Tech Predictions for 2005

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[2004 Prediction
Results | Predictions
for 2005]

This year will be spectacular.

For both the technology industry
and consumers (who will finally
begin to see some payoff in their
long and patient wait for the technologies
of wireless, broadband, conversion
and consolidation to pay off). It
is the year in which consolidation,
convergence and competition will
finally push us into new, interesting
and cost-effective technologies.

For the past five years, since Congressional
meddling and corporate greed pushed
us into the biggest economic downturn
in decades, we have waited to see
what happens when the tech sector
bounces back. So far, the wait hasn’t
been worth the cost of admission.

But this year is going to be different.
Here’s why:

• Consolidation. Almost all of the software used by accounting and finance offices is owned by four companies — Microsoft, Best, Thomson and Intuit. This is forcing the remaining independents to innovate in order to avoid being absorbed. Innovation brings new technologies and new uses for existing technologies. This is the year it will break loose. Need evidence? Look at the proliferation of ASP-based online services for accountants.
• Convergence. The idea that people would want or use a computer in the living room is a stupid idea and always has been. Microsoft, AOL and a dozen other companies have lost fortunes trying to get people to merge the TV and the PC to
  no avail. Sadly, they should have
  waited. 2005 is the year it will
  begin to happen for real.
• Competition. War is breaking out everywhere. No, I don’t mean the war on terrorism (though that certainly is enough to distract me on most days). I mean the war between the telephone companies and the cable companies. The war between satellite and cable. The war between entertainment companies and network companies. Competition for your office technology dollars is heating up, and that means more services and lower prices.

2005 marks the tenth year that The
CPA Technology Advisor (formerly
The CPA Software News)
has published this list of predictions
for the coming year. And as we have
each year previously, we will consider
the top 10 trends in technology
in the coming year. But first, here’s
a recap of how last year’s
predictions went.

2004 Predictions & Results

The problem with an election year
in the middle of a shooting war
is that these two events don’t
leave much room for any other news.
And so it was with the technology
biz, which in 2004 suffered one
of its most lackluster years ever.

Sure, sales rebounded a bit. Michael
Dell once again proved he is a financial
genius by stomping all over Wall
Street’s expectations. Google
went spectacularly public, opening
the speculation market once again
for an Internet stock bubble. And
most of the rest of the tech sector
showed solid enough improvements
in performance to cautiously suggest
that life will return to normal.

But in 2004, there just wasn’t
much of interest happening in tech.
No really new interesting hardware
or software. No explosive trends
— if you don’t count
the bloggers, and I don’t.
It was a boring year, one of those
things you just suffer through on
your way to an explosive year of
innovation.

Why not count the bloggers? After
all, I’ve lavished praise
on the technology, and noted with
approval the rise of some very good
accounting blogs. But this is hardly
new technology; we had comment boards
this good and better back in the
’80s. Worse yet, the election
blogs (and the post-election nut-case
blogs) have raised serious doubts
about how useful these things will
be in terms of credible news and
information. Time will tell, but
I expect most blogs to be abandoned
within a year or two as being too
much work for too little return.

So how did our technology predictions
for the year turn out? Depressingly
average as well. We generally have
an 80 to 85 percent accuracy rate,
and this year was no exception:

2004 RESULTS

PREDICTION:
America Online will be purchased
by Microsoft.

ACTUAL RESULTS: Not. This is embarrassing. I think after three years, I’ll stop predicting this will even happen.
SCORE: 0 Points

PREDICTION: The spam situation will get
better.

ACTUAL RESULTS: Marginal, but true due to filtering.
SCORE : 1 Point

PREDICTION: Music downloading sites will
blossom.

ACTUAL RESULTS: With a tip o’ the hat to the new Napster and newer iTunes.
SCORE: 1 Point

PREDICTION: Digital radio will rock.

ACTUAL RESULTS: It’s growing. Even Howard Stern can’t wait to go satellite.
SCORE: 1 Point

PREDICTION: Wireless Internet will do
something.

ACTUAL RESULTS: It did. It went cellular on one hand and Wi-Fi on the other.
SCORE: 1 Point

PREDICTION: Privacy will become a major
issue.

ACTUAL RESULTS: Sigh! It should have, but didn’t.
SCORE: 0 Points

PREDICTION: TiVo will finally succeed.

