Crystal Ball Gazing
Over at PBS.org, Bob Cringely has put up his predictions for the technology industry this year. I have posted the highlights in italics and my comments below:
- Microsoft's entry into the anti-virus and anti-spyware businesses will be a disaster for users. This is based on everything I know about Microsoft, having watched the company for almost 28 years. They will make a big fanfare, spend a lot of marketing dollars, but in the end, the company simply won't be able to keep up with the demands of keeping virus signatures current, which isn't the real point of this gambit, anyway. There is so much to this story and so much that I could write that I think I'll do so next week, and just move on to the next prediction.
It reminded me of something an IRA spokesperson said after the RUC had prevented a bombing. We only have to be lucky once, you have to be lucky all the time. This is the situation that Microsoft has created for itself.. Whilst it looks to plug security holes, some of the worlds most talented code heads hunt for new ones to prove that it is nothing but a software collander.
- Carrying over from last year, I predict that Burst.com will beat Microsoft in their current lawsuit. But to avoid having to eat crow again over timing, let me put this in greater context. IF a trial actually takes place, as it is now scheduled to do this summer, Burst will easily win. Microsoft is at a disadvantage already as a bully. Burst will probably get Judge Motz to tell the jury that Microsoft deliberately destroyed evidence, and it doesn't hurt, either, that Burst is just plain right on all counts -- Microsoft DID violate their patents, DID violate Burst's non-disclosure agreement, DID attempt to illegally put them out of business, and DID attempt to control the market.
Of course, Microsoft might settle before trial, but at this point, I don't think that is likely out of simple arrogance on Microsoft's part. Microsoft is furious with Burst for the little company's continued survival, plus Microsoft is listening to the wrong lawyers on this one. So Burst will win on some or all counts ,and I expect the damage award to be in the billions. Of course, Microsoft will appeal. But the key difference between this case and other Microsoft cases is that once Burst wins, Real Networks and Apple Computer, both of which are also infringing Burst's patents (along with TiVO and a bunch of other companies), will immediately buy Burst licenses, throwing $100+ million into Burst's coffers and leading to everyone else EXCEPT Microsoft taking a Burst license, too. At that point -- if it goes that far and Microsoft is that stupid -- Redmond won't be able to risk not having a Burst license and will settle, too. Only by waiting so long Microsoft will have blown any number of advantages it could have had. Typical.
This is deja vu, Microsoft has a proven history of software piracy and IP theft. Stack software compression was one of the most high profile cases, it ran for years and by the time that the court had provided a remedy the damage had been done. I do not have the same faith in the process of law that Bob does.
- Apple will take a big risk in 2005. This could be in the form of a major acquisition. With almost $6 billion in cash, Steve Jobs hinted to a group of employees not long ago that he might want to buy something big, though I am at a loss right now for what that might be. Or Apple might decide to throw some of that cash into the box along with new computers by deliberately losing some money on each unit in order to buy market share.
We might see that as early as next week with the rumored introduction of an el-cheapo Mac without a display. The price for that box is supposed to be $499, which would give customers a box with processor, disk, memory, and OS into which you plug your current display, keyboard, and mouse. Given that this sounds a lot like AMD's new Personal Internet Communicator, which will sell for $185, there is probably plenty of profit left for Apple in a $499 price. But what if they priced it at $399 or even $349? Now make it $249, where I calculate they'd be losing $100 per unit. At $100 per unit, how many little Macs could they sell if Jobs is willing to spend $1 billion? TEN MILLION and Apple suddenly becomes the world's number one PC company. Think of it as a non-mobile iPod with computing capability. Think of the music sales it could spawn. Think of the iPod sales it would hurt (zero, because of the lack of mobility). Think of the more expensive Mac sales it would hurt (zero, because a Mac loyalist would only be interested in using this box as an EXTRA computer they would otherwise not have bought). Think of the extra application sales it would generate and especially the OS upgrade sales, which alone could pay back that $100. Think of the impact it would have on Windows sales (minus 10 million units). And if it doesn't work, Steve will still have $5 billion in cash with no measurable negative impact on the company. I think he'll do it.
Apple does need to take a risk, I am not sure that what Bob outlines is the risk. The reason why I think that Apple needs to take a risk is two-fold. Firstly, Apple survives and grows by being a hard target for the tech sector to catch: think the iMac or the iPod. Secondly, the Street now has a head of steam in a belief about sustainable growth at the company, this is not going to happen when the iPod looks as if it may have its marketshare hollowed out by the lemming-style approach of other PC manufacturers commoditising the market with inferior substitute products.
