Monday, January 1, 2007

What has the iPod looking over its shoulder. . . and other tech predictions for the new year

Microsoft will hit the spot with buyers. Google will hustle to keep its frantic growth from slowing. Blogs will morph and diverge into several distinct forms. And the new technology mantra will be location, location, location.

Windows Vista surprise

I'm not trying to be a hometown booster, but I think Microsoft's going to do much better than expected with its new operating system.

Vista will satisfy the pent-up demand for a more secure version of Windows, as long as Microsoft stays on its toes and quickly patches weak spots that fame-seeking hackers and security firms will inevitably find.

Businesses in particular will want the premium version that encrypts files in case a laptop is stolen. It is hoped that Boeing has already put in its order.

Consumers will like the way Vista makes it easier to find stuff on a PC, handle digital media and connect to networks and devices.

Vista also is helping hardware companies build cool accessories, like touch-screen media centers and fancy new remote controls.

Another reason Vista will fly is good timing. The software is late, but it's coming to market as the PC industry rolls out dramatically more powerful multicore computers.

Demand for multicore Vista machines will be driven by digital video, new broadband services and upcoming wireless devices that stream high-def content through home networks.

When it boosts Microsoft's stock is anybody's guess.

The iPod loses its charge

Apple shaped the digital music player business with its well-designed, easy-to-use iPod, but its dominance will begin fading this year.

This isn't because of Microsoft's Zune, at least not the current version. The iPod is going to lose ground to new multifunction devices, especially phones that are getting as much music-storage capacity as low-end iPods.

What about the thousands of iPod accessories? Manufacturers are already figuring out how to switch parts so that their accessories support the Zune and other players. Some companies are also developing converters that will let you plug music phones and other MP3 players into cars and systems with iPod connectors.

Apple must see the writing on the wall, because it's expected to unveil an iPod phone at the MacWorld conference next week in San Francisco. But the phone may be too expensive to be a hit — analysts are saying it will cost $599 to $649 for 4-gigabyte and 8-gigabyte models.

Microsoft is likely to introduce a Zune-branded phone. It's also helping other companies build music phones with its Windows Mobile software that includes a media player and support for memory cards.

New players that take advantage of the flexibility, reliability and capacity of Flash memory cards will also put pressure on iPods, which can't be upgraded with additional memory.

On new players with memory-card slots, you can add more capacity with a $30 card instead of having to pay $200 or more for a bigger iPod. Flash players will be even more attractive as the cards' capacity goes up — 32-gigabyte Flash could come by the end of the year, and Samsung just announced that it's working on terabyte chips.

Another challenge to iPods will come from handheld devices that play music and video streamed over new wireless broadband networks operated by companies such as Clearwire and T-Mobile.

Imagine a device with 32 gigabytes of Flash memory and wireless connectivity. It could continuously sync with home and Web-based media collections, make phone calls over the Internet and display e-mail and text messages.

Instead of sharing three songs at a time, you could plug the memory card into a friend's player and upload your entire collection.

Blogs' big bang

There's been a lot said about the blog hype fading. But they're not going away, they're just evolving.

Corporate blogs will continue to grow in 2007, and individual bloggers will begin migrating toward hybrid blogs that give them more control over who sees their personal information.

The blogosphere has already forked down "corporate" and "personal" paths.

The most popular blogs are the corporate ones, and it's hard to call them personal online diaries. Sites like Engadget, BoingBoing and Gizmodo are really online magazines with paid staffs supported by advertising.

Others blogs have evolved into online newsletters for special-interest groups, like software developers or political junkies. Businesses are joining the crowd, with blogs used for marketing and brand building.

Calling these sites blogs is sort of like calling a professional lobbying campaign "grass roots."

The line has also blurred between blogs and Web sites in general, since so many sites are using the RSS subscription technology that made blogs unique.

Yet millions of individuals are still following the other fork, publishing truly personal blogs that may be read by only a few friends or relatives. These are wonderful windows into the thoughts of people around the world, but I wonder if the curtains will close a bit during 2007.

