Sunny Gupta at the WTIA predictions dinner

Microsoft will buy Nokia in 2011. Amazon.com will spin out its Web Services unit. And don't look for Facebook to conduct an IPO next year. Those were some of the bold predictions last night as the Washington Technology Industry Association hosted their annual predictions dinner at Herban Feast in Seattle's SoDo neighborhood.

I had the pleasure of moderating the panel, which included venture capitalists Mark Ashida of OVP; Chris DeVore of Founder's Co-op; Greg Gottesman of Madrona Venture Group; and entrepreneurs Michael Buhrmann of Finsphere and Sunny Gupta of Apptio. We covered a lot of ground in just over an hour, chatting about the future of technology and where things are headed in 2011.

The panelists were unanimous in their opinion that Facebook would remain a private company in 2011, and most agreed (other than Buhrmann) that Steve Ballmer would hold on to the CEO reins of Microsoft. There was also a consensus that Verizon would be the next U.S. carrier to get the iPhone, and that Seattle area companies such as F5 and Concur Technologies were good buyout candidates. Read on for excerpts of the discussion.

Mark Ashida on taking Microsoft private: "Actually, I think if that company was private, you would see a lot more innovation ... and it would be transformed."

Greg Gottesman on Microsoft's predicament: "Historically, Microsoft has been incredible at being the low cost player. Whether it was SQL or Office, they came in and were the low cost provider. And now they have ceded that to Amazon in Web Services and they have ceded that to Android in the phone market and my sense is that they are going to be second fiddle in a lot of these businesses... So, strategically, in 2011 I think they have to do some bold thhing. They have to make some bold changes -- exit some businesses, refocus some things, because again, I think being stuck in that middle position is a losing (position)."

Chris DeVore on Microsoft being a follower: "Microsoft is so strong in the enterprise. CIOs are so used to dealing with Microsoft, and yet Windows Phone 7 is all about the consumer .. and it is almost like they want to be like an iPhone.... The company is so good in one area, why would you want to walk away from your strengths. Why don't you stick with what you are good at? Why don't they buy Concur, which is a great little company that is all about a very boring business, enterprise expense management?"

Mike Buhrmann on Microsoft buying Nokia: Microsoft has been working on mobile for 15 years and "they still haven't been able to get it right. So, one of the things that I would predict in 2011, is that Microsoft is going to outsource their mobile business, and buy someone, maybe someone like Nokia.... My experience with them in the wireless space is that they just don't get it. It is just too far from them to go in terms of being able to anticipate some of these things at a visceral level, where they really understand the nature of the beast."

And on whether Microsoft can get to 10 percent market share with Windows Phone 7: "I don't think so.... I don't think they have the DNA to do it. I respect the company tremendously, and I think they have done some amazing things. But in this particular area it is just a different type of industry with a different technology and they have some real amazing competitors with Apple to come out the way it did and then with Android to come out right behind it to change the game again, I think they are not going to be able to break that trend."

Sunny Gupta on other Microsoft buys: "I think the two companies (Microsoft) should buy are SAP and Accenture.... That is really a way for them to really get a step forward in the enterprise."

Gottesman on whether Steve Ballmer will stay CEO: "I think he will still be CEO at the end of 2011. From a financial standpoint, just revenues and profits, he's had an incredible run. Every single time, the profits go up and the multiple goes down, so he's got to be just hating Wall Street."

M&A and IPOs:

Gottesman on F5 and Concur: "I predicted F5 last year would get bought by Cisco, and I am going to keep on predicting that.... Someone mentioned Concur and that is sort of another undercovered, incredible local software-as-a-service company. Someone would be extremely wise that wanted to get into this new software-as-a-service business in a big way to go after those guys."

Panelists at the WTIA predictions dinner.

DeVore: Amazon could buy a company like Netflix to bolster its digital video experience.

Gupta on spinning off Amazon Web Services: It is low margin business, but the business model is different from online retailing. It would allow AWS to make some technology-specific acquisitions and maintain its leadership position. "That kind of stands out to me as a strategic move."

Ashida on M&A: "Companies have a lot of money. Buyers have a lot of money, so we will continue to see that next year.... Actually, one of the interesting things this last year is that some very traditional industries, like storage and security, have (seen) huge exits."

