietary one at home?

~~~
gtremper
iOS is popular enough that its often easier to find another lightning cable
than a micro USB

~~~
shmerl
Not in my experience.

------
alayne
What prevents software and services from becoming commodities as well?

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badman_ting
Oh, for sure. They're doomed! Everybody knows that.

