2007 Predictions

This year marks the 10th anniver­sary edi­tion of the TNL.net pre­dic­tions for the year ahead. In past years, I’ve been bat­ting above 50 per­cent in terms of pre­dic­tions, except when it comes to nam­ing what will hap­pen with spe­cific com­pa­nies. The trends are gen­er­ally cor­rect (or in some case, early) and I always look at this game as a tough chal­lenge. So, with­out fur­ther ado, here is my list of pre­dic­tions for 2007:

Mobile

Last year, I declared that video would be big in the Inter­net space and this year, I believe that mobile will be a major focus.

The devices

While mobile devices will con­tinue to grow on the exist­ing curve, adding more pro­cess­ing power and more mem­ory, they will also add a num­ber of fea­tures with are sig­nif­i­cantly dif­fer­ent from the ones we’ve been accus­tomed to see on a mobile phone. Cam­eras will increas­ingly become just a tick on the fea­ture list and location-aware devices will become more preva­lent (they will sport a GPS chip).

The new fea­tures will come in 3 key areas: first, more mobile devices will be able to multi-task, allow­ing users to use func­tions on their phone while mak­ing a call at the same time. The multi-tasking will extend to wire­less ser­vices too and peo­ple will be able to surf the web or use internet-based appli­ca­tion at the same time as they are mak­ing a phone call. A key hard­ware change in those mobile devices will be an increase in the num­ber of phones (and other mobile device) that not only have a GSM or CDMA chip but also sport a WiFi receiver. This will allow the devices to run across a vari­ety of net­works. I sus­pect (and am prob­a­bly going out on a limb here as my guess is that this would be early) that some of the devices will con­form to the 802.11n WiFi stan­dard, and will use that tech­nol­ogy as a bridge to 3G because 3G deploy­ment in the United States will be slow.

The sec­ond big hard­ware inno­va­tion in mobile devices will be the pres­ence of RFID read­ers and chips that will allow users to use them for person-to-person or person-to-business com­merce, turn­ing mobile devices into elec­tronic wal­lets. Deploy­ments in Near Field Com­mu­ni­ca­tions for credit cards have already started to hap­pen on a trial basis in cities like New York.

The third big hard­ware inno­va­tion in mobile devices, in my mind, will come from the fact that some devices will be DNLA cer­ti­fied, allow­ing them to exchange, pho­tos, music and videos with other devices in your house.

The ser­vices

This year, the rise of mobile ser­vices will be pow­ered by a sharp drop in the price of data ser­vice offer­ings from mobile oper­a­tors, with some oper­a­tors offer­ing flat-rate all-you-can-ear ser­vices to their customers.

In the con­tent arena, the most pop­u­lar type of ser­vice will be near-CD-quality audio down­loads. There may be some offer­ings in the stream­ing audio mar­ket but I sus­pect that those will be very lim­ited. The sec­ond most pop­u­lar con­tent ser­vice, in the mobile space, will be mobile video, with TV and user-created con­tent (mobile YouTube and com­peti­tors) fill­ing that gap. Those ser­vices will be adver­tis­ing sup­ported, with rev­enue shar­ing agree­ment between the mobile oper­a­tors and the con­tent providers.

Map ser­vices will also enjoy some level of suc­cess. The recent intro­duc­tion of Google Maps on the Treo plat­form can be seen as an exam­ple of that trend and location-aware device will offer richer expe­ri­ences in that space, with live traf­fic info, weather, and maybe some adver­tis­ing being part of the offerings.

How­ever, con­tent will not take the fore­front on mobile ser­vices, which will still be dom­i­nated by com­mu­ni­ca­tion as the pri­mary type of appli­ca­tion. In that space, though, reg­u­lar phone ser­vice will not be the pre­dom­i­nant form of com­mu­ni­ca­tion. SMS and MMS will be inte­grated with instant mes­sag­ing plat­forms and email, to pro­vide a com­plete com­mu­ni­ca­tion pack­age. Expect fea­tures like the abil­ity to send text mes­sages to mul­ti­ple par­ties at once to start appear­ing, allow­ing for chat-like inter­faces on phones.

