The 10 biggest tech stories of 2014

We are now more connected across more devices than ever before, and it’s profoundly shifting both the ways we consume and the ways we work.

The combination of cloud platforms, the mobile-first internet, big data and social networks have profoundly reshaped whole industries and businesses during 2014 in ways that would have been unimaginable just a few short years ago.

The rate of change in the tech industry is also rapidly accelerating. Especially for those outside the ICT sector, staying on top of it all can be difficult.

So SmartCompany spoke to three of Australia’s leading tech experts about the biggest tech stories of 2014, and the impact they had on businesses. They included David Markus, who is the founder of IT services company Combo, Bendalls Group managing director Fi Bendall, along with technology writer, consultant and Networked Globe publisher Paul Wallbank.

With 2015 just around the corner, along with even more rapid change in the tech world, here’s a look back at the 10 biggest news stories to shake the tech world in 2014:

1. Big new iPhones, iOS8 and the Apple Watch

As far as tech product launches go, you have to hand it to Apple.

The big announcements began in June, when the company unveiled the latest version of its operating system for the iPhone and iPad, dubbed iOS8, alongside the latest version of Mac OS X, known as Yosemite.

Key features were improved interoperability between iPhones and Macs through a feature called Handoff, as well as new home automation and health tracking frameworks, named HomeKit and HealthKit. However, for small businesses developing iPhone apps, the biggest innovation was a new programming language called Swift that made creating apps easier than ever.

iOS8 also saw Apple users finally gain access to features that long ago had become part of Android and Windows Phone, such as the ability to switch to a third-party keyboard app and a One Drive/Google Drive style cloud storage service.

The launch was followed up in September with the iPhone 6 and a new payment protocol, called Apple Pay, which will allow customers to pay for purchases directly from their iPhone.

However, the biggest announcement was the company’s confirmation it is set to join the wearables market with a new device called the Apple Watch. The company is planning to release the smartwatch during the first half of next year.

“It all became another predictable Apple launch, with leaked photos and plenty of ifs, buts and maybes going on. The usual lack of supply to demand (likely on purpose) and the launch felt somewhat mediocre from the early hip cool days of iPod Apple,” Bendall says.

“As for the products, I haven’t seen the iWatch, but I am interested in it, as it has the potential to go mainstream in 2015.

“I am certainly loving my iPhone 6 Plus. The age of the phablet has dawned well and truly. The iPhone 6 is certainly a good follow on to Samsung and will likely build the phablet market at a pace in 2015.”

2. Google was no sucker, it released Android 5.0 Lollipop

Of course, Google wasn’t about to take the situation lying down, launching some big announcements of its own at its annual Google I/O conference.

First, it unveiled a new version of Android – dubbed 5.0 Lollipop – as well as a new ‘design language’ called Material that will tie together the user interfaces for the company’s various apps, platforms  and services.

For small businesses with mobile apps, there were some big changes under the hood. Dalvik, the app runtime environment used in older versions of Android, got the boot in favour of the new Android Runtime Environment (ART). The change will mean better app performance without rewriting any code.

ART is also truly-platform, meaning developers will be able to write apps once and deploy them to a range of different devices – and it supports next-generation 64-bit processors too.

Google intends those apps to run on more devices than ever before. In the future, apps developed for Android will be able to run on its Chromebook series of tablets. Google also wants to see its Play store sell apps for wearables (Android Wear), cars (Android Auto) and smart TVs (Android TV).

However, the proliferation of new devices and a growing amount of information, both within our personal lives and within business, carries risks.

“The big thing really to consider is all of what we’re doing is increasingly interconnected, and the big thing a lot of people don’t think about is who has access to our information,” Markus says.

“We’re going to have a couple of nasty years in the cyber world before people begin putting serious defences up, in around 2017 or so.

“So in 2015, the big thing will be control of that personal data.”

3. 300 million smartphones sold in one quarter

Underlying both the announcements from Google and Apple is the rapid growth of the smartphone market.

