Tech Predictions for 2009

As we gear up for 2009, there remains many questions about the economy and the growth curve of the technology industry. As a team, we have come up with predictions for 2009. Ray Capece, Venture Files editor for Technosailor.com and I make our predictions.

As always, these are predictions. Last year, we were dangerously accurate with our predictions and would like to think that we have a good understanding of the business and technology marketplace in 2009.

Ray’s Predictions

  1. By now, all VC firms have had the ‘triage’ partners meeting — where they decide, whether existing portfolio companies will 1) receive additional funding, because they’re generating revenue and have the prospect of getting cash-flow positive; 2) be shut down (and recapture any remaining cash); and 3) receive no additional funding, but be left to their own devices (to get funding however they might on their own). In 2000, there were a good many in category #2, since dot.com rounds were in the $10s of millions; now, with social-networking investments averaging around $1M, there will be little cash if any to recover. But I predict there will be many in category #3 (also known as ‘the walking dead,’ since they’re burning their cash, no matter how slowly, till it’s gone.)
  2. Online advertising revenues in 2009 will continue to fall, as inventory outpaces demand. I *don’t* see the $$ flowing from other media to online offsetting this downward trend.
  3. Consumers have discretionary (albeit small) $$$ to spend. In times of bleak economy, they seek distractions (gaming and feel-good entertainment), and will happily pay $0.99 for iFart. The hope for developers in the social networking space will potentially lie with commerce in real and virtual goods. Facebook and the others need to make this extremely easy for third parties, and it will most certainly happen in 2009. (Yes, despite what others are saying about FB’s party line.)
  4. Consolidation always picks up in down times . . . good, small apps facing a difficult fund-raising environment reset their valuations lower, and robust companies with solid funding swoop in to pick up the team and technology on the cheap. It began in the fourth quarter with Pownce and others, will continue throughout 2009.
  5. As an extension to this prediction — we’ll see more Intellectual Property for sale on eBay.
  6. Apple will continue to grow its mobile share as others fumble about. Watch for new BlackBerry Curve to become the defacto standard for ‘button lovers.’

Aaron’s Take: While I agree with most of Ray’s predictions, I’m more bullish on early round VC. Even though we won’t see as much investment as we have, I believe it will still happen and companies that have already been funded will probably continue to receive investment funds, even if on down valuations, as long as they are somewhat viable. The reason is that most funds are long-haul investments of about 10 years.

Aaron’s Predictions

  1. Consolidations will occur en masse this year. Small companies with angel funding or Series A funding will be lumped into bigger conglomerates as the acquisition threshold is low.
  2. Brightkite will be acquired by Facebook, as poignantly pointed out by a commenter over at Read Write Web.
  3. The second Google Android-powered G2 phone will be released to T-Mobile in Q1. As the first one was a proof of concept that had little impact, the second iteration will be an essential release to prove the Android platform. No other carriers will take the platform until the concept is proven, but T-Mobile is already there and will be the victim for the second release.
  4. Twitter will *not* be acquired, but an advertising/partnership business model will emerge in Q2.
  5. Apple will release 3 new products this year. That is it. Their growth will continue upward but will see a decline over growth patterns of previous years.
  6. Net Neutrality will take a massive hit in 2009 with governments and companies looking to defend themselves in a down economy. The result will be regulations that will allow the big telecoms survive. Too big to Fail. Unless it’s the general public.
  7. No clear winner in the “single identity” space. OpenID fades, fbConnect gets fleshed out and adopted by many while Google Friend Connect makes significant inroads with others. An emerging war akin to Bluray vs. HD-DVD emerges between Facebook and Google with the internet world divided evenly among the two. Blogs and social networks will tend toward Facebook while bigger sites and services, possibly including newspaper walled gardens, trending toward Google.

Ray’s Take: Aaron’s crystal ball looks pretty good to me . . . except that, like Jonah in the whale’s belly, Twitter will be devoured.

Words That Must Die in 2009

As this is the end of the year, we are required by some unwritten law to go through certain exercises. Among those are a required “predictions” post, certain holiday-related posts and of course, like last year, a list of words that have been so overused in the past year that we hope they will die a tortured, cruel death in 2009.

