2009: Year of mergers, platform changes and conservation
Analyst Opinion - 2009 is shaping up to be a nasty year, in fact it looks like 2009 and 2010 will be years we'll want to look back on as briefly as possible. But these years will also clear out of lot of the dead and dying companies that have been clogging up the market. I believe the U.S. and the technology industry will both emerge stronger than they went into this cycle. Let's look at some of the trends that likely will dominate 2009 and a few of the bellwether companies that currently define the tech market.
The Holy Grail for home media is being able to move your content around the house and from device to device easier than you can currently move a CD, DVD, or cassette tape. It still amazes me that the misguided efforts surrounding DRM have effectively created some of the strongest incentives for pirates and disincentives for legitimate buyers at the same time. But the music industry has begun to get a clue and stepped away from DRM altogether and the movie industry has started to open up, albeit more slowly, as well.
The combination of mergers, financial pressure, and several years of folks working on this problem will come together in 2009 and by the end of the year we will have the first affordable whole house media solutions that rival Kaleidescape capability. It is interesting to note that Kaleidescape, even with nose bleed prices, grew 747% in 2008 and made the Inc. 500 showcasing just how much demand there is for this kind of capability.
A number of companies are in play for this, including HP, Cisco, Apple, Microsoft, and a few smaller firms I can't chat about until after CES. Cisco coined the term "Visual Networking" and it 2009 someone, maybe even Cisco, will make it real.
Notebooks give way to always connected netbooks
This is already happening and recently I received an HP Mini 1000 with an up-level configuration that still prices out under $500 (starting price is $359). This class of product comes into its own in 2009 when backend services arrive and a current-generation operating system, Windows 7, shows up to make it shine. Netbooks are hampered at this time, because they are running XP, the on-line services are either too expensive (WAN) or not yet widely deployed (WiMax).
This all changes in 2009 as WAN services will have to drop in price to compete with lower cost and increasingly widely deployed WiMax services and Windows 7, which is being vastly slimmed down to run on netbooks, arrives in final form. Many believe Apple will shortly enter this space and that the next major version of Google's Android will target this form factor as well. But it will be the web services and online application stores rivaling what Apple is doing on the iPhone and what Google is doing with the G1 that will put these head to head with smartphones and on a path to truly displace notebooks.
Some of the most interesting 2009 netbooks will actually have graphics by Nvidia or AMD's ATI division as casual gaming and media consumption quickly moves to this platform. By the end of the year, a number of them may outperform their much more expensive notebook rivals as a result.
Large companies, in an effort to contain costs, are already requesting corporate configurations of Netbooks, which need things like fingerprint readers and trusted platform modules to comply with security requirements. Even IBM is behind this platform.
Smartphones battle with netbooks
Smartphones continue to grow in the market but their growth is offset by netbooks as well, because they are focused on a similar always connected opportunity. Netbooks are more suited for things like email and web browsing. There are simply too many smartphone platforms and that will likely change by the end of 2009. Though, initially, it will go the wrong way with Palm releasing their highly anticipated Nova.
For the first half of the year, the battle will likely be between RIM, Apple, Google, and Palm with Microsoft re-entering in late 2009 with Windows Mobile 7. I believe Symbian and LiMo will fall out.
Linux in volume on the desktop
What is kind of interesting with netbooks so far is that the Linux configurations have not done well with vendors reporting some of the highest return rates they have ever seen in a PC-like product for those running this platform. It continues to amaze me that vendors think they can give consumers who have no software skills Linux and not expect the product to generate large returns. Google, with Android, and Phoenix Technology with Hyperspace, is doing to Linux what Apple did with UNIX and that is the only proven success model for a platform like this.
Having said that, both Google and Phoenix Technology will introduce their Linux platforms in 2009 though details will have to come later. The success of both will be predicated on how well they emulate Apple. We started covering Hyperspace over a year ago, because we viewed it as potentially disruptive.
In the end, the result is the same, much more Linux (even though it won't look like Linux) on the desktop.
Energy conservation in everything
One of the really big 2009 trends are products that are vastly more energy efficient. A number of firms have been, largely because of high energy prices during the last several years, making significant advancements in energy conservation technology and we'll see the results of this next year even though energy costs are falling. This trend will bring products that actually do not use power when they are off and lower power bills for those us that can afford those new products.
Many of them may actually be co-funded with government incentives as the U.S. moves aggressively to become energy independent again. While other green efforts will likely fall off in the face of poor funding, the one area that is likely to continue strong is energy conservation and that will help us end 2009 on a high note.
Overall, we will end 2009 far more connected and far more mobile than we entered it but, with far fewer companies and with the very real possibility that we will finally be able to watch our video content where and when we want. It will be a buyer's year and by the end of it, most of the marginal companies will have gone away. But it will help set up the next decade as a potential golden age for technology that will likely be worth waiting for.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.