Ringing in a New Year With Predictions for Hot Software Sectors

12/28/09Follow @dclerke

The constrained venture capital markets and difficult environment for IPOs, will make 2010 a big year for M&A transactions. The leaders in hot new software sectors will be swallowed up at a premium, along with entrepreneurs tired of running on the treadmill as they get closer to retirement, will drive more M&A transactions than ever. I see these theses trends emerging:

1. Emergence of “Social Commerce”—The continued propagation and expansion of social networks open a significant opportunity for new forms of online commerce. Expect to see integrated commerce applications embedded into the social networks that offer simplicity, security and a unique and integrated understanding of the social network participants. This will drive new forms of commerce with remarkable results in 2010 and beyond.

2. Greater Performance for Online Advertising—The downturn in gross online ad spending has “weeded out” many undifferentiated online advertising businesses, but has also stimulated ad technology companies that make a measurable difference in converting ads to sales. Expect to see breakthrough technologies in the areas of ad placement and dynamic creative that will improve relevancy and yield from the historical conversion rates.

3. Better Online Privacy Controls and a Move to Mobile Devices—Today’s myriad of online entertainment and productivity applications, combined with the move to greater “computing on the go” capabilities, have created a privacy conflict between web application providers and users. The application providers want to understand and expose data to improve online presence which, in many cases, is in conflict with individual privacy concerns. The situation is even more concerning for children and with mobile devices. Today’s litany of online games and social communities accessible through phones can result in personal information getting into the wrong hands. While some applications prevent this on PC’s, mobile devices are open terrain. Parents, parents, corporations and users will embrace new forms of privacy controls on mobile devices in 2010.

4. Broad Adoption of Energy Management Applications—The concentration on clean technology and green energy has resulted in a new class of applications driving energy efficiency. Buildings account for about one-third of all energy use. It is estimated that 30 percent of this is wasted. In order to control energy use, you must measure energy consumption. Many sensor-based monitoring applications will be developed for this purpose. In 2010 you should expect to see a new breed of energy-oriented analytic applications that will help improve efficiency in the home, office, and in energy-intensive locations like data centers.

5. Software to Manage Food Safety–There is a growing desire to get better information about what we are eating. Not just nutritional labels in the grocery store, but a complete history of food products covering the product from the farm to the kitchen. Consumers want to know more about the food we ingest, including where it comes from, potential exposure to pesticides, oversight of properly controlled transportation and more. To date we have relied on regulatory agencies for such oversight, but the system is far from perfect, as we witnessed with many food scares in 2009. Expect consumer-oriented applications on the web to play a bigger role in 2010 and beyond.

6. Technology to Manage Water Use—With only 1 percent of the world’s fresh water available as drinking water, water capture, management and retention will become a big focus in 2010. Again, this requires measurement and testing that involves sensor-based applications, collaborative systems among agencies and better storage facilities. Expect to see highly integrated and analytical web applications that will be facilitated by wireless and mobile computing.

[Editor's Note: As the decade comes to an end, we've asked Xconomists and other technology leaders around the country to identify the top innovations they've seen in their fields the past 10 years, or predict the top disruptive technologies that will impact the next decade.]

Dennis Clerke, managing director and co-founder of DaggerBoard Advisors, has played a key role in numerous early-stage Southern California software companies. Follow @dclerke

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  • http://www.prestondata.com Kevin Paxton

    Curious if you have names of companies you’ve reviewed under item # 2. Always looking for ways to make our marketing efforts better and easier to manage.

    Thanks,
    KP

  • http://www.daggerboardadvisors.com Dennis Clerke

    Kevin,

    There are some real interesting ad technologies you may want to check out.

    One that I thought was very interesting from a venture backed Bay Area company called NetSeer http://www.netseer.com that uses a map of the concepts across the web to optimize online ad perfromance.

    A couple others from 2 companies named Tumri and Teracent (just acquired by Google) that assemble ad elements based on profiles of the targets

    Regards

    Dennis

  • http://www.electronicink.com Oliver Franklin

    Do you have the names of some companies reviewed for #5 & 6.
    Happy New Year!
    oliver

  • http://www.daggerboardadvisors.com Dennis Clerke

    Hi Oliver,

    For #5 you may want to look at Delta Tech http://www.deltatechsoft.com They are concentrating on fresh fruit and produce safety or Trace Gains concentrated on seafood

    For #6 have a look at Ecolayers
    http://www.ecolayers.com

    Dennis

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  • Thomas

    Regarding the emergence of Social Commerce (#1), do you see a discernible leader or well-positioned forerunner in this space?

    Thanks and Happy New Year,

    Thomas

  • http://www.daggerboardadvisors.com Dennis Clerke

    Thomas,

    With respect to leadership – this is still a new sector. Facebook is clearly the dominant platform and has enabled social commerce with Facebook connect. They have also invited 6 select partners into the facebook gift shop. The only one that has true gifts (not virtual or digital) is a company called Real-Gifts…

  • http://www.software-marketing-advisor.com Joanna Lees-Castro

    An interesting list. I definitely agree with #1 (emergence of “social commerce”)… and it’s not just the main social networking players, but the software providers who leverage a social aspect within their application, or integrated with a social site.

    In fact, I think all three of the first items on your list (social commerce, improved online advertising, and mobile privacy) are quite inter-related, in the sense that growth of the first will tend to drive or accelerate growth of the others.

    Joanna

  • Dave Watson

    I am pretty surprised to see the same old things people said last year. But on the other hand, 2010 looks like a watershed year for niche software for fun and personal interest on tablets and iPhones from Apple and Google.