I was recently describing my update process to David Strom, after he had posted an entry on his blog about how poor the contact management system in Gmail was, and I hit upon a realization: A lot of the work that goes into keeping all that information up to date seems to be something that ought to be more suited to some level of automation. Why is it that there is no real linkage between my address book, different email systems, social networks, IM systems, Skype (and other voice over IP solutions) and my mobile phone? Each of those appears to live in a silo, unable to offer me a full view of the people I know.

While Plaxo does a good job of synchronizing metadata about people (What I would consider as rank, name, and serial number ie. the basics like physical address, IM address, phone, and email), it has yet to evolve into a solution that would give me a full view of the relationships I have.

I also played with a number of CRM packages like SugarCRM but ultimately, they fail because their view is completely sales-centric, with the idea of people being largely seen as members of a company and sales prospects to be closed. I am not much of a salesperson (unless you consider pushing new ideas on people a type of sale, which arguably it is) but my view of the world is much richer than that. I don’t want to think of people as buyers.

However, the concepts of grouping information in CRMs is somewhat attractive. What I want is a view of my relationship with people that would group:

• The basic type of address book information available in my address book and/or on my PDA and/or phone.
• The rich email discussions I have had with said people
• The similarly rich IM discussions I have had.
• SMS or MMS discussions synched from my phone.
• Social Networks interactions
• Feeds for the person (to things like their blog, their last.fm account, etc…)
• Trackbacks and other blog related discussions.

The interesting thing is that each of this information is available in a digitized fashion but there is no centralized point that allows me to see said information about Joe Smith.

Why is that?

So I’d like to suggest the creation of a new class of software called the “Personal Relationship Manager” or PRM. The purpose of a PRM would be to help you manage your life instead of trying to manage sales.

Basic Personal Relationship Manager

Of course, people are going to say that this product or that product solves my existing problem. In order to get those people to think before they push their solution, let me describe in details what I want:

Contact Information

• Integration of my address book across different email services: the contact part of this is largely completed by Plaxo as they have managed to integrate and aggregate the address book from a number of services. They need to provide an interface to integrate others but they seem closer than anyone else on this.
• Integration of my address book across different IM services: top line, the following would be needed from day one: AIM, MSN IM, Yahoo IM, Google IM, ICQ, and Jabber. I should not have to reenter information for each.
• Integration of my address book across different social networks: this is getting trickier as most of the popular social networks look to that type of data as owned by them. However, an ideal PRM would integrate and aggregate the information my friends give on a social network into a single view.
• Integration of my address book and mobile and VOIP solutions: Caller ID on my VoIP solutions like Skype, Vonage, etc… and on my mobile phone should be integrated into a contact view. Today, my Treo asks me if I want to create a new contact or add a number to a contact if it’s not in my address book already. I want that type of feature across all voice communication solution.

Conversations and Status

• Integration of Email conversations across all email services I use: At minimum, this should allow to bring IMAP and POP into my PRM.
• Integration of IM conversations across all IM services I use: Most IM services now have an archival feature. That should be presented as part of a user view.
• Integration of Social Network Status and related messages across all socially-aware applications: From social network status to Last.FM music, from WeSabe to Twitter, my friends are updating information in a variety of services. I should have a dedicated news feed for each individual view.
• Integration of SMS/MMS history: SMS and MMS sent to my mobile phone should be integrated into the overview of people.
• Possible Integration of Voicemail and audio messages: At a later time, integrating those into the package would be a nice to have.

Input

• The PRM should manage relationships across social network: This ought not be aggressive but the system should check when people I know join a particular network I’m on. If it finds a match, it ought to tell me that it did and, based on my settings, either ask for a linkage automatically, or ask me to approve/deny asking for such linkage.
• The PRM could (not should) become a single point of entry for broadcast messages. For example, if I change jobs (as I did recently), I would update that system with the job change status in a single location and it would update that information across all the touch points where I have entered that information.
• The PRM could (not should) be a single entry point for status broadcast. At the very least, it should allow me to set which system ought to be integrated via simple rules similar to filtering (for example, I could say “If I update Service X, also update Service Y and Service Z.”