Personal blogs have lost ground to hybrid blogs/personal Web pages that people publish at social-networking sites like MySpace.

But as those in the MySpace generation mature and tire of harassment from strangers and viruses on first-generation social networks, they'll migrate to the next thing.

Two new social-networking options are Wallop, a service Microsoft is testing, and Vox, a San Francisco-based service that recently launched. They let users create limited social networks and fine-tune how broadly they share personal information online.

Google 2.0

Expect Google to make dramatic moves in 2007 to maintain its cachet as its rate of growth slows. I'm guessing it will significantly refresh its search experience, make interesting new partnerships and make a bigger push into devices beyond the PC.

Three factors are putting pressure on Google to be bold this year.

The biggest is the law of large numbers. Google's share of the online ad market is getting so big that the company will have trouble sustaining its past growth rate.

It will still earn more money and take market share, but investors get nervous when the growth rate tapers — just ask Microsoft.

Another factor is the challenge from Microsoft and Yahoo! Microsoft's online ad system has been a disappointment, but it should get a boost this year as Vista and Office 2007 bring millions of people back into its orbit.

Yahoo! is finally launching its Google-buster ad system, and there's speculation that Yahoo! and Microsoft will hook up this year to better compete.

Finally, Google is surely concerned about the ad market in general. Web companies won't be completely immune if there's a major slowing in the economy and ad spending.

A slowdown would have a ripple effect on all the little Web companies built largely on expectations of online ad sales continuing to soar.

Online advertising is outpacing the market, but it's not completely up for grabs. Newspapers and TV — where most of the ad dollars go — are also expecting a bigger share of online dollars, and there's only so much to go around.

There are hints of cooling. Merrill Lynch recently predicted little growth in overall ad spending during 2007 — it's forecasting 2.9 percent, less than nominal GDP growth, and down from the 5.3 percent it had predicted for 2006 before revising the number downward.

The firm expects online ad sales will grow 27 percent, down from its 29-percent forecast for 2006.

But Google will still be a great story in the Seattle area in 2007.

The company is shopping for a huge office in Seattle or on the Eastside, with enough space for 1,200 employees.

That would make Google one of the region's biggest software companies and make the area an even more attractive destination for software engineers.

Google's growth here could offset any slowdown at Microsoft, where hiring may slow now that its major new products are done.

Find yourself

in 2007

Location services will have a breakout year during 2007.

Driven largely by aggressive competition for online ad dollars, new services will take more advantage of the location information that's already being transmitted by your computer, phone, wireless devices and vehicles.

The trend will also accelerate with new "location aware" devices, many of which will debut at next week's Consumer Electronics Show (CES) in Las Vegas.

Technology that tracks your whereabouts has been trickling into the mainstream for years.

Global Positioning Systems are becoming common in cars, and telecom companies have upgraded location systems to help emergency personnel locate callers.

Google and Microsoft are also merging location information with search results and blending this information with sophisticated new online maps and ad-delivery products.

Internet companies have long checked the Internet address of your computer to get a sense of where you're located. Now they're monetizing that information.

Microsoft's pushing the envelope with its Live Search service. If you search for "pizza," the top results are nearby pizza parlors.

Devices accelerating the trend include new semiconductors that will let consumer-electronics companies add GPS capability to their products.

Handheld computers, such as the Ultra-Mobile PC that Microsoft is promoting, and new automotive products will also use location data in creative new ways this year.

Among the products coming to CES: A system from Dash Navigation in Mountain View, Calif., that keeps cars continuously connected to the Internet, providing both traffic reports and local search results.

"This technology is opening up an array of new mobile couponing and promotional opportunities that help merchants reach consumers in new and unique ways," the company said.

If it gets to be too much, you may be grateful for another innovation Microsoft is delivering in 2007 — a new on-off button in Vista that gives you multiple ways to shut down your computer.