- The Recording Industries Association of America will continue to sue customers while their business slowly dissolves. The big threat here isn't file swapping, but affiliate programs like Apple's iTunes Affiliate Program that I am sure will be shortly copied by all the online music stores. These affiliate programs turn bloggers into shills and blogs into record stores, with the result that record company's last source of power -- marketing clout -- is taken away. This will take time, but it is the beginning of the end for old-style record companies.
- WiMax will be a huge story by summer, but widespread adoption of the wireless networking technology will take at least another two years. In the meantime, though, nobody will make money on WiFi, but it will become ubiquitous anyway, especially with the arrival of 802.11n.
WiMax has to go through all the stages on the Hurwitz hype curve yet
- VoIP will continue to shatter the telephone industry with the arrival of WiFi phones, which might finally be the killer app for hotspots. Eventually, all the backbone suppliers will figure out that VoIP is their salvation and will either start their own VoIP companies or ally with big VoIP players.
This is based on the assumption that the mobile phone companies are just going to sit there and take it like a bitch? Maybe in America.
- The trend of repurposing Linux-based consumer electronics devices through revised firmware will expand dramatically as people realize the cost-benefit advantage, AND nerds realize that they can sell reprogrammed WRT54GS stuff all over town and over the Internet. Just look at Sveasoft's James Ewing, sitting on a little island off the coast of Sweden serving firmware upgrades to 44,178 users who each put $20 per year into his PayPal account. Do the numbers. The next killer app in this space will be a cut-down version of the Asterisk Open Source PBX. Imagine a $100 box that manages your telco, VoIP, and mobile phone lines, making them appear as a virtual three-line phone with common dialing rules and always choosing the cheapest route for each call.
Hardware hacking does not need to happen just on Linux boxes, free software tools from chip manufacturers and cheap inventory / equipment on eBay will facilitate a hacker economy on a wide range of smart devices like the iPod.
- Desktop Linux will finally make some serious inroads as Linspire sets the trend for how to make Linux more user-friendly. There will undoubtedly be other players in this space, but they'll just be emulating Linspire (formerly Lindows). Now if Linspire could only manage a one-click installation of MythTV.
- And speaking of MythTV, 2005 will start to show some innovative online video initiatives. Don't expect this until late in the year, but the networks are starting to figure out that control of the broadcast schedule is being taken over by the viewers in a TiVO world, while producers with big libraries are starting to realize they don't need a network to sell bad TV. Since this is a tide they can't stop, the networks will have to decide how best they can surf it. Expect some interesting attempts this year, most of which will fail.
- In 2005, the major beneficiaries of the Peoplesoft-Oracle merger will be SAP and IBM, NOT Peoplesoft or Oracle customers, despite anything Larry Ellison says ("Oversupport" Peoplesoft customers? -- sheesh).
- Cisco will rediscover its ability to buy and assimilate startup companies since it REALLY needs a shot of new ideas and has a ton of cash to spend. At least, I hope they will.
- There is no evidence that Sun will change its current course, which is inexorably downward. I know Jonathan Schwartz thinks I'm crazy, but so far I am more right than he is, and hear no reason coming from him why that should change.
This is a real shame as Sun has been a force for good within the tech sector, from Java and Jini to providing a less vendor centric alternative to Microsoft Passport
- While Intel thinks its 2004 course corrections will do the job, I just don't see much in the new product roadmap to get excited about. AMD will continue to grow at Intel's expense. And keep an eye on IBM's PowerPC introductions later in the year that should really give Intel fits, especially if they are accompanied by substantial OEM agreements.
- Two thousand five will NOT be the year for UltraWide Band (UWB) networking or Power Line Networking, but both will do really well in 2006.
The dirty nature of electric power supplies in terms of mains spikes may see power line networks put off for years after 2006. Between research and hardware costs, it could be as cost effective to expand the DSL or cable modem network instead.
- Sony's PS3 will be delayed yet again, giving a real advantage to xBox2 IF Microsoft can get it out the door this year in volume.
Sony's wider strategy seems to be in some disarray, the universal media player properties of the PSP have not been all that well received thought it is a good mobile games machine by all accounts. The Connect music service has been slated and Sony is looking to throw its lot in with Microsoft according to some reports. Blu-Ray has a serious hurdle to adoption, because of the DVD patent pool tax and the declining margins in manufacturing DVD discs, Sony may be the only existing legal disc manufacturer who can afford to tool up for Blu-Ray. Most of the rest will look to use existing equipment to support HD-DVD instead.