Programming Bits

• Low change footprint: A new application should not force me to change everything I already use. Instead, it should work with the applications I already use. This is probably the hardest thing in developing the application I’m highlighting as it will have to integrate with other services/software via some kind of service oriented architecture but not take over their basic features.
• Fully addressable via API: The PRM, if built successfully, would become central to managing relationships. As a result, it could become the source of data that applications could be built on. Because much of the data is personal, a strong set of security and access controls would need to be in place in order to ensure that only the data people in my PRM want to distribute is distributable. On the other hand, the data should be formatted in such a consistent way that developers could build applications that integrate with the PRM.
• Online/Offline addressable: Knock me off the network and I should still be able to have access to some of the data. Put me back on the network and I should be able to resync it all with the most up to date information.
• Decentralized: People tend to prefer having their contact info in the hands of more than one providers as they feel that type of information is largely personal. A PRM solution would thus have to be in a mode that can be federated so no single entity is in full control of the data.

So the purpose of the system, once built, would be to give me a view of my friends/contacts/etc… that is consolidated. It would probably provide me with a high level contact overview (listing all the ways to get in touch with someone), and then allow me to drill on the different conversations I’ve had with the person across a variety of systems (Email, IM, phone, social nets) as well as give me an overview of what they’ve been up to thanks to a status message and socially aware apps screen. And it would have to do all that without me changing any of the systems I’m currently using. It’s a tall order but it’s one that, if satisfied, could easily become the central way for people to manage their relationship.

If your product does indeed satisfy all those requirements, you may have made a sale. And if you have an interest in developing a PRM, I’ll be happy to be an alpha tester.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Personal Relationship Manager. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

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).

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2007 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Broadband Penetration

It wasn’t much going out on a limb to estimate that broadband penetration would increase. However, the implications are generally harder to extricate. The rise of VoIP has been realized, with my predictions about large-scale operators adopting VoIP as their own only partially realized. All the major operators do have a specific VoIP offering but few are using it as a total replacement of their backend so I guess I was overly optimistic in my assessment.

In terms of other implications of broadband, though, my predictions about video where correct: Apple did announce (or is that pre-announce) a living room strategy with the iTV (new name to be announced at MacWorld). My assumption that they would not market it as a computer are correct and that direct access to the media store and emphasis on HDTV seem to be correct. Also in video, Google did offer a pay per view system (on Google video) but not in partnership with AOL… and my assumption of this generating good buzz for AOL, allowing it to do an IPO, was way off base.

TV stations increasing their online position with advertising supported media was also correct. I was, however, early in my predictions about ad insertion mechanisms being better targeted than traditional advertising. Currently, online video advertising is still about equivalent to TV advertising (minus the large audience size) so better targeting is something that will probably come in the future.

YouTube could easily be considered a new type of video aggregator, and its acquisition by Google fits into my thinking about major portals acquiring those new aggregators. I was also (I must admit my own surprise here) partially correct in predicting that Tivo would open up and start positioning itself as a new aggregator for content online and offline. I was dead wrong, however, on it being acquired, as I was about Yahoo! acquiring NetFlix.

TV stations going fully online was also overly optimistic. While a few efforts, like TrioTV, were launched as a way to keep flagging brands alive, no small station went completely online in 2006. What happened, however, was that large stations put popular shows online, rankling some of their affiliates in the process. The idea of putting local news online is what I would consider one of the big missed opportunities for traditional media. It’s content that could be repositioned online easily and could be sold on a network basis in terms of advertising so I’m surprised that it hasn’t been done yet. Maybe in 2007.

My predictions about the trajectory of vidcasting seemed to be pretty dead on. Amanda Congdon signing up with ABC can be seen as the beginning of a trend, in terms of vidcaster moving to traditional media. Traditional media are still seeing this phenomenon as small and largely to be ignored but the rise of citizen journalists has gotten them to pay a little more notice (reference Senator Allen and the Macaca incident and you start understanding the power of citizen powered video).

On the infrastructure end, my predictions about outcries relating to the security of the network were wrong but incumbent line operators asking for more control was not: the fight over Net Neutrality is the battleground pitting operators who want to close up the net vs. people who believe that the Internet has been successful because of that openness. I sit in the latter camp and I think this fight will continue through 2007 and probably beyond.

Growth and Scalability

My predictions about 2.0 sites being unable to cope with explosive growth proved wrong. Looks like there are a lot of people out there who are doing great work making sure that those sites stay up and kudos to them for that.

My fears about mainstream media hedging out the traditional blogs also appeared wrong. Traditional media did attempt to co-opt blogging but, apart from a few exceptions (Business Week comes to mind), few have achieved any major traction in the space. It appears that established bloggers are now the new gatekeepers of the blogosphere and traditional media will not be able to displace them (I suspect that the next move by traditional media organizations will be to co-opt those bloggers now).