As a result of those changes, social net­works will also start inte­grat­ing mobile appli­ca­tions more closely this year. MySpace and other net­works like it will offer inte­grated solu­tions for mobile blog­ging, pod­cast­ing, and vlog­ging, as well as inte­grated chat and loca­tion aware social net­work­ing ser­vices. Dat­ing ser­vices will be another arena to go mobile with the abil­ity to iden­tify matches within your gen­eral area.

Wrap­ping up the offer­ings will also be lim­ited tri­als in the video­phone space, lever­ag­ing off new next gen­er­a­tion 3G infra­struc­tures. The video­phone tri­als (and 3G in gen­eral) will still be lim­ited offer­ings by the end of the year, due to the high pre­mium charged for such services.

On the voice end, the intro­duc­tion of WiFi on some mobile devices will give rise to VoIP mobile appli­ca­tions. If the devices sport 802.11n receivers and such infra­struc­ture is deployed, ser­vices around that space could eclipse tra­di­tional voice traffic.

Apple

Due to the added power mobile phones now have, the iPod is threat­ened. Apple makes a defen­sive move by unveil­ing the Apple ecosys­tem, cen­tered around use of media in gen­eral and of the Apple iTunes store in par­tic­u­lar. With the intro­duc­tion of its own offer­ing in the mobile space (an iPod with phone func­tion­al­ity and not a phone with iPod func­tion­al­ity) and in the liv­ing room (the already pre-announced iTV com­po­nents), Apple presents a strat­egy that allows for sim­ple inte­gra­tion of all their com­po­nents into a dig­i­tal lifestyle offering.

In the non-media space, Apple bun­dles blogs and wikis with the new ver­sion of OSX and starts offer­ing Web 2.0-like func­tion­al­ity on its Xserve servers, in a bid to get a spot in enter­prise racks. They will also merge in social net­work­ing fea­tures in their cal­en­dar­ing and address book appli­ca­tions, allow­ing for a more inte­grated experience.

In another bid for enter­prise posi­tion­ing, Apple will include vir­tu­al­iza­tion of other Oper­at­ing Sys­tems natively in the next ver­sion of OSX, allow­ing their com­put­ers to run Win­dows and OSX appli­ca­tions side by side under OSX. The fea­ture will take some of the exist­ing Apple boot­camp attrib­utes and turns them into an equiv­a­lent of Parallels.

In a sur­prise move, Apple will also announce that it has signed a part­ner­ship with Google, which will offer the Google Apps for your domain as a replace­ment for the .mac ser­vice offered by Apple. The ser­vice will now be avail­able either as a free ad-supported ser­vice, or on the same pre­mium ser­vice offer­ing as before with­out ads.

On the hard­ware end, Apple will endorse 802.11n as their stan­dard for media dis­tri­b­u­tion, equip­ping all new com­put­ers and the iTV device with receiver cards so it can lever­age off the higher speeds offered by that stan­dard. Because of its long-standing rela­tion­ship with Sony, the com­pany will also decide to side with BlueRay as their stan­dard for next-generation disks, equip­ping their new lap­tops with dri­ves fol­low­ing that standard.

Microsoft

Microsoft’s oft-delayed Win­dows Vista will finally be released but adop­tion of the new oper­at­ing sys­tem will be lack­lus­ter as few of today’s com­put­ers can sup­port it. The same will be true of the release of Microsoft Office 2007, as most users feel per­fectly OK with the ver­sion of those prod­ucts they have run­ning on their desktops.