Over at PBS.org, Bob Cringely has put up his predictions for the technology industry this year. I have posted the highlights in italics and my comments below:
- Microsoft's entry into the anti-virus and anti-spyware businesses will be a disaster for users. This is based on everything I know about Microsoft, having watched the company for almost 28 years. They will make a big fanfare, spend a lot of marketing dollars, but in the end, the company simply won't be able to keep up with the demands of keeping virus signatures current, which isn't the real point of this gambit, anyway. There is so much to this story and so much that I could write that I think I'll do so next week, and just move on to the next prediction.
It reminded me of something an IRA spokesperson said after the RUC had prevented a bombing. We only have to be lucky once, you have to be lucky all the time. This is the situation that Microsoft has created for itself.. Whilst it looks to plug security holes, some of the worlds most talented code heads hunt for new ones to prove that it is nothing but a software collander.
- Carrying over from last year, I predict that Burst.com will beat Microsoft in their current lawsuit. But to avoid having to eat crow again over timing, let me put this in greater context. IF a trial actually takes place, as it is now scheduled to do this summer, Burst will easily win. Microsoft is at a disadvantage already as a bully. Burst will probably get Judge Motz to tell the jury that Microsoft deliberately destroyed evidence, and it doesn't hurt, either, that Burst is just plain right on all counts -- Microsoft DID violate their patents, DID violate Burst's non-disclosure agreement, DID attempt to illegally put them out of business, and DID attempt to control the market.
Of course, Microsoft might settle before trial, but at this point, I don't think that is likely out of simple arrogance on Microsoft's part. Microsoft is furious with Burst for the little company's continued survival, plus Microsoft is listening to the wrong lawyers on this one. So Burst will win on some or all counts ,and I expect the damage award to be in the billions. Of course, Microsoft will appeal. But the key difference between this case and other Microsoft cases is that once Burst wins, Real Networks and Apple Computer, both of which are also infringing Burst's patents (along with TiVO and a bunch of other companies), will immediately buy Burst licenses, throwing $100+ million into Burst's coffers and leading to everyone else EXCEPT Microsoft taking a Burst license, too. At that point -- if it goes that far and Microsoft is that stupid -- Redmond won't be able to risk not having a Burst license and will settle, too. Only by waiting so long Microsoft will have blown any number of advantages it could have had. Typical.
This is deja vu, Microsoft has a proven history of software piracy and IP theft. Stack software compression was one of the most high profile cases, it ran for years and by the time that the court had provided a remedy the damage had been done. I do not have the same faith in the process of law that Bob does.
- Apple will take a big risk in 2005. This could be in the form of a major acquisition. With almost $6 billion in cash, Steve Jobs hinted to a group of employees not long ago that he might want to buy something big, though I am at a loss right now for what that might be. Or Apple might decide to throw some of that cash into the box along with new computers by deliberately losing some money on each unit in order to buy market share.
We might see that as early as next week with the rumored introduction of an el-cheapo Mac without a display. The price for that box is supposed to be $499, which would give customers a box with processor, disk, memory, and OS into which you plug your current display, keyboard, and mouse. Given that this sounds a lot like AMD's new Personal Internet Communicator, which will sell for $185, there is probably plenty of profit left for Apple in a $499 price. But what if they priced it at $399 or even $349? Now make it $249, where I calculate they'd be losing $100 per unit. At $100 per unit, how many little Macs could they sell if Jobs is willing to spend $1 billion? TEN MILLION and Apple suddenly becomes the world's number one PC company. Think of it as a non-mobile iPod with computing capability. Think of the music sales it could spawn. Think of the iPod sales it would hurt (zero, because of the lack of mobility). Think of the more expensive Mac sales it would hurt (zero, because a Mac loyalist would only be interested in using this box as an EXTRA computer they would otherwise not have bought). Think of the extra application sales it would generate and especially the OS upgrade sales, which alone could pay back that $100. Think of the impact it would have on Windows sales (minus 10 million units). And if it doesn't work, Steve will still have $5 billion in cash with no measurable negative impact on the company. I think he'll do it.
Apple does need to take a risk, I am not sure that what Bob outlines is the risk. The reason why I think that Apple needs to take a risk is two-fold. Firstly, Apple survives and grows by being a hard target for the tech sector to catch: think the iMac or the iPod. Secondly, the Street now has a head of steam in a belief about sustainable growth at the company, this is not going to happen when the iPod looks as if it may have its marketshare hollowed out by the lemming-style approach of other PC manufacturers commoditising the market with inferior substitute products.