ACTUAL RESULTS: What? You don’t own a PVR yet?
SCORE: 1 Point

PREDICTION: Security will begin to lose
its luster.

ACTUAL RESULTS: How would you like the be America’s fourth cyber-security czar in two years? It’s a tough job when no one cares.
SCORE: 1 Point

PREDICTION: Laptops will see new popularity.

ACTUAL RESULTS: Thinner and lighter are in this year.
SCORE: 1 Point

PREDICTION: PDA phones will proliferate.

ACTUAL RESULTS: Not among teens, of course, but in the business set, it’s hard to find anyone without a PDA or PDA phone this year.
SCORE: 1 Point

8/10 Points

Fortunately,
being way wrong has never daunted
our fervor for making predictions.
After all, most of the major trends
in technology take time to develop,
and (2004 notwithstanding) it should
be relatively easy to spot the trends
that will burst into the headlines
by mid-year.

So
let’s take a gander at technology
for 2005.

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2005
Technology Predictions

1. Time Warner will dump America Online. Okay, I said I was going to stop predicting this. But how long can this Titanic keep afloat? It’s hemorrhaging hundreds of thousands of users at a whack and is still embroiled in a costly, embarrassing accounting scandal that won’t go away any time soon. What was once a cash cow for the entertainment giant has once again had to restate its earnings in 2004, and the company has set aside a whopping half-billion dollars in a bid to close out the SEC investigations of malfeasance. Worse yet, AOL bet the farm on a broadband strategy that has failed, forcing them to dump broadband subscribers in many states and reconsider where to go in the rest. Someone please buy this thing. Or kill
   it. Or something.
2. Cable will win the broadband wars. For the past five
   years, the earnest money has been
   on the telephone companies to
   rebound and clobber the emerging
   cable Internet industry. After
   all, the telephone companies have
   lines to virtually every home
   in America, and tons of cash to
   spend. And DSL is the dominant
   form of broadband the world over.
   But is just isn’t happening.
   The phone company has held DSL
   hostage to its political wrangling
   over local and long-distance phone
   service, refusing to deploy DSL
   to most neighborhoods in America.
   Cable, meanwhile, has spent the
   last decade investing billions
   of dollars in new fiber networks
   along the streets of most of those
   neighborhoods. The telephone companies
   are firing back with fiber networks
   of their own, but it is a case
   of too little, too late. Note
   to technology companies: When
   dealing with regulatory agencies,
   the strategy of “give me
   what I want or I will hold my
   breath until I pass out”
   is a losing proposition.
3. Satellite will clobber earth-bound radio and television. Once upon a time, conventional wisdom was that satellite TV would be capacity-constrained at no more than 15 percent of the market because of limited bandwidth on the satellite itself. Guess what? DirecTV and the Dish Network put up more satellites — four alone for DirecTV at last count. Satellite now has an estimated 25 percent share of the market for premium TV services, with very high customer satisfaction rates. Plus, DirecTV is now part of Rupert Murdoch’s empire, typically a harbinger of innovation and falling prices. On the radio side, the battle to allow local news and weather over satellite radio will not last long, and, once local content is added, this
   subscription service is also likely
   to capture a quarter of the radio
   market quickly.
4. There will be a computer in your living room.
   I’ve laughed so hard for
   so long at the idea of PC-TV convergence
   I can hardly believe I am writing
   this. TV tuner cards in computers
   were a massive flop. Video cards
   with TV outputs were a massive
   flop. And Microsoft’s “MSN
   TV” venture was …
   well, much worse than a flop.
   Nonetheless, I spent much of December
   playing with ways to use a wireless
   keyboard to web browse in my High
   Definition television (HDTV).
   The advent of HDTV has meant that
   televisions now have the screen
   resolution to match a PC monitor,
   and wireless technologies open
   the door to all manner of new
   innovations in hardware and services.
   Tech to watch: Microsoft could
   wallop PlayStation, or vice-versa,
   by putting web browsing and Wi-Fi
   into their X-Box platforms.
5. Independent content will dominate Video on Demand. Video on demand is the new Mecca of entertainment. With everyone deploying fiber optic networks in the feverish bid to get fiber to the home (FTTH), you might think that major motion pictures would be the content that would dominate. But the movie studios have already demonstrated that they would rather let priceless, epic films rot in a vault than be forced to examine new distribution methods. Meanwhile, independent producers like the Food Network and the History Channel are beginning to cozy up to the idea that they can re-sell old episodes of popular shows over the Internet and make a bundle. Note to PBS: You could have done the same with episodes