According to figures released by IDC in August, the worldwide market for smartphones hit a record 301.3 million units worldwide during the second quarter alone. That’s up an astounding 25.2% from 261.7 million units in the same quarter a year earlier.

To put that number into perspective, the worldwide market for PCs stands at around 75.5 million units per quarter. Phrased differently, there are as many smartphones shipped worldwide each quarter than there are laptop and desktop computers in a whole year.

The overwhelming majority of smartphones shipped worldwide during the second quarter ran Android, with the platform claiming 255.3 million units and 84.7% market share. This was up 33.3% from 191.5 million units and 79.6% market share during the same quarter a year earlier.

By comparison, Apple and iOS smartphones now make up just 11.7% of the market off shipments of 35.2 million units, with the company’s share of the market falling slightly from 13% a year earlier.

In total, IDC estimates 1.288 billion smartphones will ship for the full year of 2014. Given the entire population of the planet Earth is estimated at 7.125 billion, it means one out of every six people alive on the planet will buy a new smartphone sometime in 2014.

In total, the estimate is that 1.06 billion Android smartphones, 178 million iPhones, 35 million Windows Phones, and 14 million others (including Firefox OS and BlackBerry) will be sold in total around the world this year.

What does 1.06 billion Android smartphones look like? Consider this: The entire population of the United States is estimated to be a comparatively tiny 316.1 million people.

That figure becomes even more extraordinary when you consider the rate of growth of the smartphone market. According to Google, the number of users to have actively used its Play store in the past 30 days has grown to over a billion people in 2014, up from 538 million last year, 233 million in 2012, and just 77 million in 2011.

And Australia is close to the vanguard of the change.

In fact, Australia comes in 13th in the world in terms of smartphone ownership rates, with 66.2% of Australians owning one. This is lower than the penetration rate for nations such as Singapore (85.3%) and South Korea (79.5%).

However, Australians are far more likely to own a smartphone than their cousins in the US (56.4%), Ireland (65.5%), Israel (62.4%), New Zealand (57.9%), Canada (57.4%), Germany (50.1%), France (48.8%) or Japan (46.1%).

The message behind all these numbers is very simple. Australia, and the world, has embraced mobile faster than any other technology in history. If your business is not effectively selling to mobile devices, you are missing out.

4. Satya Nadella became Microsoft’s chief executive

Microsoft named Satya Nadella as its new chief executive in February, after a months-long search for a replacement to his predecessor, Steve Ballmer.

Nadella is one of just three people to have held the position, along with Ballmer and the company’s co-founder, philanthropist Bill Gates.

Microsoft had previously competed in a range of markets, from video games to search engines and peripherals. However, its core focus had been on its Windows series of operating systems and its Office productivity package.

Under Nadella’s “cloud-first, mobile first” strategy, the company has shifted focus to its Azure cloud platform. It even opened its first Australian data centres.

On the device side, Microsoft completed its takeover of Nokia’s mobile phone division and mothballed the Nokia brand in favour of “Lumia”.

Microsoft made it easy to use products from one-time software rivals, such as SAP or Red Hat Linux, on its Azure platform. Apps that were once limited to Windows devices, such as Office 365, were released for free on Apple iOS and Google Android.

According to Markus, the five really big areas for change for business were in mobility, the cloud, big data, social and security. Under Nadella, Microsoft is setting itself up as a leader across these areas.

“[Nadella] has a clear focus on making Microsoft available to everyone. He’s targeting mobile devices and making the Microsoft platforms available to all devices with a screen smaller than 11 inches,” Markus says.

“What he’s trying to get is business systems on to mobile devices and on to the big focus, which is collaboration on data.

“This has been the year when the promise of mobility, cloud, social and data has finally been delivered, and Microsoft is trying to drive that trend.”

5. Alibaba’s massive IPO

A milestone event this year was the IPO of Chinese e-commerce giant Alibaba, which started trading on the New York Stock Exchange in September.