  • Change – the buzzword of the 2008 Presidential election. It has become a mantra for utopian-loving citizens everywhere.
  • Meta – Meta is a word to describe descriptive data of descriptive data. Or, better, it is the abstraction of something more well known. It is a catch phrase to describe something as simple as, for instance, one photographer taking a picture of another photographer taking a picture. It is rather difficult to describe because it is so meta.
  • Rock Star – a description of a minor celebrity or demigod, usually in the web space. These are individuals who carry some personal reputation and weight in only their circle but remain relatively unknown “in the real world”. Also describes the blogosphere’s “A List” of top tier bloggers. I, for instance, am a rock star.
  • Cloud – a technology that takes data and operations out of a simple peer to peer concept of client and server, and places it in a massive grid on the internet. Cloud computing is usually powered by Amazon S3 or EC2, Google App Engine or the new Microsoft Azure platform.
  • fail
    Products built “in the cloud” are generally known to buzzword junkies in PR as SaaS (“Software as a Service”).

  • Bailout – By far the biggest word that must die, in word and in deed, is bailout. No explanation necessary as you must be living under a rock if you don’t know what I’m talking about!
  • Ubiquitous – this word tends to revolve in the same orbit as “Cloud”. It is a buzz word often used to describe web services that are always available and tends to apply in the world of mobile. Ubiquitous ensures that everyone can get to everything at any time or any place. And it needs to die.
  • FAIL – This is shortform for the obvious meaning. If something is unsuccessful or stupid on it’s face it is just plain FAIL. Made popular by the Failblog, it has become a common part of geek culture and lingo.

As a bonus, Twitter seems to think “Oh, you know Aaron?” is overused in conjunction with people meeting other random people that know me. :-)

Thanks to everyone who helped me assemble this list!

Additional: Transparency. This has come up in a variety of way. In politics and government circles, the Sunlight Foundation has made a lot of progress (and noise) on the Transparency in government front. In PR, communications people are striving to be “more transparent” online. Regardless of which form of transparency, people need to talk less about it and do more of it. :)

UK Plans to Keep Kids Safe on the Web, Ignores History

2008 is drawing to a close, a new U.S. Presidential Administration is on the threshold of taking power and the UK is seriously looking to the largest age restriction initiative ever undertaken in the history of the internet.

In the UK, there is a such thing as a Culture Secretary who is responsible for the entertainment of British subjects. I kid you not. This is a Cabinet-level position in charge of the Department for Culture, Media and Sport. According to the official website, Culture is responsible to “improve the quality of life for all through cultural and sporting activities, to support the pursuit of excellence and to champion the tourism, creative and leisure industries”.

That’s right. Culture has their hand in your family trip to the amusement park, the art museum or a trip to the ballpark.

According to a Daily Telegraph story, they also plan to have their hand in your web-surfing as well. The idea is that Internet Service Providers servicing the UK would be required to provide child-safe surfing opportunities. The trickle down would be that website owners and developers would have to adhere to a “ratings” system, similar to what is in place for motion pictures and video games.

They plan to work closely with the Obama administration to ensure that the standards established are not simply UK-centric, but also US-centric. In essence, the governments are attempting to ramrod a standard down the throats of the western world.

To be fair, there is justification in wanting to see a child-safe portion of the web. We all want what is best for kids, but the truth is that parenting starts at home and does not involve a village. What I would prefer to see is a recommended set of standards that would assist parents in screening and moderating the internet activity of their child.

Also to be fair, history tells us that simply declaring standards for the web does not ensure that such standards are adhered to. A full eight years later, the best commonplace standard for web markup (XHTML 1.0 Transitional if you must know) has yet to be fully adopted. U.S. Government websites are required to be Section 508 Compliant (which is a set of standards to assist in accessibility, particularly for those who are blind or colorblind). Many government sites still do not meet this standard.

Even outside the web, the DTV transition fast approaches, yet it fast approaches again and it is doubtful if it will actually arrive in February as is currently projected. That is because the new standard has not been quickly adopted and the government is forced to extend their deadline.

In the best of scenarios, the web industry self-polices as it always has. In the best situation, we come together and innovated around a widely accepted and understood standard. In the best scenario, the government utilizes the standards and innovations that the web industry itself has created to solve the very real problem of creating a child-safe internet.

But at the end of the day, the Village cannot solve this problem. We can only bring ideas and tools to the table. Nothing we, or the government, do will protect children. Parents have that responsibility and should exercise their roles, instead of passing the buck to someone else.