   of Sesame Street, or with a retrospective
   bundle of Julia Child’s
   old shows. Don’t come whining
   to me for money if you pass up
   opportunities to make millions
   on the Internet.
6. Privacy and security will be dead issues.
   This will be the case for the
   same reasons that tourists still
   get robbed while partying in Tijuana,
   and why most homes don’t
   have a security system. People
   expect the police and their service
   providers to handle these protective
   chores, and will do no more than
   necessary to protect themselves.
   A 2004 study found that over 80
   percent of home computers don’t
   even have a firewall and anti-virus
   package installed. The truth is
   that most consumers simply don’t
   fall prey to the scams and hacks
   online, and thus feel little need
   to spend a lot of time worrying
   about it. Privacy and security
   will become every bit as important
   as flossing your teeth —
   you know you really should, but
   ….
7. Microsoft will make a bid to dominate accounting software. The Giant in Redmond has had its derrière booted by Intuit at every turn, from the disastrous Money to the moribund Great Plains. But in 2005, building on its strength in SQL databases and buoyed by success with its offerings for CRM and other business products, Microsoft will push into new areas. Working to its advantage will be the ability to leverage the popular interfaces of its Office products — accounting that looks like Outlook, and strong collaboration tools built in. Granted, it will be an uphill battle against three well-entrenched opponents. But Microsoft is smart enough to know that business applications, not consumer markets, are its future.
8. Smaller computers will dominate. This is such
   an easy prediction I’m almost
   ashamed to make it. On the desktop
   side, micro-ATX machines measuring
   a few inches in height and width
   are all the rage, carried by even
   such stalwarts as Dell and Gateway.
   Sony just introduced a new line
   of VIAO micro-notebooks, the tiny
   “U” series, which
   are already the rage in Europe
   and Asia. And hand-held computers
   (a.k.a. PDAs) continue to expand,
   though it’s Microsoft’s
   operating system and not Palm
   that seems to be pulling ahead
   in the marketplace. Perhaps the
   real innovation will not be the
   computers, but the fact that other
   peripherals — printers,
   routers, et al — are also
   shrinking.
9. Wireless connectivity will drive hotel occupancy. The hospitality industry is driven by the need to keep pace with must-stop technology. First, it was television and a telephone in each room. Then it was cable and HBO. This year, no self-respecting hotel chain will be caught dead without free broadband (mostly through Wi-Fi) available to every guest. And not just hotels. This is the year for broadband in campgrounds, hospitals and restaurants as well. Except for truck stops, that is. They went wireless years ago. Hint to tech watchers: Truck stops are a wonderful place to see where new technologies are hatching. Truckers have money to spend, like their creature comforts, and seldom bet wrong on a trend.
10. Plasma TV sales will be lackluster. With the
    wave of early adopters out of
    the way, makers of plasma television
    systems will face a tough battle
    for market share. Their products
    are subject to screen burn-in
    (like the old computer monitors),
    are expensive to purchase and
    worse to repair, and face significant
    competition from LCD, ultra-thin
    projection TVs and other technologies.
    Most consumers are wary of paying
    that much money for a risky consumer
    product, and many are happy to
    live with their old tube-based
    television anyway. A tough road
    this year for the plasma crowd,
    and while they say prices will
    not fall quickly, I think you’ll
    get a good deal on cheap plasma
    screens by Christmas 2005.

Those may be the Top 10 predictions
for 2005, but they are hardly the
end of what we will see happening
in the tech sector. Look for broadband
prices to continue to fall in the
face of competition. Look for more
homes and small offices to adopt
Wi-Fi. Look for Cisco Systems to
continue to amass wealth as the
arms merchant to the tech industry,
quietly skirting the major wars
over content and connectivity while
maintaining control of the hardware
needed to make both work.

And keep an eye on the Congress.
With the election over and things
settling down elsewhere, Congress
will again turn to meddling with
major stuff. Already on the books
for this year will be a re-write
of the nation’s copyright
laws and telecommunications laws.
Remember, the last time they did
this was like breaking a mirror
— we got seven years of bad
luck, including a major recession.
And there are hints that the Congress
may even try to re-write social
security and the tax codes, an opportunity
for every accountant to dash to
the store for the technologies needed
to cope.

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