Upon listing, the company had a market capitalisation of $US168 billion, meaning the company was worth more than the value of eBay, Twitter and LinkedIn – combined.

“This is about Chinese industry flexing its muscle as it becomes more confident,” Wallbank says.

“And it’s not just Alibaba, companies like Xiaomi and Huawei want to compete in the US market, so it’s likely we’ll see more of it in the coming years.

“The real question is whether Alibaba can grow outside the PRC (People’s Republic of China), and that will be the story of 2015.

“Listing in the US means they will need to be a lot more disciplined in terms of their finances and reporting. But if they can combine that US financial discipline with the determined culture Jack Ma has set up, they could become a powerful force.”

6. Facebook’s massive $US16 billion takeover deal for WhatsApp

The Alibaba and Twitter IPO were not the only big money story in the tech industry this year.

Back in February, Facebook paid a startling $US16 billion to buy the mobile messaging service WhatsApp.

The social media mega-deal saw WhatApp investors gain $US12 billion in Facebook stock and $US4 billion in cash, alongside a further $US3 billion in restricted Facebook stock to WhatsApp’s founders and employees that will vest over the next four years.

It made Facebook’s later $US2 billion purchase of virtual reality headset maker Oculus look like a bargain by comparison.

According to Wallbank, the mega-deal has led to the price of tech stocks and startups – especially in the social media sector – becoming massively distorted.

“What happened there is the deal has further distorted a market that was already distorted by Facebook’s earlier purchase of Instagram. A lot of people now assume tech companies are worth a lot more than they are because of this deal,” Wallbank says.

“It’s had an unfortunate effect on the startup scene. People now think that a $20 billion exit is normal, not exceptional. So you’ve had more companies setting up startup incubators as a result.”

7. Profit pressure causes changes at Twitter

When it comes to heightened expectations following the WhatsApp mega deal, Wallbank says no company felt it more keenly than Facebook’s social media rival Twitter, which listed on the New York Stock Exchange at the end of last year.

“Twitter has a market value of $US50 billion, but it’s just not worth that much. That then puts a lot of pressure on their management from banks and investors to justify their valuation,” Wallbank says.

“Really, their lives would be a lot easier if it were valued more realistically at $US10 billion.”

The heightened revenue pressure has led to Twitter adding a range of new features during the year in a bid to grab users and revenue, with some drawing a better reaction from small business users than others.

In a win for small businesses, Twitter opened its promoted tweets function to small and medium enterprises in Australia, having previously required a minimum spend of $5000 to use the ad platform.

In contrast, a redesign in April, aimed at making the social media service look more like Facebook, drew a hostile reaction from many users.

The most ominous came in early December, when Twitter announced it would use its iPhone and Android apps to snoop on the other apps installed on your device.

“Twitter went public one year ago and the company has more than doubled its revenue to $361 million but its losses have grown to $175.5 million,” Bendall says.

“It hasn’t been all plain sailing, losing five product heads, carrying many inactive users with usage declining. Twitter attracts a higher level of investor scrutiny than many of its contemporaries.”

8. Silicon Valley’s gender diversity problem

In 2014, Silicon Valley’s gender and ethnic diversity issues came under the microscope like never before.

In May, Google released figures showing the tech giant remains a male-dominated workplace, with women making up just 30% of its workforce. The situation is not much better when it comes to ethnic diversity, with 61% of its staff identifying as white.

Similar figures were later revealed by LinkedIn, Apple, Twitter and a number of other tech giants.

Bendall says 2014 was the year the tech industry’s outdated, misogynist views about women were exposed.

“From Microsoft chief executive Satya Nadella’s gaffe about women’s pay, at a women’s tech conference, Nadella said that women not asking for a raise is ‘good karma’ and that ‘the system will give you the right raises as you go along’,” Bendall says.

“Then add to this being the year that Apple and Google decided to offer to freeze women’s eggs, so they can work longer before having children and this became the year of exposing the tech industry’s bias.

