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.

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The Xbox Experience: A Great Improvement That Still Lacks

Microsoft is clearly getting hipper with their offerings. The company that has been notoriously committed to offline products, like their Windows operating System and productivity suite, Microsoft Office, to the detriment of their online offerings seems to definitely be moving into the internet space more. They are, in fact, trying to own the online space now which is a significant internal company departure from the past.

As recently as yesterday, speculation was that the ill-branded Live! Search could be rebranded in a much more internet friendly way. Kumo.com anyone? Their IM client… well, no one uses it.

xbox-360-logoOf course, they have jumped headfirst into the incubation industry by launching BizSpark, which seeks to provide promising young companies with technical resources, such as their server offerings, and human and business resources to help these investment companies, mostly web based startups, become viable.

Naturally, one of the odd players in the Microsoft ecosystem has been the Xbox 360 platform. It is a killer gaming platform (I am an avid Xbox Gamer) and their online gameplay over Xbox Live is second to none. It has always lacked any kind of cohesion for an online service though. Especially in 2008, where Facebook and Twitter rule the day and it is rare to find someone who is not on some kind of social networking platform.

So a few months ago, when word leaked out about a complete overhaul to the Xbox Live experience, there were many of us who were excited about a modernization with significant incorporation of social networking elements. With the launch the other day, some of that has been delivered.

The Xbox Experience, as it’s called, is a significantly streamlined dashboard making it extremely easy to access common items, such as the Xbox Marketplace. Incorporation of online video giant, also dabbling in the social networking space, Netflix makes the Experience worlds better. It is possible to watch Netflix “Instant Play” queue items directly via your Xbox Dashboard. Sweet, if the video quality was better. Putting this aside, the mashup is a great step in making the Xbox an entertainment hub.

However, significant issues remain. A “big bling” element to the new Xbox Experience, is the new avatars. Going through a wizard the first time I logged in, reminded me a bit of creating your Tiger Woods 2008 character. Though this is fine in creating a personalized environment, I find no purpose for an avatar except to snap a proverbial photo and making that photo your “avatar photo”. I would much rather designate an actual graphic or picture as my avatar, in much of the same way most social networks allow you to.

The storyline falls apart more when you login to manage your Xbox Live account from the web and discover they have not incorporated any further way of getting at your data. Microsoft would do well to develop robust APIs that would allow players to get an XML or JSON feed of achievements, gamerscores, last/currently played games as well as other social network elements.

Why not provide a much more efficient “friends” method that would allow players to have wish lists, friend challenges, friend groups, as well as a unique element I call “tip sharing”. Tip sharing would be a forum element where a friend could share intel about a game (say Fallout 3) and I could “download” that tip into my Xbox Live user account. When I reach the Farrugut West Metro station in Fallout 3 and my friend has discovered something, the game could feed me that intel from a friend.

Another social element would be the concept of a “lifeline” where, if I’m stuck during a game, I could get immediate assistance (in-game or otherwise) from my friends through screen sharing, instant message (kill Live! Messenger and use OpenAIM, please) or other “helper” element.

Let’s make it really social and make it possible for gamers to find other gamers in their area and schedule times together (if you have to, use a modified, online, lite version of Sharepoint or Exchange Server to make this happen).

Of course, a natural tie together, via OpenSocial, with other social networks, possible use of OAuth for data access and login, status messaging and comment, and other “social elements” would really flesh the Xbox Experience as useful in 2008.

What are your thoughts on the Xbox Experience?

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Blog World Expo: Bonus Day of Sessions

bw_joinme_135.gifFor anyone going to Blog World Expo in Vegas next month (you are going, aren’t you?), you’ll be interested to know that there is now a BONUS day of sessions courtesy of b5media. You can see the BWE announcement here. We have a jam packed lineup of sessions and speakers too. I’ll be doing a panel with Brian Clark of Copyblogger on using Digg and other Social Media tools to drive huge traffic to your blog. Allen Stern of Centernetworks and Jeremy Wright are talking about thriving as a B-List blogger. Marshall Kirkpatrick, also known for his writing on Read/Write Web and previously Techcrunch and Tris Hussey from blognation will be talking about creating a powerblogging toolset.

b5media’s own WordPress ninjas Brian Layman and Mark Jaquith will talk about using WordPress to its fullest. Leora Zellman and Mary Jo Manzanares, two of our Channel Editors, will be dishing out survival tips for network bloggers. I’ll give the CE that mentions my name first on the panel $50 in cash. ;-)

Of course, there’s also Alex Hillman from Philadelphia’s Independent’s Hall (whom I had the pleasure of meeting at Podcamp Philly) and Jake McKee from Community Guy who will bring their experience to Creating Conversations. Finally, there’s a private session for b5′ers who want to join us at the end.

I’m really looking forward to BWE, and not because I’m flying Virgin America. This is going to be a fantastic chance to catch up with folks that I haven’t seen in awhile and meet folks I’ve yet had the chance to meet. Plus it’s Vegas and is by nature unbloggable. ;-) Kidding!

If you’re a full conference badge holder, you get access to this bonus day for free. You can also opt in and if you want to get into a session but can’t for some reason, just drop me an email and I’ll see what I can do.

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