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As a tech investor, 2010 has been good to me. My tech portfolio is up. My top tech holdings made gains in their core markets. And many of my tech picks for Motley Fool Rule Breakers rallied to new highs, including Rackspace Hosting.
So as we inch closer to 2011, I'm optimistic. The tech trends should continue to favor my portfolio. What trends, you ask? Here are 12 things I think we'll see next year.
1. Web developers will lead an apps revolution. At last count, the iTunes App Store had more than 310,000 active apps. The Android Market contains more than 200,000 apps and games. Soon, Apple (Nasdaq: AAPL ) will make an app store available to Mac users as well. Developers who don't the follow the money starve, and right now, lightweight web and mobile apps are where the money is.
2. More streaming, less traditional TV. Video streaming as a TV replacement may be in its earliest stages, but many of us are using Netflix (Nasdaq: NFLX ) and Hulu Plus to supplement traditional TV. Smart devices such as the iPad should accelerate adoption.
3. Emerging-market tech will crush the market. Here in the U.S., we're used to tech. Advanced features are what we're after. But in emerging markets, tech we were betting on 10 years ago is still fresh and new, and the companies delivering it should provide outstanding returns to investors. One such opportunity: ChinaCache Holdings (Nasdaq: CCIH ) , which provides Akamai-like content delivery to Chinese web businesses.
4. Handset makers begin to take control of the mobile market. Traditional telcos are losing leverage now that Apple and Google (Nasdaq: GOOG ) are taking steps to interact directly with customers. Need evidence? Look no further than Verizon (NYSE: VZ ) . The carrier has apparently agreed to pay Apple a premium to sell the iPhone.
5. Small tablets die a quick death, thanks to the iPad. Feature-rich tablets still aren't selling as well as the iPad, because at seven inches, they're undersized. Apple's genius was to make a big, glossy screen and let developers do the rest. Look for larger alternatives in 2011. Dell appears to already be working on one.
6. Chrome OS briefly gives netbooks a second life. Give Tim Cook and Steve Jobs credit. They knew netbooks would flame out, and they have. But if you take a look at Google's new Chrome Web Store, you'll find a number of apps designed for in-browser use -- exactly the sort of stuff we're hoping for from the Chrome OS. And exactly the sort of software that might make a lightweight, web-connected netbook perform like a heavyweight.
7. The iPad remains the best-selling tablet. Research says that today, Apple controls 90% of the market for tablet computers. That won't change much next year. Google's "Honeycomb," an Android-flavored tablet OS, appears on pace to ship after Apple introduces iPad 2 in February.
8. Android widens its sales lead over iOS. Call it fragmented if you want, but Google has a winner in Android. The OS is attracting not only developers but also millions of users via great handsets from HTC, Samsung, and Motorola. Adding Verizon will help Apple bring more users to iOS, but a rapidly increasing number of Android devices should more than offset Verizon's impact and hand Google new market share gains.
9. Google's fiber project changes net neutrality debate. Fast Internet access for all is important to the Obama administration and regulators. And yet Comcast (Nasdaq: CMCSA ) still wants the right to levy extra fees on heavy data users. Who's right? It doesn't matter. Google's move to place cheap fiber in select regions will make it economically impossible for Comcast or others to charge a premium for the Fast Web.
10. Netflix inks a streaming deal with a major movie studio. Thanks to a sublicensing arrangement inked years ago, Starz has helped Netflix deliver a lot of great movies over the web. Bears worry this was an outlier; I'm not so sure. Skeptics also said Steve Jobs could never get music labels to keep selling tracks for $0.99 each after the initial success of iTunes. You know what? He did. Similarly, I believe Netflix CEO Reed Hastings will convince at least one to sign a long-term deal. Studios need millions of users watching their content in order to make money online. Netflix offers the best platform for achieving that.
11. TiVo gets acquired. I've long believed that TiVo's (Nasdaq: TIVO ) patents have value. What's changing is that the company's box and software are worth less with the rise of Apple TV and Google TV. Someone will acquire TiVo's patents and kill everything else -- and in the process, alter the balance of power in the war of the living room.
12. Skype's IPO fails to impress. Much as I like Skype, there's nothing awe-inspiring about the software. It operates in the middle: good for consumers, good enough for businesses, but not great for either. With months to go before its IPO, there's plenty of time for Skype's squishy market position to get exposed, which it will now that Google Voice is improving and smaller alternatives such as 8x8 are winning converts.
Think I'm right? Wrong? Head on down to the comments box below and tell us how you see the tech industry unfolding in 2011.
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