“It got confirmed by Hired.com survey that found the average minimum pay for female tech workers is $107,000, 13% less than the $124,000 that men earn. Women in tech ask for salaries that are lower than their male counterparts: $114,000 versus $124,000, the report said.

“To top it all off, our own Australian technology entrepreneur and former Victorian MP Evan Thornley says he ‘stuffed up’ when he told a Sydney technology start-up conference that women were ‘often relatively cheap’ to hire compared to men. Whilst he may be correct, he certainly wasn’t in the right.”

9. Mozilla unveils a $US25 smartphone

The Mobile World Congress in Barcelona is the world’s biggest annual trade fair for the telecommunications industry. Taking place in February, it brings together the world’s telcos and mobile phone carriers with app developers, mobile phone makers and network equipment firms.

The world’s largest mobile phone maker, Samsung, used this year’s event to unveil its latest flagship, the Galaxy S5.

However, the talk of the show was a new smartphone unveiled by Firefox developer Mozilla, aimed at emerging markets. What made this device stand out was not any particular feature, but rather its price.

This Firefox phone costs just $US25 outright.

Wallbank says low-cost smartphones have the potential to have a big impact on the industry.

“We’re beginning to see this trend, through there’s quite a way to go before we get to $25 [outright] smartphones in Australia,” he says.

“This makes smartphones a lot more accessible. You can give out these smartphones to kids and employees and if they lose one, it might be a bit of a hassle, but it’s not nearly the same as if they lose an $800 iPhone.

“So smartphones become disposable, a bit like what we’ve seen with USB sticks. Once, USBs were expensive, and now companies just give them away in showbags.

“In turn, apps become more accessible because the phones they run on are cheaper.

“You’re really seeing this having an impact in international markets, where Xiaomi is the third biggest smartphone maker worldwide and Lenovo is in the top five of international markets.”

10. The fall of Samsung?

The year started off with so much promise for Samsung Electronics, which launched its latest flagship smartphone, the Galaxy S5 at the Mobile World Congress in February.

However, things took a turn for the worse for the South Korean conglomerate in May, when chairman Kun-hee Lee suffered a heart attack. This meant Samsung Group immediately began putting into action a complicated succession plan designed to see the company handed to Kun-hee’s children, Jay-yong, Boo-jin and Seo-hyun.

In August, the Seoul High Court upheld a 2011 ruling that Samsung Electronics is responsible for the deaths of two of its semiconductor plant employees from acute myeloid leukaemia in 2006 and 2007. While the company issued a formal apology, the lslow pace of negotiations led to former employees picketing the company’s global headquarters, claiming as many as 98 deaths from cancer.

That was just the start of the company’s troubles.

In July, IDC released figures showing total worldwide smartphone shipments in the July quarter reached 295.3 million units worldwide, up 23.1% from 240 million units for the same quarter a year earlier. Overall, smartphones running Android claimed 87.1% of the global market.

Samsung remained the world’s largest smartphone manufacturer, with a global market share of 25.2% off 74.3 million units. However, this was down by 3.9% from 77.3 million a year earlier – in a growing market. By contrast, second-placed Apple saw its shipments growing to 35.1 million units, up 12.4% from the same quarter a year earlier.

The maturing market and intensifying competition saw Samsung’s profits fall by 59.65% to 4.1 trillion Korean won ($4.35 billion) in the third quarter, down from 10.16 trillion a year earlier.

Later in the year, the company launched a virtual reality headset and updates to its Galaxy Note series of phablets. However, both devices were overshadowed by the launch of the iPhone 6 and Apple Watch.

In response to the challenges of succession and falling profits, Samsung Group sold off its petrochemicals and defence affiliates. It listed its cloud computing affiliate, Samsung SDS. It initiated a complex stock split at the Lee family’s main holding company ahead of an IPO. Several chief executives and a whole app development division were culled.

However, all the corporate manoeuvring in the world won’t help the company much if it doesn’t come up with some compelling products in 2015.

It seems not every business in the tech sector is going to have a Merry Christmas this year.