What to expect in tech this year: Jim Donnelly: Ottawa Business Journal
January 10, 2011

Five of Ottawa’s gizmo gurus give their take on what’s in store

OBJ: Some have predicted 2011 will be the year of social site Quora, or that context-based applications or web-based TV will finally come into their own. Which do you think will be the hottest technology trends of 2011?

Topics :
Best Buy , Kik , RIM , Ottawa , U.S. , Canada

TOBIAS LUTKE, SHOPIFY: I was going to mention Quora, because it’s a brilliant website. But I don’t know if it will have mainstream appeal. The technology I’ve seen lately which I thought was most interesting is an application called Word Lens (software that translates words inside of images). And that’s such a game-changer for me, and I don’t know if we’ve thought enough about what this implies.

Obviously the tablet is now out, and now it’s a question of who will make the most of it. But lastly, I hope people figure out (the medium of) television, because it’s starting to seem really tired. I did a poll in our company and only 45 per cent of our employees have TVs at home. Most people here just watch everything online. So the question is, is the television itself running out?

LUC LEVESQUE, TRAVELPOD FOUNDER: Certainly, I think there’s some value to Quora and I think it will tip this year. But did iPad tip last year? I don’t know. I keep having to remind myself that tablets haven’t been around for even a year yet. And I think actually this year will be the year of the tablet, and it will change how we do day-to-day computing.

CLAUDE HAW, OCRI CEO: It’s hard to predict, but I think we’ll see intense competition in the whole tablet scene, which will still be a very significant trend going into 2011. I think it will be a very hot area. And in some ways, this past year was just the test run for tablets. The volumes are still in the millions, and the potential is there for hundreds of millions.

JAMES KNUDSEN, CRYPTOCARD: I’d say the cloud. But it’s going to be a long time evolving, because it is not a singular thing. It’s almost like a new infrastructure, and that’s not something that can just be flipped on. The cloud is a natural evolution of the Internet from a repository of data and information, to a repository of data, information and the apps that process that data and information.

JOHN REID, CANADIAN ADVANCED TECHNOLOGY ALLIANCE: We’ve got tablets now, we’ve got all the devices, and what’s cool and what you get excited about now is this or that application – something that can help you navigate the traffic from Ottawa south to downtown, or that gives you a tour of Paris from your handheld.

OBJ: What will the business climate will be like in the tech sector in 2011, and in particular in your sector (if you run a company)?

LUTKE: A big change over the past year was the changing of Section 116 (a cross-border tax issue), which means U.S. venture capitalists can more easily invest in Canadian companies now. And there were a few companies which have recently benefited from that, including ours (Shopify completed a $7-million funding round with U.S. venture capitalists in late December). And people are wondering if (local companies) can’t now aim a bit higher again, because companies in Ottawa have lately gotten really good at bootstrapping, but now there are more alternatives.

HAW: There are lots of interesting trends: the whole mobile applications area is one of significant focus. And Ottawa is very well-positioned in the mobile apps space. It’s looking like the number of companies in Ottawa has increased over the past year, and a lot of that has been driven by a wave of digital media, app creation, and content creation companies. Clean tech will also continue to do well. The price of energy and oil is expected to continue to rise, which will drive that sector.

KNUDSEN: The potential for new wireless apps is really almost limitless, but what remains is the uncertainty on data pricing – the prices in Canada are either too high to begin with, or very low but with a huge (penalty) if you go over your bundle allotment. And the biggest example is on foreign roaming. Imagine you’re want to do a (business-to-business) wireless app for tracking vehicles. Well, that’s great. But the vehicle has to stay in the U.S. or Canada, or all bets are off – a $20 monthly plan becomes much more than that, multiplied by however many trucks you have.

REID: Last year we saw organizations doing a great deal of thinking about their technology plans, and this year we will see some of these plans put into action. And a big part of that is putting in place social media to advance their businesses. A lot of companies have been evaluating the business potential of this, but I think in 2011 we will see the full deployment of this type of technology.

