Recession be damned: Tech is booming.
Amid a shell-shocked American corporate landscape, Silicon Valley and other tech centers around the country continue to make good money. The country's biggest tech companies, Apple (AAPL), Google (GOOG), IBM (IBM), Intel (INTC), HP (HPQ), Microsoft (MSFT), Amazon (AMZN) and others, are very profitable -- and they're sitting on billions in cash hoards. Heck, even Facebook and Twitter are making money. A year ago, not many observers would have thought 2009 would turn out like this for tech. But what lies ahead for this invigorated sector?%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%Here's one fairly safe prediction: In 2010, we'll all be Twittering like crazy on lightweight mobile computers -- when we're not watching videos or texting incessantly.
But let's take a deeper look into what's likely to happen this year. To do so, we're combining the insights and crystal-ball gazing of DailyFinance tech writers Alex Salkever and Sam Gustin. Alex covers tech from Silicon Valley, and Sam does the same from New York City, so together their predictions offer a sort of bi-coastal point of view. Here's what they see coming in the year ahead. Hint: Apple and Google figure to loom large over the tech landscape in 2010.
1. The first blockbuster tech startup will emerge from India. In fact, it may already have emerged. Companies such as online business-productivity tools provider Zoho are disrupting the software marketplace and could easily become serious challengers to established on-demand players like Salesforce.com (CRM). As economies in Asia and the East outpace those in the West, it's only logical that some closer-to-home startups will emerge to service those markets.
"Hot start-ups are like microwave popcorn," says Vivek Wadhwa, an expert on entrepreneurship and research director at the Center for Entrepreneurship and Research Commercialization at Duke University. "Entrepreneurs emerge from the workforce, and India's technology workforce is growing quickly. We are already seeing people who have worked for large multinationals in India breaking out on their own, and those numbers will increase as more 'kernels' pop." Wadhwa isn't sure if 2010 will be the year the first one hits, but he says definitely in "the next two or three years."
2. Amazon, Google and Microsoft will conquer the cloud. Price wars for cloud-computing services -- the delivery of business apps on a Web browser while the software and data are stored on servers -- have already broken out. Both Amazon and Google are dramatically slashing the rates they charge to use clout-based storage and computational capabilities.
In some cases, those price declines have hit 90%. That will prove a crushing blow to upstart providers of cloud services such as Rackspace (which also provides plain-vanilla hosting and other services). It signals that the economics of the cloud will be truly geared toward survival of the biggest.
3. Apple's next iPhone will allow for simultaneous use of multiple applications. This will make the iPhone far more formidable. Right now, if you're running a GPS navigation program on your iPhone, you can't take a phone call without shutting down the GPS. And you definitely can't run a Pandora music stream, a GPS program and answer your phone at the same time -- which is a fairly normal set of requirements for a smartphone today.
When Apple rolls out its latest iPhone operating system (it probably won't take a massive hardware change to make this possible), expect such multitasking capability to be rolled in. Sorry, AT&T (T) -- use of iPhone's network-hogging data services will spike even more.
4. Available apps for Google's Android mobile operating system will eclipse 100,000. Why is this important? While ease of use and elegant design certainly played key roles in the iPhone's ascendancy, the number of really cool and useful applications has been equally important. Apple's "There's an app for that" tagline has already entered the popular vocabulary.
Google has beautifully greased the skids of application innovation by introducing technology that makes it almost absurdly easy to write an Android app. That's a page out of Microsoft's old Windows playbook, and it will work. While many of those 100,000 apps will be awful and amateurish, plenty more will be amazing, much to Google's benefit in 2010.
5. Google will finally buy Twitter. This will be Google's way of combating Facebook's growing dominance of identity management. During the past year, Facebook has allowed more and more of the data that once resided solely within its walled garden to become accessible to Web publishers operating outside of those walls. The primary mechanism for this has been Facebook Connect, an easy way for third-party sites to allow visitors to sign up for access or newsletters with one click.
The user agrees to allow the site to access their Facebook profile and login credentials, and uses those to set up an account. This is incredibly powerful because then the third-party sites often get access to all the detailed personal information that Facebook users supply on their profile pages.
