Twelve years of making annual predictions and never have I bombed as badly as I did in 2002. The HP-Compaq deal was "dead, dead, dead," I told you. EMC would sell out to IBM. Voice over IP was poised for a breakout year and Cisco would bid for Nortel.
What was I thinking?
Well, it was that kind of year. High-tech stocks were cheap, but no one had money for acquisitions. It was hard to forecast technology winners in a year when everyone seemed to lose. The HP-Compaq deal looked like roadkill and then Carly Fiorina.… Well, what can I say? She pulled off a miracle.
Chastened but not daunted, I regrouped and vow to do better this time. Here are 10 bold predictions for 2003. Consider them and then let me know your forecasts.
Victory over viruses -- The year just past may be remembered as the last one in which viruses inflicted heavy casualties. Sure, Klez and Nimda extracted their pounds of flesh, but the year was the quietest one yet for major new infections. Two reasons: corporate IT organizations have finally gotten religion about stopping the rogue programs before they hit the server, and new antivirus technologies are much more sophisticated. While this doesn't end the threat of outbreaks, it will at least mitigate the damage. The more serious new threat is spam, which seems to multiply with Moore's Law-type vigor. No one's figured out a really effective way to combat that scourge, and there are few promising technologies on the horizon.
A spending rebound of surprising strength -- It is darkest just before the dawn, and even as it appears that the tech industry has settled into the permanent doldrums, demand rebounds with surprising strength. The reason? Computers actually wear out. And with many corporations having invested practically nothing in new hardware since the late '90s, the cranky servers and desktops demand replacing. Look for spending to be concentrated in hardware and network devices, which grow old most quickly.
Linux disappoints -- Linux got "da buzz." What is hasn't got is "da profits." Despite continued strong growth projections, Linux's market share remains tiny next to Windows'. The difference, you see, is that Microsoft has an army of independent software vendors willing to sing Windows' praises (and reap fat co-op advertising dollars). Linux is championed by just a few big hardware vendors trying to sell servers. And by the way, all but one of them have substantial Windows businesses as well. Users love Linux, but without the backing of the big marketers, it will continue to act mainly as a spoiler to Microsoft. Which isn't a bad thing to be.
A breakout year for Wi-Fi -- Ten years from now, your kids might point to an Ethernet cable and say, "Mommy, what's that?" The 802.11-based Wi-Fi standard had a great year in 2002 and will have an even better one in 2003. Security problems are being addressed, prices are plunging and wireless network cards are becoming standard-issue equipment in notebook PCs. What will really drive Wi-Fi is hardware makers' bundling of wireless networking into their handheld computing devices. Just think of it: next boring meeting, you can pull out your Palm and tap into ESPN.com. Yee-ha!
WorldCom sells off MCI, emerges from bankruptcy -- Amid the harsh glare of accounting scandals, what's often overlooked is that WorldCom is one of the largest infrastructure companies in the world, with 70 data centers and more than 3,800 Internet points of presence. There will be growth in that business as the economy recovers. But the sleazy, low-margin long-distance business just doesn't make sense in this product portfolio. CEO-elect Michael Capellas is an enterprise guy who knows what motivates corporate customers. Look for him to use the magic of Chapter 11 to shake off creditors, ditch the consumer business, scale down and rebuild as a more focused company. And bet on him also to discard the baggage-laden WorldCom name.
XML everywhere -- The XML data interchange standard has made it across the chasm and will soon be widely implemented as a native file format in databases and documents. This just makes sense. Document incompatibility has been a bugaboo for many years. XML's most visible contribution to the computing world will be to eliminate the countless filters and translators that users must buy and use to get one program to interact with another program's output. This is the year XML becomes ubiquitous.
Time Warner sells money-losing America Online -- The ritual destruction of the Internet bubble culminates with old-world Time Warner selling or spinning off the financial boat anchor called AOL. What a mess. Two years ago, the $100 billion deal was the defining victory of new media over ink on paper. Today, AOL is a pricey Internet service provider (ISP) that some analysts have suggested may actually have negative market value to the combined companies. AOL's turnaround plan is to become a broad-based content provider, a strategy that no one has been able to execute well. With broadband eating away at the ISP business and advertising revenues plummeting, you have to wonder what AOL can do to get customers or investors excited again. It's all the more embarrassing in light of AOL's having boasted so loudly about its victory just two years ago.
IBM buys Sun -- Stronger than the traditional rivalry between these two tough hardware makers is their mutual hatred of Microsoft. Sun is no longer strong enough to challenge Microsoft alone, but the IBM-Sun combination would have the keys to the Java kingdom, a No. 1 share in servers, an industry-leading services business and a compelling Linux strategy. Even at $3 a share, Sun is pricey, but IBM has more than enough resources to pull it off. New IBM chief Sam Palmisano has said that the company will be acquisitive. Does he have the gumption to take on what would be a wrenching assimilation of Sun?
PCs crack $300 price barrier -- Brand new PCs were advertised for $399 this year, and it's only a matter of time before a desktop computer becomes a giveaway in a Cracker Jack box. You'll continue to pay a premium for Dell, but a host of Taiwanese white box manufacturers are crowding under Dell's price umbrella. Don't expect to get much for $299, but a 1 GHz processor, 128M bytes of memory and 15G bytes of disk is likely. Four years ago, that would have cost you two grand.
The year of instant messaging -- Hey, I have to get at least one prediction right. Instant messaging (IM) is already entrenched in businesses and homes. Corporate IT departments are scrambling to get a handle on it. A flock of vendors will compete to secure, audit and archive the flood of IMs that are flowing around the Internet. IBM/Lotus has the early lead with Sametime, but Microsoft will argue that IM should be part of the operating system and it's probably right. Will the courts agree? Expect IM to open a new front in Microsoft's ongoing battle with its competitors and regulators. Either way, expect IM to go mainstream very soon.
What do you make of these predictions? On the mark or far off-base? E-mail me at firstname.lastname@example.org and let me know your thoughts.
FOR MORE INFORMATION:Look back on Paul Gillin's 2002 forecast
Dig Deeper on Security Industry Market Trends, Predictions and Forecasts