2011 will be a year of economic recovery and continued drama in Silicon Valley, marked by the hyped battles of Apple vs. Google, Google vs. Facebook, and Oracle vs. the rest of the enterprise world. Without further ado, here is the 4th annual edition of my technology predictions.

The Groupon Juggernaut Will Slow Down
Groupon is quickly becoming the Sarah Palin of the technology world. It has its haters (Forrester’s Sucharita Mulpuru), doubters (Flybridge Capital’s Jeff Bussgang) and fans (FM’s John Battelle) like the former vice presidential candidate. Everyone seems to have an opinion of Groupon, whether through their own personal experiences or spurred by a coffee talk at Coupa Café in Palo Alto. Being from Chicago, where the company is based, I wanted to be a fan, but I have strong doubts on the sustainability of its business model. It will remain successful, but will it be the next Amazon or “Google of e-commerce” as many people predict? I just don’t see it. Maybe its critical mass and huge funding rounds will sustain its market share for a couple years, but the competitive barriers of entry are too low, so I predict its revenue growth will begin to slow towards the end of 2011. A few years from now, this darling of the ecommerce space will be a fading memory.

Virtual Reality Will Be Hot Again … Thanks to Kinect
If Microsoft’s Kinect was only around during the hype of Second Life, it could have helped the struggling virtual world become a mass market player. As Kinect rockets past 8 million sold after two months, I agree with Jaron Lanier’s view that it brings us closer to a true avatar experience, which he discussed at the November 16th, 2010 TEDxSF event. The possibilities are exciting when you consider an early hack of Kinect for World of Warcraft and the variety of games we’ll see once Kinect comes to the PC.

Kinect won’t just make virtual reality hot again in 2011, but a permanent fixture in the technology landscape. Moving beyond dance and sports games, Kinect will allow for more immersive virtual worlds that were previously limited to keyboard strokes. Interactive virtual learning environments? Virtual tours of The Coliseum? With Dora the Explorer? Kids will go crazy. Virtual gladiator games? Imagine virtual dating through Kinect. Maybe go on an initial date from the safety or comfort of your home? We might be a few decades closer to a Star Trek Holodeck or X-Men Danger Room than you think.

Tablet Market Explodes
The tablet market’s already on fire, but it will continue its explosive growth. Apple’s iPad really created this market, but now everyone and their grandmother wants a tablet. Dell, Viewsonic, NEC, Toshiba … probably even Wal-mart, Disney, and McDonald’s will be coming out with their own tablets (just kidding).    The features and services will only continue to get better, whether through Apple or Google’s Android (disclosure: my wife works on the Android team; nothing related to this article was discussed with her). It will be interesting to see tablets targeting certain verticals, such as children or NFL coaches.

Mobile Commerce Poised for Takeoff in the U.S.
As a frequent visitor to Korea, I’ve been waiting for this moment in the U.S. For a few years now, South Koreans have conducted mobile commerce through USIM embedded RF (radio frequency) services on subways, taxis, fast food restaurants, and other locations. Credit card companies have over 120,000 merchant terminals (RF readers) throughout Korea. This has led to almost 60% of mobile subscribers using mobile payment services, nearly 15% conducting mobile banking, and 8% substituting it for their credit cards. The next stage is the deployment of dual USIM and NFC (Near Field Communications) chips in mobile devices, which will allow for two-way communications versus one-way. While Korea has led the way, mobile commerce is present in Japan and some European countries, but the U.S. has lagged behind.

2011 is the year the U.S. steps into the arena. Google’s Nexus S handsets all came with a NFC chip, and we can expect Apple to have NFC chips in its next-generation iPhones along with some big retail partnership announcements. RIM and others will be hot on their tails, but all this really depends on the number of merchants and big retail chains signing up for these payment services. Lastly, an x-factor and potential catalyst is the continued growth of location-based services and their convergence with commerce. Facebook, Foursquare, Booyah, and others can be huge drivers for mobile commerce’s growth in the U.S.

What are some of your predictions for 2011?  Please feel free to share them in the comment section below.

Bernard Moon is co-founder & CEO of XS Groupe, an online private sale startup. He blogs at Silicon Moon.

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