I went out on a limb last year, predicting three things that would happen in 2012.
Going out on a limb -- or in this case three different limbs -- usually means eating a fair amount of crow later on. Well, this time at least, I can keep the crow on ice. All three things that I suggested would materialize this year did in fact take place.
This isn't an exercise in back-patting. I've made plenty of bad calls over the years. However, in the spirit of accountability it's always worthwhile to look back and see why things played out a particular way.
Let's dive right into the three predictions for 2012 that I made last December.
1. There will be cheaper iPads
It may seem silly these days, but there really was no way to get a new iPad for less than $499 a year ago.
"Apple's (AAPL 1.45%) been able to cling to its $499 to $829 price points through two generations of its trendsetting tablet," I wrote at the time. "The third time won't be the charm."
I went on to point out that I didn't think the iPad 3 would be cheaper.
"There are actually two paths for Apple to get a cheaper tablet on the market," I proposed.
It could do what it was already doing with its smartphones. Whenever a new iPhone comes out, Apple keeps cranking out earlier generations at lower price points. That's exactly what happened earlier this year, as the introduction of the new iPad saw the iPad 2 stay on the market at a new price of $399.
I also argued that Apple could go small, and that's just what happened several months later. The $329 iPad Mini was apparently a big hit this holiday shopping season.
Apple didn't have much of a choice in either call. The iPad remains the tablet of choice, but the proliferation of cheaper Android gadgets is gaining momentum.
2. Netflix will grow its subscriber base
This doesn't seem like such a brazen call now, but just remember where we were a year ago.
Netflix (NFLX +0.12%) suffered a surprising net sequential decline in subscribers during the third quarter of 2011 after the controversial call to force DVD renters to pay as much as 60% more if they wanted to keep streaming.
A lot of folks began writing off Netflix as a dot-com dinosaur, and the stock took a beating in 2011.
Well, it's a rosier outlook these days.
Netflix is nowhere near the all-time highs that it hit two summers ago, but the stock has risen by more than 30% so far in 2012. A major reason for the bounce is that the leading video service's rolls have grown since slipping during the latter half of last year.
Sure, DVD-based subscribers are fading. That's yesterday's media. Through the first nine months of 2012, Netflix has shed 2.56 million of its net DVD-based accounts. However, Netflix has more than made up for that with net streaming additions of 3.43 million domestically and 2.45 million internationally.
We can lament the high churn inherent with streaming services or the decimation of Netflix's average revenue per user, but in terms of popularity the service has never been bigger than it is right now.
3. Sirius XM will grow revenue by more than 10%
A year ago, Sirius XM Radio (SIRI +0.00%) was expecting revenue to grow 10% to $3.3 billion in 2012.
It seemed too low. For starters, Sirius XM was rolling out a 12% monthly rate hike in January. Sure, it wouldn't apply to most of its accounts right away, but it was something that would make revenue grow even faster than its user tally.
There were plenty of concerns at the time. Automakers were rolling, but the car industry that Sirius XM needs to keep growing would be run off the road if the economy didn't recover. Pandora (P +0.00%) was surprising investors with its profitability and its heady growth. Would folks who could stream Pandora for free in their cars keep paying for satellite radio?
What about that price increase? Wouldn't it result in a spike of cancellations? Raising rates at a time when automakers were making it easier to stream music on smartphones through car speakers was a gutsy strategy.
Well, revenue has climbed 12.5% through the first nine months of 2012, and analysts see that growth accelerating to 15% for the fourth quarter. Sirius XM has spent all year revising its guidance higher, and surprisingly enough it is on pace to add more net subscribers in 2012 than it did in 2011 despite the January increase.
Well played, Sirius XM.