- The Recording Industries Association of America will continue to sue customers while their business slowly dissolves. The big threat here isn't file swapping, but affiliate programs like Apple's iTunes Affiliate Program that I am sure will be shortly copied by all the online music stores. These affiliate programs turn bloggers into shills and blogs into record stores, with the result that record company's last source of power -- marketing clout -- is taken away. This will take time, but it is the beginning of the end for old-style record companies.
- WiMax will be a huge story by summer, but widespread adoption of the wireless networking technology will take at least another two years. In the meantime, though, nobody will make money on WiFi, but it will become ubiquitous anyway, especially with the arrival of 802.11n.
WiMax has to go through all the stages on the Hurwitz hype curve yet
- VoIP will continue to shatter the telephone industry with the arrival of WiFi phones, which might finally be the killer app for hotspots. Eventually, all the backbone suppliers will figure out that VoIP is their salvation and will either start their own VoIP companies or ally with big VoIP players.
This is based on the assumption that the mobile phone companies are just going to sit there and take it like a bitch? Maybe in America.
- The trend of repurposing Linux-based consumer electronics devices through revised firmware will expand dramatically as people realize the cost-benefit advantage, AND nerds realize that they can sell reprogrammed WRT54GS stuff all over town and over the Internet. Just look at Sveasoft's James Ewing, sitting on a little island off the coast of Sweden serving firmware upgrades to 44,178 users who each put $20 per year into his PayPal account. Do the numbers. The next killer app in this space will be a cut-down version of the Asterisk Open Source PBX. Imagine a $100 box that manages your telco, VoIP, and mobile phone lines, making them appear as a virtual three-line phone with common dialing rules and always choosing the cheapest route for each call.
Hardware hacking does not need to happen just on Linux boxes, free software tools from chip manufacturers and cheap inventory / equipment on eBay will facilitate a hacker economy on a wide range of smart devices like the iPod.
- Desktop Linux will finally make some serious inroads as Linspire sets the trend for how to make Linux more user-friendly. There will undoubtedly be other players in this space, but they'll just be emulating Linspire (formerly Lindows). Now if Linspire could only manage a one-click installation of MythTV.
- And speaking of MythTV, 2005 will start to show some innovative online video initiatives. Don't expect this until late in the year, but the networks are starting to figure out that control of the broadcast schedule is being taken over by the viewers in a TiVO world, while producers with big libraries are starting to realize they don't need a network to sell bad TV. Since this is a tide they can't stop, the networks will have to decide how best they can surf it. Expect some interesting attempts this year, most of which will fail.
- In 2005, the major beneficiaries of the Peoplesoft-Oracle merger will be SAP and IBM, NOT Peoplesoft or Oracle customers, despite anything Larry Ellison says ("Oversupport" Peoplesoft customers? -- sheesh).
- Cisco will rediscover its ability to buy and assimilate startup companies since it REALLY needs a shot of new ideas and has a ton of cash to spend. At least, I hope they will.
- There is no evidence that Sun will change its current course, which is inexorably downward. I know Jonathan Schwartz thinks I'm crazy, but so far I am more right than he is, and hear no reason coming from him why that should change.
This is a real shame as Sun has been a force for good within the tech sector, from Java and Jini to providing a less vendor centric alternative to Microsoft Passport
- While Intel thinks its 2004 course corrections will do the job, I just don't see much in the new product roadmap to get excited about. AMD will continue to grow at Intel's expense. And keep an eye on IBM's PowerPC introductions later in the year that should really give Intel fits, especially if they are accompanied by substantial OEM agreements.
- Two thousand five will NOT be the year for UltraWide Band (UWB) networking or Power Line Networking, but both will do really well in 2006.
The dirty nature of electric power supplies in terms of mains spikes may see power line networks put off for years after 2006. Between research and hardware costs, it could be as cost effective to expand the DSL or cable modem network instead.
- Sony's PS3 will be delayed yet again, giving a real advantage to xBox2 IF Microsoft can get it out the door this year in volume.
Sony's wider strategy seems to be in some disarray, the universal media player properties of the PSP have not been all that well received thought it is a good mobile games machine by all accounts. The Connect music service has been slated and Sony is looking to throw its lot in with Microsoft according to some reports. Blu-Ray has a serious hurdle to adoption, because of the DVD patent pool tax and the declining margins in manufacturing DVD discs, Sony may be the only existing legal disc manufacturer who can afford to tool up for Blu-Ray. Most of the rest will look to use existing equipment to support HD-DVD instead.
