We've reviewed a year's worth of coverage and data to put together this list of our favorite predictions for the forces that will shape mobile in 2014.
Mobile is a sprawling ecosystem that intersects with virtually every industry — from banking to entertainment — but these are the events and trends that we think will be relevant across the largest number of businesses and have the most tangible impacts.
Where possible, we've linked to our past coverage of these trends.
1. Beacons will be the fastest-growing mobile hardware market in 2014, and anchor the Internet of Things. Think of beacons as 21st Century intercoms, nodes in an indoor communication system centered on mobile devices. These low-cost pieces of hardware are poised to transform how retailers, event organizers, travel businesses, transport companies, and educational institutions communicate with audiences. They utilize low-energy Bluetooth connections — which are much more effective indoors than GPS, Wi-Fi, or NFC — to deliver signals, data, and messages directly to a smartphone or tablet. Beacon systems will probably be the first Internet Of Things-type device to gain wide acceptance, since they have such a low barrier to entry in cost terms. This technology is already revolutionizing how large retailers think about communicating with their customers, and Apple has a head-start in this area with its iBeacon platform.
2. Next year will also be the year of Smart TVs. They will be the second-fastest growing hardware market after beacons, and take over the living room with app-driven audiovisual entertainment systems. We estimate that there are already over 280 million active Internet-connected smart TVs and set-top devices (i.e., Roku, Apple TVs) in the world, and forecast that the number will almost double to over 400 million in 2014. As these devices become more common in the average household, we expect more content providers to develop apps for smart TV platforms. Traditional pay TV providers will load up their cable boxes with copycat app-like experiences, but consumers will begin to migrate to the superior quality platforms provided by Apple, Samsung, Google, and others.
3. In mobile marketing and advertising, 2014 will be all about personalization. Two themes dominated mobile advertising in 2013 — native advertising, often in the form of in-stream social media ads; and programmatic, or the shift to automated buying and selling of display ad impressions. But both these trends were hardly exclusive to mobile. They were also important in the world of traditional online ads. Personalization on the other hand has particular value in mobile contexts for capturing the attention of on-the-go smartphone users. There's so much that can be done on mobile with personalization. Ads can be tailored dynamically based on different kinds of data, including past Web browsing, interests, demographics, and location. A sports retailer might target women skiers in the northeast United States. The ad might show skis of different price points based on an individual's purchase history. If real-time bidding is brought to bear, the ad could show snow flurries whenever it's snowing in the user's area. But personalization isn't just for display ads. Retailers and brands will use their own and third-party data to personalize mobile coupons, notifications, and mobile commerce offers.
4. TV Everywhere-style apps will proliferate, and bring slices of TV ad budgets into mobile. Pay TV channels, cable companies, wireless operators, content studios, websites like YouTube and Yahoo, over-the-top video services — in short, everyone who's anyone in TV and video — will compete to bring premium video content to tablet and phone screens, mainly through apps. There will not be much clarity in this market in 2014, but there will be more and more dollars up for grabs, and a lot of experiments to try to determine who can peel audiences away from competitors as viewing habits shift to mobile.
5. The main app stores will see big shifts in organization and infrastructure. The app store model is currently broken and could eventually sap innovation away from mobile, mainly because developers have few avenues to monetize apps — beyond advertising and in-app purchases. In 2014, the main app stores will begin giving developers and publishers more tools and the ability to bill customers for different things: updates, upgrades, monthly or annual subscriptions — maybe even bug fixes. Consumers begin to get accustomed to the idea that they need to pay for improved experiences that require a lot of developer time and effort. Either that, or see a lot more ads. Finally, Google and Apple will enter into a race to improve discovery in their app stores, so that their customers are able to find apps they're interested in much more easily.
6.The smartphone platform war becomes a three-horse race between Apple, Google, and Microsoft. BlackBerry will fade into irrelevance, and HTML5 — which is less a platform and more a collection of Web standards for app-like mobile sites — will have a tough year. Google in particular but Apple in its own way will continue to dominate. The big story will be Microsoft riding resurgent Lumia and Surface sales to a distant, but solid third place position. Microsoft is already gaining momentum after nearly doubling its share of the global smartphone market in the course of 2013, thanks primarily to record shipments of Lumia smartphones, which grew 200% year-over-year in the third quarter. On the tablet side, the Surface had a disastrous start in 2013, but after some rebranding and serious price cuts, sales have rebounded. The new Surface tablets will prove popular in 2014 with enterprise customers. Amazon will continue to be relevant in the tablet market, and may release a smartphone.