Gottesman on M&A: "Mark makes a great point. A lot of these bigger tech companies just have massive amounts of cash on their balance sheets. Massive.... My sense is, at some point they are going to have to spend -- and this isn't millions -- it is tens of billions, hundreds of billions of dollars on the balance sheets of these tech companies. Ultimately, people say that companies could give larger dividends, and I just don't think tech companies like to do that. So, I think they are going to go and continue to buy things and that should be good for the market."

Ashida on IPOs: "If we had five (IPOs) ... in total that would be an incredible ... year for Seattle. I think last year there were 12 (IPOs) across the whole industry, that's across the U.S..... So, five in Seattle? We should all be cracking Champagne next year."

Gupta on his M&A plans: "Apptio's prediction is we are not selling." [Laughs]

STARTUPS:

Gupta on why entrepreneurs should think big: "I think the startup community, many of the entrepreneurs need to think big. I think you got to think big, and go big, raise a lot of money and just go big. That's the only way we are going to grow the next 10 Isilons in this economy and that's good for everybody."

Chris DeVore responds: "I would rather see dozens of small outcomes.... The billion dollar outcomes are going to be small... I would rather see a dozen smaller outcomes than a billion dollar business.... I would like to have hundreds of startups in Seattle, many of them fail, but that entrepreneurial energy and ideas and creativity and this thinking" sparks more innovation "and rather than have a couple of big pockets of risk-taking where a couple of people get rich, I'd rather have dozens (of entrepreneurs) ...who have some success and create a generation of entrepreneurs who want to go back and do it again and want to write checks" and help the next generation.

Gottesman on going big versus lean startups: "We need people like Sunny (Gupta) who are going to build the next multi-billion dollar company and I also think we need to have things like TechStars.... One of my predictions is that I think one of the TechStars companies will get acquired for a nice exit in 2011 and I think that spurs more (money) in that program and other programs like it."

Chris DeVore, left, makes a point as OVP's Mark Ashida looks on.

Gottesman on the outlook for venture capital in 2011: "I am bullish.... I actually think there's a lot of M&A activity, and there seems to be a window that could change on the IPO front. I don't feel the venture capital model is broken. There are certain types of companies, for companies like Apptio, the venture capital model works brilliantly. For Isilon, it worked brilliantly. And for other companies it doesn't work as well.... I think this is a great market. There isn't an overabundance of capital here.... If you are asking me overall, my sense is that (the VC business) will shrink a little bit because the returns haven't been there over the last 10 years."

FACEBOOK, GOOGLE AND TWITTER:

Buhrmann on Facebook's challenge: "One day they are going to overreach. They are going to try to do too much, and they won't be competent in everything. You see a lot of things out there -- while every company has its time in the sunshine and it could last for a couple years, five years, 10 years -- but eventually they get to this saturation point where they overreach and then there is someone that innovates, which is really the exciting thing, because we don't know where that innovation will come from.... Many companies have held that lead, and lost it where innovation comes in and things that you haven't even thought about start to emerge."

Gottesman on Facebook's outlook: "It is more likely 10 years from now that we will be talking about Facebook in the same way we are (now) talking about Yahoo .... and that's what is so great about technology and what keeps us all in jobs."

DeVore on Google: "It wouldn't surprise me if five years from now, when people think of Google, they think of Android and mobile."

Ashida on Twitter: "I think the real danger for Twitter is that they just become a feature on Facebook."

STOCKS: (I asked each of the panelists to offer their perspectives on stock prices of some big tech companies).

Microsoft (trading at $25): Gupta ($28 to $30); Ashida ($27); DeVore (up 1.6 percent); Buhrmann ($35); Gottesman ($28)

Amazon (trading at $158 at the time): Gupta (up 20 percent); Ashida ($200); DeVore ($175); Buhrmann ($175); Gottesman ($185)

Google (trading at $583): Gupta (flat or down five percent); Ashida (inaudible) DeVore ($650); Buhrmann ($600); Gottesman ($600-$650, depends whether they come out with a "self-driving car.").

[Photos via Tim Reha. More photos here.]