Radio stations did offer more shows via podcast, which is a very welcomed improvement I had predicted. However, very few TV stations are offering shows via vidcast. Hosting services offering a share of advertising revenue did start to appear but few podcasters signed on, as it turns out that my predictions about escalating bandwidth cost constraining podcasters were wrong.

On the crash and burn side, few companies actually did so little talk of bubble burst 2.0 have happened. Stories about Google hubris have started appearing and as I write this, Google has lost 10 percent from its highest price this year (the stock is trading at US$461 while its high was US$513) so I guess I got this one right too.

My bets on consolidation were wrong and LinkedIn was not acquired. Oh, and tagging as a market hasn’t really been decimated. Instead, it appears that Yahoo! loves the concept and has gone out to buy most of the players in the space.

My prediction of a massive Google backlash also proved incorrect. While rumblings are starting to happen among tech luminaries, those have had little effect on how business operates and interacts with Google, and thus has had little effect on Google itself so far.

While new companies emerged in the analytics space, none of them really provided anything revolutionary I can think of so my guess on this space being a great new area of activity was wrong. However, I think it’s a space that does need more work.

Trust did not become as hot a topic as I thought it would. While there were a few discussions around trust-related issues in the blogosphere (the most recent examples to come to mind are the payperpost debacle and the recent Microsoft laptop delivery discussion), trust itself did not become a major topic. My prediction about anonymous editing of Wikipedia was partially correct, though, as Wikipedia is working on a tighter policy and better controls. My predictions regarding a major hack of Wikipedia were wrong (thankfully) but I’m glad that they are taking the appropriate steps to deal with minor problems before they became major.

Conclusion

I have to say I’m pleasantly surprised with how accurate a number of my predictions were. This year was a pretty amazing one and my success rate on this effort makes it that much harder in terms of predicting 2007 as I now have to keep up with a good rate of success. We’ll see next year when I review the 2007 predictions I should be making soon.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2006 Predictions — The Review. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Understanding the mobile landscape

In a lot of ways, the mobile phone landscape in the United States could be considered a case study into how sometimes the free market fails end users. Let me explain: in the late 80s and early 90s, there were two different types of technologies available in the US for mobile phone delivery: CDMA and TDMA. However, due to vendor differences, the market fragmented even further with Sprint PCS (now Sprint Nextel) adopting a different flavor of CDMA than Verizon. Meanwhile, Nextel (now part of Sprint Nextel) adopted a proprietary technology called iDen, which was based on TDMA while T-Mobile and Cingular adopted GSM, a flavor of TDMA that has become the global standard outside of the US.

The bottom line on this whole acronym soup is that most mobile operators in the United States cannot operate on each other’s networks because they are using different technologies. This is why foreigners visiting the US generally lament about the poor quality of the mobile experience in this country and why the US is falling behind in the global mobile race. This is also why most American mobile phones don’t work abroad.

Because Cingular and T-mobile used the same GSM technology, they agreed to share their networks, allowing their customers to use both networks transparently, in a situation similar to the one one would witness outside of the US. The fact that they use GSM is also why a lot of cool phones make it to their networks before they are available to other providers. Verizon is now hedging its bets by introducing hybrid CDMA/GSM phones under the heading of Global Phone Service. To many outside the US, it looks like GSM is already the winning format in the standards war.

Enters Apple

Traditionally, Apple has been known for its exceptional industrial design (creating hardware people lust after) and marketing (also known as the reality distortion field). However, one of the other interesting features of Apple is the company’s willingness to take a standard and move forward with it. For example, by rebranding the 802.11b standard into Airport and later the 802.11g standard into Airport extreme, Apple pushed forward usage of wireless networking. Apple was also the mainstream PC first company to decide to drop disk drives being installed by default on their machines, prompting the rest of the industry to follow suit. The recent removal of modems from their new laptop lines does, in my view, harbor the death of modems being built into computers by default.

Meanwhile, the recent success of the iPod eco-system has gotten many vendors to rethink their strategy when it comes to the portable media player.Microsoft is now creating a closed system called Zune, following the Apple iPod + iTunes strategy and Sandisk and Real Networks are working on a similar walled garden approach. These trends seem to be defying common wisdom as to the progression of markets, whereas markets would generally tend towards standardization.

But what does all this have to do with mobile, you might ask?