With the major release of updates to the Win­dows and Office plat­forms behind it, the com­pany will focus efforts in other areas. In the con­sole mar­ket, Xbox 360 will become the dom­i­nant game plat­form, due to slow adop­tion of the PS3 plat­form. Microsoft will inno­vate heav­ily on that plat­form, lever­ag­ing its posi­tion­ing in the liv­ing room to offer more movies, more TV shows and other types of ser­vices around it. Mean­while, the com­pany will also work on a major revi­sion of their Zune offer­ing, offer­ing a new ver­sion of the iPod com­peti­tors that will be bet­ter received than its pre­de­ces­sor. How­ever, Zune 2.0 will not make a major dent into the iPod mar­ket. On the web end, Microsoft will con­sider the acqui­si­tion of either Yahoo! or AOL as a way to shore up its MSN offer­ing and adopt a more aggres­sive stance in its fight for online adver­tis­ing revenue.

Vir­tual Currencies

There will be more talk about the dig­i­ti­za­tion of money this year. Microsoft will use its Microsoft points as a new form of cur­rency that can be used not only on the Zune mar­ket­place and the Xbox live mar­ket­place but also as a way to pay for goods and ser­vices online with approved mer­chants. This will be fol­lowed by sup­port for a pay­ment solu­tion (like Google Pay­ment or Pay­pal) in a stake to get a stronger foothold in that space.

Google will con­tinue push­ing its Google Pay­ment engine, mov­ing it to an inter­na­tional base before year end. Mean­while Pay­pal will con­tinue expand­ing its lead in the space and will start offer­ing vir­tual credit card num­bers that will be usable on any sys­tem and tie back to Pay­pal on the back-end.

But the big sto­ries in the vir­tual cur­rency space will be around the rise of vir­tual worlds like Sec­ondLife and oth­ers, which will see their own vir­tual cur­ren­cies rise against the dol­lar. Their will be dis­cus­sion about the power those vir­tual worlds oper­a­tors have over money flows and calls for reg­u­la­tions of those cur­ren­cies (and pos­si­ble tax­a­tion of rev­enue made in those vir­tual worlds) in sev­eral coun­tries around the world.

Vir­tual Worlds

Speak­ing of vir­tual worlds, there will be a con­tin­u­ing explo­sion in the growth of this phe­nom­e­non. By year end, Sec­ondLife alone will have over 15 mil­lions res­i­dents, but will be expe­ri­ence growth pains. At least one other major vir­tual world oper­a­tors will appear in the space but most cor­po­ra­tions will rush to SecondLife.

The ini­tial hype that started appear­ing in the main­stream press about Sec­ondLife will give way to a num­ber of neg­a­tive sto­ries, prob­a­bly talk­ing about some of the darker aspects of the vir­tual world phe­nom­e­nons, includ­ing gold farm­ing, the sex trade, and gam­bling. Some politi­cian will use the neg­a­tive press as a way to grab head­line by call­ing for a gov­ern­ment inquiry in the deal­ings of vir­tual worlds operators.

While I declared 2007 the year of mobile, vir­tual worlds will come of close sec­ond in terms of high­lights for the year. I sus­pect that Lin­den­Lab will sur­prise peo­ple by announc­ing that it will open up its plat­form and present the under­ly­ing com­po­nents as a new stan­dard for the web. The com­pany will then start offer­ing their grid soft­ware as a stand­alone appli­ca­tion that cor­po­ra­tions can install on their own servers if they want more con­trol. Lin­den­Lab will also allow com­pa­nies to use cus­tomized ver­sion of their thick client that could be branded with com­pany des­ti­na­tions and other goodies.

Due to LindenLab’s strength in the space, many com­pa­nies will con­sider acquir­ing it but many will be turned off by all the neg­a­tive press and poten­tial for gov­ern­ment involvement.

Media

Main­stream media will con­tinue try­ing to co-opt suc­cess­ful blog­gers and will also turn its atten­tion to suc­cess­ful pod­cast­ers and vlog­gers. New stars will emerge online, develop fol­low­ings there and make the jump to main­stream media, while the reverse path will be taken by main­stream reporters and actors, who will increas­ingly start vlog­ging and pod­cast­ing (they’re already blogging).

