Tech Predictions for 2009

This article will take approx 3 minutes to read.

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.

Comments

  1. says

    Good stuff. I think on the the Social Media/Online Advertising prediction, companies are going to look more for revenue opportunities than just eyeballs. It may be through generating apps like IFart but relevant to their brand or running campaigns that have a commerce opportunity associated with them. I think that tech companies and startups that allow large companies to run authentic social media and online marketing campaigns in 2009 are going to do really well.

  2. Tobias says

    Several VC firms will work together and sell off a string of stand-alone unprofitable apps that together make a cohesive, profitable and viable platform. It is possible some very smart component developers will also do this; however, it is a long shot.

    Platforms unable to articulate their value or prove their model are finished no matter how much the early adopter crowd loves them.
    Marketing firms will come to understand that industry awards are not enough to convince customers to ignore ROI. You want me to use your agency – show me the conversions. No matter the platform or path, accountability will replace the Goodyear Blimp and the amusing but pointless campaign.
    The concept of Innovation will be redefined as the early adopter moves to cut expenses and shed those shiny little objects that do not put food on the table or money in the pocket. Show me the value.
    Those who are unable to explain what they do are in terms SMBs can understand are in very deep —-!

  3. says

    Aaron, just want to clarify what you mean with Android – you’re just talking about the US? Because as far as I know, there’s quite a few Android handsets coming in Q1 and Q2 next year.

  4. says

    The G2 won’t be coming out until April at the EARLIEST.

    Also saying the G1 had little impact whereby I agree its first generation thus having kinks, it still blew away initial forecasts of selling several 100,000 units to selling a million.

    Also other manufacturers like ASUS, Sony, & Garmin are jumping onboard with Android along with HTC, Motorola, Samsung, and others so there will be a plethora of Android phones out in 2009.

    This is really going to grow out the mobile social media space which will be next step beyond Facebook.

    PS – Jimmy Hendricks, when we playing tennis again in San Diego? :)

    ,Michael Martin
    Google And Blog

  5. says

    Rachel: I was not aware there were a lot of Android sets coming outside the US. AFAIK, the G2 is the only Android phone planned as of this time for 2009. I could be wrong, I suppose, but all I’ve heard of is an HTC phone for T-Mobile.

  6. says

    About Aaron’s #7 – Identity management is a key factor in the evolution of the web in the next few years, and the prediction about Google is probably well grounded, but – as usual – the balance between “user frendliness” and “user laziness” is a danger for truly open solutions, in favor of proprietary (more attractive – in the short period) ones…