Well, the question here is how successful Apple can be. If it creates a product that is so compelling that users will be interested in switching carrier for it, Apple may actually tip the scale on adoption of GSM in the United States. Going back to the ThinkSecret piece

insiders say Apple is internally estimating that shipments of the iPhone will top a staggering 25 million in 2007 alone

According to Gartner, roughly 700 million phones will be sold this year so it’s not improbable that Apple would try to sell 25 million, which would garner it a marketshare of 3 percent. But the overall market numbers may be misleading as many of those mobile phones are on the lower end of the price range, aiming at the developing world, a market Apple is not current going after. The numbers get more interesting when one considers single operators: for example, Cingular is the largest US operator with 56 million subscribers. If Apple were to work its magic here, Cingular could see anywhere up to a 10% growth or more in their subscriber base just on that one product. These users would move to a GSM network and away from CDMA technology.

From there, two possible scenarios could evolve: Apple could decide to license CDMA technology from Quallcom (CDMA is a proprietary technology so every vendor has to pay Quallcom for its use) or say that they are happy in the GSM-only market. If they were to do the latter, they could potentially tip the scale in a life-long fight in the US, making GSM the standard.

But why is Apple interested in mobile?

When considering rumors about an iPhone, one might wonder the interest Apple may have in that marketplace. After all, it’s not one that the company has ever entered and there doesn’t seem to be much overlap with their current existing products.

However, one has to look at the natural progression of the music business to understand why Apple would be interested in this market segment. While its current iTunes store sells roughly US$2 million a week of tracks, the ringtone market is much larger and the margins are supposedly better. So Apple is getting into the market for two possible reasons: first, it needs to protect the market it’s created with the iPod and sees mobile as the next evolution and a potential competitor to their single use device. Second, the company sees a market it wants to dominate. So that adds up to a new phone

But can Apple tip the scale on GSM?

As it stands, GSM in the US is supported by 2 of the big four operators. If Apple is successful, one could see defection from the other two. It’s not going to be an overnight kind of thing but, much like Apple has forced its competitors in the music field to reconsider their position, it could happen in the communication field.

Of course, all this is predicated on those standards still being relevant further down the line. If phones move towards more of a VoIP model, as I suspect will happen over the long run, this may all be irrelevant but, for the time being, a major shift of that kind could have tremendous impact in the telecom world.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Could Apple Solidify GSM in the US?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The Music Industry

Take, for example, the music industry. Traditionally, the music industry has been based on aggregating multiple songs on a piece of media. Every few decades, they would benefit from the introduction of a new technology (for example, shifing from LPs to 8-tracks, then to cassette tapes, then to CDs) as people had to basically purchase the same good over and over again when they upgraded their equipment. Then came the concept of a digital track available via download. The music industry is trying to resist that change because the shift from selling pieces of plastic at a premium to buying individual tracks hurts them in two ways:

• first, they now have to ensure that every track they sell has the potential of getting some buyers. Gone are the days of packaging some sub-standard product with some better products in order to average out the difference. Now, every track has to fend for itself.
• Secondly, they can no longer rely on technology as a way to get sell the same track again and again to the same people.

So, of course, they are resisting the change. The issue they have with MP3s and downloadable music does not have to do with people sharing things illegally (as people have been sharing music illegally since the first days of recordable media) but rather because digital music has the potential of making their market a lot more efficient. Now that goods (in this case, songs) are parceled out in their most atomic way, there is no room for them to repackage them into something bigger that may be 10 percent good and 90 percent useless. Their approach to fighting things, of course, is to sue and attempt to create a new closed system through the use of digital rights management (DRM) in order to protect their advantage.

The advertising industry

Another industry getting hurt by the Internet is the advertising business. Traditional advertising business have been based on selling a general audiences to advertisers. The model, however, was based on the concept that some percentage of the audience would buy the product. What was always in question, though, was how much that number was. Then came the Internet with its easy to measure model. Ad banners were measurable but response rates were low. Then came google, with its rich contextual advertising model and its offer to charge advertisers only for the clicks they received. This started to change expectations as to what is now expected of advertising. As a result, advertisers are becoming more demanding of traditional media, requiring more information about the effectiveness of their purchase. Television, newspapers, radio are now considered less effective, because they can’t provide the rich tracking data that the internet does. The net result of this is that advertising is becoming more efficient. Along with that efficiency comes the fact that less dollars will be wasted and therefore less dollars will be spent. Because expectations have changed, advertising is suffering. Their model is evolving and they’re having difficulties adjusting.