Pres­sured by lower view­er­ship in their tra­di­tional times­lots, TV sta­tions will start post­ing more con­tent online, with at least one TV sta­tion offer­ing all its prime­time slate online in and adver­tis­ing sup­ported fash­ion. Smaller video dis­trib­u­tors, in the mean­time, will start inves­ti­gat­ing using bit­tor­rent for dis­tri­b­u­tion of their con­tent. Some old TV show will see its archive fully posted online and will start receiv­ing a new stream of rev­enue as a result of that online appearance.

Mean­while, ad rev­enue will con­tinue to shift to web, and media will reluc­tantly fol­low. By year end, most news­pa­pers will have com­bined their print and online news­rooms, and many will be cut­ting back on print to focus more on their online pres­ence. As part of this shift to online, we will also see increased reliance on user gen­er­ated con­tent, with some news­pa­pers offer­ing blogs to their read­ers and encour­ag­ing active par­tic­i­pa­tion in mak­ing the news.

How­ever, most of those efforts will not gen­er­ate the expected returns as Google gob­bles up increas­ing share of over­all inter­net ad rev­enue, and starts expand­ing to audio and video. Dis­cus­sion in the tra­di­tional media will start shift­ing to whether Google is too pow­er­ful for everyone’s good.

Death of the website/webpage

Another impor­tant shift in the media space will be the death of the con­cept of tra­di­tional web­site or web page as a result of increas­ing con­sump­tion of con­tent via RSS or through dis­tri­b­u­tion of wid­gets that can be embed­ded in other people’s sites. Peo­ple will move away from the term web site and start talk­ing about web prop­er­ties. Because con­tent will not nec­es­sar­ily be con­sumed in the creator’s site, there will be dis­cus­sions of a new for new advertising/revenue mod­els for such con­tent and a need for new met­rics to iden­tify reach and audi­ence. This will present a new oppor­tu­nity for com­pa­nies in the web ana­lyt­ics space.

As the web page is no longer seen as the best way to mea­sure the suc­cess of a web prop­erty, the CPM will be on its last gasp as a model for sell­ing online adver­tis­ing, replaced largely by cost per click (CPC) and increas­ingly by cost per action (CPA) as the way to sell ads online.

Web 2.0

There will be increas­ing ver­ti­cal­i­sa­tion in the web 2.0 space, with social net­works, search, and web ser­vice offer­ings becom­ing more focused this year. How­ever, this will also mean that many com­pa­nies that were only sin­gle fea­tures will not be able to adapt and will die. Oth­ers will con­tinue to be acquired for sums in the under $100 mil­lion cat­e­gory and few, if any, will go public.

Tag­ging will become more and more implicit, with less and less users actu­ally doing the tag­ging and more and more tags being gen­er­ated algo­rith­mi­cally. More appli­ca­tions will start look­ing at people’s behav­ior and cre­at­ing the appro­pri­ate tags or mak­ing the appro­pri­ate mod­i­fi­ca­tions in the background.

But it’s not all doom and gloom for web 2.0 as Enter­prise 2.0 becomes a real­ity. Use of blogs, wikis and VoIP behind the fire­wall com­mon­place at most large cor­po­ra­tions and other tech­nolo­gies intro­duced as part of web 2.0 (AJAX, pod­cast­ing, etc…) will become more com­mon in Global 100 corporations.

And speak­ing of the enter­prise space, enter­prise search will be huge, with Fast and/or Auton­omy being acquired by Ora­cle, HP, or Microsoft. More focused will be paid on cre­at­ing strong search solu­tions for the unstruc­tured data on intranets and IBM will be a major player in the space.

Con­clu­sion

At year end, many of those pre­dic­tions will be wrong but a few will be cor­rect. In the mean­time, I’ll try to keep every­one up to date and hope­fully will keep pro­vid­ing great con­tent through­out the rest of the year.

I think 2007 will be another ban­ner year and believe that we are look­ing at another exist­ing set of new devel­op­ments. Feel free to com­ment below and tell me what you think I may have missed (or point me to other prog­nos­ti­ca­tions, as I haven’t had time to get to my aggre­ga­tor since Christmas).

Related Terms

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