As the Web continues to splinter into streams of content and as websites as stand-alone destinations diminish in importance, the ownership of user information becomes of paramount importance for targeting ads and any number of other business models. Right now, with 350 million users, Facebook is the leader in this sector.
Twitter and Facebook both understand that the ultimate value of these services lies primarily in ownership of the user information. But it's unlikely that either can win this battle on its own. That's why Google will finally pony up to buy Twitter, combining their forces to create a viable user-identity competitor to Facebook.
1. Personal computing will truly go mobile. For the past several months, the tech world has been all a-twitter about Apple's forthcoming tablet PC, with bloggers freaking out over every little twitch of rumor-mongering. But while many reporters and bloggers are hypnotized by Steve Jobs & Co.'s "reality distortion field," the major import of Apple's new device isn't the device itself, but rather its significance. It heralds the accelerating shift away from discrete computing machines -- one for work, one for home, one for mobile, etc. -- toward an integrated personal computing platform you can take anywhere.
As with all Apple products, the first version of the tablet is to be avoided, but its introduction will speed the way for other device manufacturers, such as Sony (SNE), Toshiba, Lenovo (LNVGY) and others. Amazon will continue to trumpet Kindle's success -- but after a two-year headstart, it will face its first serious competition this year. My prediction? Kindle will be buried within the next two years, with the widespread adoption of tablets and netbook alternatives.
2. Google will continue ruling the Net. Its vaunted search engine makes Google the Teflon Web icon. No other Internet business can duplicate the point-of-sale proximity that Web searching inherently present for marketers to get advertising in front of consumers -- advertising targeted exactly to what shoppers are looking for. Simply put, Google is too good at this to see any major competitive threat next year, or any time soon, for that matter (see Microsoft prediction below).
No matter what happens with the economy, Google will continue to print money, giving it the resources to enter new markets and expand its influence. First on Google's agenda is the mobile market, currently witnessing a paroxysm of innovation and change (see Alex's Google apps prediction above). Look for a big announcement from Google in the first weeks of the new year, as the company aims to shake up the smartphone market.
3. Microsoft won't go down quietly. Call it the revenge of the Borg. Microsoft is sick of defeat. In fact, it has been absolutely abused by Google over the last few years, and it needs to do something about it. That's why the software giant will keep plugging away with its Web search offering, Bing. Having grabbed just over 10% market, Bing is likely to keep gaining, and federal regulators will approve Microsoft's effort to integrate Yahoo's (YHOO) search ad business.
But the more important development this year will be a Microsoft spending spree. Look for Redmond to buy a small search start-up -- possibly Wolfram Alpha or Aardvark -- as that $50 billion in cash continues to burn a hole in Steve Ballmer's pocket. Though Google will stay in command, Microsoft will make some moves designed to put the world on notice that it intends to compete aggressively.
4. Web search will go mobile and get smarter. Speaking of search, Google may continue to dominate the market, but that doesn't mean the way we search won't change. Google executive Marissa Mayer once famously mused that it would be great if Google could help you search the physical world -- as in, "Where are my keys?" Although Google won't look, or sound, like a HAL 9000 this year, Web search will get smarter in a couple of key ways.
First, as computing moves off the desktop and into the world, the importance of location-based search will only increase. Search engines will offer results based on where you are, in addition to what you're looking for, and they'll know your location because you're carrying around a GPS device in your phone. Search will also become more like a conversation between friends, allowing you to ask more nuanced questions to people whose judgment you trust. Look for Aardvark, a search start-up that leverages a person's social network to answer questions in real time, to make a major splash in 2010 (see prediction about Microsoft above).
5. Which platform will be the winner? This will be the year top tech companies duke it out over platforms and how to deliver content and services to consumers, with advertisers watching closely. Everyone knows that we're moving toward a single converged device -- one that answers your calls, checks your email, surfs the Web, displays text, plays music and generally keeps track of your life.
But before we see convergence, we'll have to tolerate "divergence," according to Rob Enderle, a Silicon Valley-based tech analyst. The single-device model is still a few years away, and 2010 will be full of skirmishes about who can provide the best user experience -- on hardware, software and services. Smartphone, netbook, e-book reader, tablet, laptop . . . these distinctions are about to evaporate. Get ready for a fierce battle, where winners will take home ample booty, while losers, well, they'll just go home.
Ten Tech Predictions for 2010