7. BlackBerry is reborn as a provider of mobile services. There is actually ample space in the enterprise mobile services market for a player of BlackBerry's size.BlackBerry will pivot its focus away from its consumer-focused devices and operating system and toward enterprise services such as mobile device fleet management, secure corporate mobile email and messaging, and enterprise app platforms. Meanwhile, BlackBerry will work with partners like Foxconn to manufacture its devices for emerging markets where its handsets are still popular, and hang on to its legacy consumer services like BlackBerry Messenger, which is now available on iOS and Android and will come pre-installed on a new LG smartphone.
8. 2014 will be the year that low-cost, high-quality smartphones begin to dominate handset sales. By low-cost, we mean smartphones that are sold unlocked and unsubsidized for around $200, like the $179 Moto G from Motorola. Let's remember: the smartphone market isn't a subset of the flip phone-dominated hardware market any longer, smartphones are the mobile phone market. Smartphones will virtually wipe out feature phone sales in the very near future, thanks to the rapid decline in the average selling price or ASP of smartphones globally and because of heavy uptake in emerging markets. The decline in ASP is driven mainly by the low-cost Asian manufacturers, like ZTE, Huawei, Lenovo, Micromax, and Xiaomi. But there will be room for competition on the basis of quality, too. Premium device manufacturers (e.g. Apple and Samsung) will wade deeper into the market for mid-range or low-cost devices.
9. Tablets are no longer considered "lean-back" media consumption devices, and evolve into productivity tools that replace laptops completely. In 2014, tablets will move from being considered medium-sized portable Netflix and social media screens to efficient, handy productivity tools for business and creative applications. Part of this will happen thanks to attachable keyboards such as those championed by the Surface, or modular Bluetooth keyboards. But the real key will be the improvement of tablet-optimized business software — like Microsoft's Office suite or Adobe's creative apps. Google, Microsoft, and Apple will all try to push tablet-friendly productivity software. But startups will try their hand as well. Whoever wins this war will have a leg up on the competition for the huge enterprise market as tablets come to replace laptops for blue- and white-collar workers. We may see the emergence of a new Office-like software suite that remains dominant for many years to come.
10. The wrist wins the market for wearable computing as Apple introduces an innovative wrist-worn product: We have already estimated that smart wristwear will account for 85% of all wearable device unit shipments in 2014. We think that Apple's new supposed iWatch device will actually be something very unexpected — perhaps a collection of modular and customizable wristwear – that goes above and beyond what we've seen so far in wearable computing. It may come in many different colors and styles, and offer different modules depending on wearers' interests: different watch-faces, fitness trackers, social media alert lights, etc. We're speculating, but Apple's hiring of several luxury and fashion-brand executives this year and Tim Cook's cryptic comments that "the wrist is interesting," but that young phone users already have a watch (i.e. their phones) lead us think that Apple's wrist computer will be much more than a watch.
11. That said, Google Glass will make its consumer debut and see modest success thanks to smart apps that are native to the device. Before Glass hits the mainstream, Google will need to address three major issues: price, privacy, and style. Already, it has become clear that Glass will be compatible with prescription lenses, and that future iterations will likely be difficult to distinguish from conventional eyewear. And Google is no doubt striving to get the price down from the current $1,500 for the beta version. The privacy issue is trickier, but will fade as technology and society adapt to the age of smart eyewear. Perhaps a blinking light will serve to warn people when Glass wearers are taking photos or video. Google has also opened Glass to developers, and there's a lot of opportunity for Glass-exclusive apps that show users information but meanwhile allow them to continue using their hands for whatever they're doing: Google itself has promoted apps for bike riding, cooking, and real-time translations. The Oculus Rift, a headset that blocks out reality and will likely be used mainly for gaming, might also have a big year.
12. The large wireless operators will continue to consolidate into regional and global super-carriers. Despite the recent gains made by some upstart smaller carriers like T-Mobile USA, and the retrenchment of Vodafone and Deutsche Telekom, the wireless market will see more and more consolidation globally, especially since slowing subscriber and data revenue growth is causing large carriers to cast about for new growth markets or for acquisition targets, often in order to avoid being acquired themselves. A a handful of giant carriers — AT&T, Verizon, Softbank, America Móvil, Deutsche Telekom, VimpelCom, NTT DOCOMO, Orange, Telefónica, Bharti Airtel, China Mobile — are in the running to become more, not less dominant.