I also think this year we’ll see significant growth in the use and deployment of mobility applications. If you don’t have a mobile app, you should get one quickly because more and more of your customers are going to be in the app world.

LEVESQUE: Traditionally in our space, companies will see revenues increase 30-per-cent year-over-year just based on the growth of the sector. So it’s a great space, and it’s back to where it was (before the recession). And I think things like E-commerce on the phone - shopping on Amazon while you’re in the Best Buy - those are all new tools that didn’t exist before. So there’s all this growth in mobile and web that is still accelerating.

OBJ: What do you see as the main drivers for growth in your industry sector, or for Ottawa’s tech scene overall, over the next 12 months?

LUTKE: It’s the same in my sector as in all of technology, and it’s clearly mobile. It’s absolutely ridiculous how quickly mobile is growing. We actually ran the numbers recently, and we saw that in the last 12 months the amount of Shopify sales done on mobile platforms went up 6,500 per cent. And it shows no sign of stopping, either. People are extremely optimistic about mobile but I don’t think they are optimistic enough, from what we’re seeing. Look at the Kik (Messenger) guys in Waterloo - they managed to get to a 3-million-person user base in 28 days.

HAW: For the overall technology sector I think the big growth opportunities are in Asia. Most of our sectors have shown tremendous resiliency in Asia. And the fact that we have a significant focus on wireless and mobile apps, and IT in general, the investment in those areas in these countries is substantial and encouraging.

KNUDSEN: I would say that wireless becomes the core of the mobile worker, and we will see the continued rise of the mobile office. Just look at some of the capabilities on these tablet computers - it’s one thing to read a Word document on the tiny screen on your BlackBerry, but look at what is available on these tablets. And at the end of the day, wireless is what enables the utility of these tablets.

Having said that, the move toward cloud computing is going to continue to be huge. It still has a ways to go, but more and more you see companies moving towards a single repository for documents.

REID: I think it’s important to mention that we were hit hard by restructurings, so there has been a significant decline in employment in Ottawa in some sectors. But that will be offset by other sectors - look at the firm Purple Forge, and you’re seeing some significant opportunity with mobility applications. And look at the RIM world, in terms of automotive and networked vehicles. And you look at Rod Bryden and some of the clean tech areas. These are areas which are going to be a restatement of Ottawa as a centre of expertise.

LEVESQUE: There will be steady growth from the market growing, but also growth from new platforms and the opportunities that come with those. All the new competitors coming out in the tablet space, for example, is pretty exciting and will revolutionize some spaces.

OBJ: Have you seen any indications on what the financing climate will be like in your sector, or for Ottawa’s tech scene overall, in 2011?

LUTKE: I think so, but a different kind of VC. The money we raised was true growth capital and I think that’s where the focus of VC will be, because the costs of starting a business have declined so much. I was at a meetup recently in Toronto and it seems like many VCs, especially the newer VCs, are starting to embrace this new role for venture capital. There are also a series of really interesting seed funds that have started up, and many of them are structured in a way that they surround the entrepreneurs with experienced people who can give good advice.

HAW: We’ve seen the financing climate begin to thaw a bit, and 2010 is looking to be around triple the investment of what 2009 was. They are still very small numbers but money is starting to flow into good companies. But I think companies who have clear sights on who their customer is, and who are starting to build momentum, are able to get the growth capital they need. The Ontario Emerging Tech Fund is starting to have an impact as well.

KNUDSEN: I’m not so sure. I was just reading the paper today, and they were talking about some of the big recent technology valuations like the deal with Facebook, which valued it at 25 times sales. What kind of madness is behind that kind of thinking? The big attention is towards these really big deals, but for the average company I think the formula is to start small and build your business on sales.

REID: I think there’s been a realization in terms of priority, that capital for growth has to be number one after customers. And we’ve had some restrictive rules removed such as Section 116, but there’s still a long ways to go in terms of providing capital particularly to mid-tier companies.

LEVESQUE: I do think it will get better this year, and things are getting pretty frothy with some of the valuations out there. And a lot of that has to do with the fact that it’s cheaper to launch a startup now, and there’s more money available because you don’t need as much to get started.