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Predictions for 2003

An answer to Cringely’s challenge

This is the time of the year when major analysts make bold predictions for the coming year. We usually make these predictions in our annual Year in Preview cover story. This year, I was content to merely ask our analysts the questions and compile their answers without offering any of my own. But that was before Robert Cringely issued the following challenge to his fellow analysts in his annual prognostication column: “As the last honest prognosticator (maybe the only honest one) I have to look at the predictions I made a year ago to see how they came out.” Bristling with this insult, I will follow his lead and both assess my predictions from a year ago and make my own predictions for 2003.

Looking back at that old cover story, I see I took much the same tack last year, content to ask our leading analysts the questions. Yet, implicit in my questions, I did make a few predictions that I can assess. And I can make many more this year that I can evaluate next year. That way Cringely won’t be the only honest prognosticator in the field.

I predicted that 2002 would be a time for IT departments to concentrate on core issues and cost cutting. This has been painfully obvious to all those hopeful of a recovery in the sector. I predicted widespread OS upgrades to Windows XP and Mac OS X. This was mostly true, with a couple of wrenches in the works: Microsoft’s licensing terms prevented widespread adoption of Windows XP; and Quark undercut OS X in graphics departments. I predicted that this would be the year of security for IT departments. This is mostly true, though I’m surprised at the number of companies that are still insufficiently secure. I predicted that, to the extent that IT departments spent money, they would explore CRM as a way to put the customer first. This happened in much more halting steps than I expected. Finally, I predicted that it was still too early for wholesale e-business approaches such as supply-chain integration. This has happened to an even lesser degree than I expected as most companies are waiting for .NET and other Web services technologies to mature before they invest in these business opportunities.

Now to my predictions for 2003, one for each month of the year, in no particular order.

1. Amid shrinking margins for computers and peripheral equipment, retailers will differentiate themselves on service. That means that the small local retailers who better serve their customers will not go away. It also means that superstores (like Best Buy) and other retailers that invest in better service initiatives will dominate the market. Direct marketers such as Dell may be able to beat all comers on price/performance ratios, but total costs will favor retailers with better service, and savvy consumers will recognize this. The fact that it takes Dell up to two weeks to fix a computer will finally serve as friction to its growth. (BTW, this is contrary to Cringely, who predicted the death of the reseller and computer manufacturers who rely on resellers, such as HP.)

2. Dedicated home and business service companies, such as the Geek Squad, Geeks on Call, and will emerge as a viable new business model. This is especially true in the home market, where the convergence of entertainment and computer systems will force busy people who can afford the gadgets to also pay to have them installed and maintained.

3. The entertainment PC will be the fastest-growing category in 2003. As HDTV, DVD, PVR, MP3, and other digital entertainment technologies mix and commingle, consumers will learn to take advantage of the dual power of timing and choice. With PVRs run from their PCs, couch potatoes can see TV content when they want to. With MP3s, music mavens can listen to a theoretically infinite variety of music and musicians. And convergence will enable users to mix and match media such as games and movies, music videos and MP3s, etc. And they will share all of their compilations and creations over the Internet. Long predicted, this is the year when it comes to fruition.

4. Wholesale business investment will come back to IT. We’ll see signs of this in the first half of the year, as less risk-averse companies angle for competitive advantage. In the second half, business investment will show strong recovery as even the conservative CEOs won’t want to pass up the return on investment from integration technologies such as Web services.

5. Fixed wireless will take shape as the third broadband alternative. Companies like Boingo will offer an inexpensive (and insecure) alternative to cable and DSL. And a slew of new offerings, based on a variety of 802.11 standards (especially 802.11 g, per Cringely), will enable more secure connections. The FCC will even get in the game, opening up vast tracts of the country to spectrum that enables licensed and secure wireless broadband, and taking such spectrum away from companies like WorldCom that are not in the position to use it or even resell it.

6. 3G will be a dud. While the variety of standards enables some choice, it also prevents adoption by those wary of making the wrong choice. The FCC won’t meddle with some of the biggest contributors on Capital Hill to enforce standards, though we will be able to keep the same cell numbers when we switch carriers (a small victory for consumers).

7. This will be the year of Foveon in digital cameras. I predicted back in my May Insights column that Foveon chips would start to show up in cameras in stores by the holidays. Alas, that hasn’t happened. But they’re close, and they will be here in 2003 as consumers demand better color from their digital cameras.

8. 64-bit computing will finally emerge. Sure, lots of people are taking advantage of 64-bit computing, but it is still a small corner of the market. This will change in 2003 as enterprises need the additional power 64 bits can offer and applications develop critical mass. Who will win the 64-bit wars? I favor the more open and backwards-compatible approach of AMD’s Hammer technology. But look out for IBM’s new Power 4 processor, which will be released on high-end Apple systems late in 2003.

9. PC gaming will level out in 2003. It was the key growth engine in 2002, and it will continue to drive growth, but the games themselves will be limiting factors. Hardcore gore gamers will be able to get their fill of bloody games in 2003, but the category still lags for more mature consumers, who need plot and character development and who don’t care for violence for its own sake. Games following on “The Lord of the Rings” and other popular geek movie series will fill in the gaps somewhat. But PC games won’t be a mainstream thing until more game developers think like Hollywood directors rather than wanna-be Doom developers.

10. Office 11 will not be as successful as previous Office suites, especially because of the price. Word and Excel users will not need to upgrade unless their corporate IT departments are heavily invested in .NET technologies. Presenters will upgrade in reasonable numbers, however. For the first time, PowerPoint will have its own freely downloadable, Acrobat-style reader. No longer will recipients of a PowerPoint presentation need PowerPoint to read it. But the limiting factor: Office 11 will only run under Windows XP Professional. It seems Microsoft has carved out too small a niche for this product to gain widespread adoption–.NET and XP Pro presenters in well-funded IT departments.

11. Tablet PCs will shine, Smart Displays will be dull. Faced with a choice of a full computer in a tablet (with a keyboard) and merely a screen that is connected by slow wireless signals to a PC in the den, users will chose the former. And, as bugs are worked out and expectations adjusted, the tablet PC concept will establish itself as a fourth PC category (with desktop, laptop, and palmtop) in 2003.

12. Pocket PC will pull even with Palm OS in the battle for the palmtop. As prices are lowered (e.g., Dell Axim X5 and HP iPaq, both selling for half the price of a decent desktop system) and battery issues continue to be resolved, the value of the Windows interface and integration issues will hold sway, especially for business users.

I could go on and on, but that should give us enough fodder for this column next year at this time.

James Mathewson is editor of ComputerUser magazine and

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