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Weekly Column

Win Some, Lose Some: Bob's Prediction Average Was Down for 2005, but 2006 Is Looking Better Thanks to Apple and Burst

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

It is time for my list of predictions for high-tech in the year ahead. Two thousand and six will look completely different whether you are a home or business computer user. Home users will find this an exciting time, with new products and services galore, while business users -- especially BIG business users -- will have to suffer with the breakdown of traditional suppliers and with inevitable consolidation problems as their list of suppliers shrinks and product lines are merged.

But first I have to be honest and take a look at how my predictions turned out from a year ago. I've been doing this for many years now, and typically score 70 to 80 percent correct. Last year, I hit only 73 percent, but would have been over 80 percent had Intel decided to come around and support AMD's 64-bit instructions just a week earlier. Alas, readers have been looking back lately and say my average may be down -- perhaps WAY down -- for 2005. Let's see.

I predicted that Microsoft's announced entry into the anti-virus business would be a disaster for users because Microsoft simply wouldn't be able to keep up with demand. Was I right or wrong? This is a difficult call because Microsoft has done such a poor job that more than a year after announcing the product, it isn't really here yet. But I'm going to claim this one because it has been a bad year for Microsoft competitors in this space. Because of the imposing shadow of Redmond, they haven't really come through with much of anything, and the feeling of impending doom I had back then is just as present today. I'll go further and actually add this to my 2006 list because it is still true.

I wrote that IF there were a trial in Burst v. Microsoft would lose, and that if Microsoft were smart, they'd settle. They were smart and settled for $60 million -- something that wouldn't happen if they had expected to win. So far, two correct.

I wrote that Apple would spend some of its cash horde on a major play for market share. Well, they made the play but didn't pay, so I got this one wrong.

I predicted the RIAA would continue to sue music lovers and they have, despite the fact that it doesn't help anyone and actually hurts everyone to do so.

I wrote that WiMax would be a huge story. Not! I was a year too early, and probably two.

I wrote that VoIP would become more disruptive and cause major headaches for telcos. Can't you smell the panic? SBC bought AT&T. Correctomundo!

I was wrong when I saw significant progress for desktop Linux, which was wishful thinking.

I was right when I said that movie studios and TV networks would embrace video downloading, and righter still when I said that SAP and IBM would be the big winners of Oracle's PeopleSoft acquisition.

I was wrong when I saw resurgence for Cisco and right when I saw mainly gloom and doom for Sun. Jonathan Schwartz has not yet shown me (or anyone) that he knows how to save that company.

I was right when I said AMD would give Intel further fits.

I was right about Ultra Wide Band networking, Power Line networking, and the PS3 being insignificant in 2005.

My final score was 10 correct and five incorrect, for a dismal 66 percent -- my worst showing EVER. Could my job be in danger?

Now for this year's predictions:

1) This one is easy: Apple will eventually announce all the products they were supposed to have announced at this week's MacWorld show, but didn't, including a bunch of media content deals, a huge expansion of .Mac to one TERABYTE per month of download capacity per user, a new version of the Front Row DVR application, and two new Intel Macs with huge plasma displays, but with keyboards and mice as options -- literally big-screen TVs that just happen to be computers, too.

2) The reason Apple changed its MacWorld announcements at the last minute was because the company sued little Burst.com a few days before, trying to invalidate the Burst patents. But since Apple sued Burst, Burst shares have gone UP by 30 percent. The market is rarely wrong. Suing Burst was an enormous mistake for Apple, casting a pall on their video strategy and potentially costing the company strategic alliances with networks and movie studios. Apple realizes this now and is struggling internally to find a way to change course and put a positive spin on the course correction. Apple will lose and Burst will win, and Apple won't be able to afford to wait for the courts to decide anything, since time is critical in staking out Internet video turf. I predict that Apple will eventually take a license from Burst, that is UNLESS SOME OTHER COMPANY (Google? Real? Yahoo?) doesn't snatch up Burst first.

Here's something I've noticed lately: Big companies believe in patents as long as they are talking about THEIR patents. Because Burst is three guys in an office in Santa Rosa, companies like Microsoft and Apple tend not to take them seriously. They forget that Burst spent 21 years and $66 million developing that IP, and the company has code that is still better than anything else on the market -- code not even Microsoft has seen. Unless someone buys the company first, Burst is going to win this and eventually license the world. They are in the right, for one thing, and in practical terms they now have as much money for legal bills as any of their opponents. Apple can't win this one.

3) But Apple WILL make some inroads against Microsoft. The new Intel Macs will run Windows XP unofficially, and Apple Support acknowledges that they are only days from running XP officially, too. So Apple finally has a solid argument why Windows-centric companies and homes should consider trying a Mac. The best case, though, says that Apple sells an additional million units, which aren't enough for Steve Jobs, so I see him going into a kind of stealth competition with Microsoft.

Here's how I believe it will work. Apple won't offer versions of OS X for generic Intel hardware because the drivers and the support obligation would be too huge. But just as you can buy a shrink-wrapped copy of 10.4 for your iMac, they'll gladly sell you a shrink-wrapped Intel version intended for an Intel Mac, but of course YOU CAN PUT IT ON ANY MACHINE YOU LIKE. The key here is to offer no guarantees and only limited support, patterned on the kind you get for most Open Source packages -- a web site, forums, download section. and a wiki. Apple will help users help themselves. With two to three engineers and some outreach to hackers and hardware makers, Apple could put together an unofficial program that could easily attract two to three million Windows users per year to migrate their old machines to the new OS. Imagine the profit margins of three engineers effectively generating $300-plus million per year in sales.

4) Enough about Apple. Google will continue to roll out new products and services as it builds out its infrastructure for a huge push in 2007. They'll need money, of course, so I predict a supplemental stock offering timed with a 20-to-1 stock split. 2006 is a building year for Google.

5) Still no good news for Sun. Those Galaxy servers are very nice, but they aren't enough to support the company and Eric Schmidt is too smart (I hope) to bail out his old firm.

6) IBM will get in trouble with its customers as it becomes clear that Sam Palmisano didn't learn much, if anything, from Lou Gerstner. Gerstner's fat-cutting is long forgotten, so all IBM knows how to cut these days is customer service.

7) Microsoft still sucks at security and users suffer for it. My best guess is they are planning on putting all this new technology in the "next" operating system, which seems to be yet another year behind schedule. The important question the world will soon be asking -- "Do we need another Windows operating system?" In 2006, Windows XP gets another service pack and/or facelift. Nothing more.

8) Sony's PS3 hits the market with a dearth of games. Howard Stringer loses his job, not because of the game problems but because he's undermined by the Japanese parts of his company. But there is good news for Sony, too. Internet video and viral marketing hit new mobile platforms like the PSP, which will become a medium in itself for the school age set. Imagine downloadable advertiser-paid TV shows for tweenies.

9) WiMax is still 12 months away. It will take until then for Sprint-Nextel to get its act together and put further downward pressure on broadband pricing.

10) Embedded devices will hurt Media Center PC sales, which will continue to be pitiful.

11) TiVO will be bought by another company.

12) Intel is spending $2 billion to re-brand itself as a consumer electronics company because the future is in being cheaper, not faster. The next big consumer market will be a network computing appliance. When it hits anyone's processor can be used and Intel will be$2 billion behind.

13) Google WON'T go head-to-head with Microsoft for a desktop operating system or a cheap PC.

14) EBay stumbles with Skype, which won't contribute much to the company in 2006 OR 2007, though the whole VoIP segment will boom.

15) Whatever we expect from Google might just as easily appear from Yahoo, too. With so much attention on Google, Yahoo is operating under the RADAR and will have several surprises for the market while AOL continues to shrink.

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