The phone industry

The Internet is also starting to hurt the phone industry. The recent announcement by Gizmo that they would offer free calls is just another thing highlighting how the phone company model is broken: traditionally, phone calls have been very cheap to deliver (in an order of magnitude much lower than 1 cent) and phone companies have been charging a very large amount for those offerings. Voice over IP is undermining that, showing people that phone service can be very cheap. In the US, the telcos are trying to fight this by attempting to create a multi-tiered internet where such services would not go through. That model is doomed as mesh networks could undermine their ability to do so. Once again, efficiency is making a product much cheaper. At that point consumers win and the remaining players are making good money but are playing in a marketplace that is much smaller than it used to because inneficiencies have been worked out of the system.

Services

Service providers who do not need to have a foot in meatspace (accountants, lawyers, etc…) have the potential of being affected too. In “The World is Flat”, Friedman argues that this type of work is shifting overseas. He’s right and the long term trend has the potential of shaking up many services industry by providing those services at a much cheaper rate. Once again, the introduction of the internet and globalization is making a market more efficient (hence cheaper costs) but leaving behind a much smaller marketplace.

What to do?

When this stuff happens, the only thing you can do is figure out how to move upstream or change your business model. Large corporations are generally slow at making those types of evolutions but it’s a make or break scenario: adapt or die. The process can be painful: One of the first thing to do is figure out where your fat is and reduce it. This means getting rid of people who do not provide real value. The second part is figuring out which part of your business are highly efficient and invest in innovating with those companies. Ultimately, costs will continue dropping and survival will continue to be about increasing efficiency.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Ruthless Efficiencies. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

We are already starting to see the beginning of that phenomenon with Voice Over IP, which moves the traditional phone communications over to the Internet. Similarly, television stations are starting to experiment with distribution over the Internet, moving what was once running on a different network to the Internet.

IPzation represents a threat to a number of existing business models because it represents a shift from traditional inefficiencies that were taken advantage of by large providers to the Internet.

Assuming users won’t catch up

Telephone companies were safe in the knowledge that, as long as they had control of the telephone infrastructure, they were assured a near-monopoly over that type of business. They have managed to parlay some of their initial advantage into a position where they are offering a way to access the Internet (via DSL, for example) but are starting to see competition from other entities with access to the home, like cable companies, for example, which have managed to use their access to household’s TV screens to create another way to access the Internet. Because the communication layer is happening over IP, the applications can run on either network without any problem, creating a more competitive market.

However, built into the business model around providing DSL or cable access to the Internet were large subsidies to the telecom providers. For example, a DSL line currently only takes a couple of dollars to provision and maintain. The same economics are true of the cable industry. The reason for that low a cost is that the assumption, based on previously established Internet usage patterns was that users were not going to use the full service they were provided all the time. As such, providing what looked like large pipes to the Internet was predicated on a model that assumed that users would use those pipes in a sporadic manner (fetching email or downloading a web page) which could balance access to the larger pipes and distribute it across users.

As more bandwidth-heavy applications are arriving, the telecom providers are starting to complain that they cannot support users following that model. Basically, what is happening here is that they have sold a good they cannot deliver at a price point they cannot offer. Because they have overpromised, they are now starting to worry that users will actually use what the telecommunications companies claimed to offer.

The inefficiency they had assumed was wiped out by Internet Protocols because such protocol allowed for offering services like the telephone or video over the network, something that telecommunication providers had assumed would not happen. Because telephony and video went through an IPzation process, the telcos need to rethink their business model.

Assuming a geographic hedge

Television companies used the geographic boundaries in terms of distribution of content from a TV station to create affiliate networks of TV stations that each had their own business protected in terms of their local area. As such, one could not find two stations offering the same show at the same time in the same geographic region.

There are a number of assumptions here: assumption about physical space, assumption about time, and assumption about monopolies. The economics of television are now faced with challenges as IPzation takes place because those assumptions are no longer valid. Digital Video Recorders have broken through the notion of time-slots and new devices like the SlingBox are breaking through the notion of space. The TV networks are trying to fight back by starting to offer some of their products over the Internet.

However, in order to fully understand the long term impact of IPzation on the TV business model, one needs to take a step back and start thinking about what business TV stations are in and that business is one that is based on another set of inefficiencies. I am talking here about the advertising business which, when it comes to television, relies on delivering an audience to advertisers and charge a premium for it. John Wanamaker, the father of the department store and the father of modern advertising was known for saying “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” TV advertising models were largely based on that old model. The came Google and advertisers started demanding more information about what it was they were getting from those audiences. As Internet advertising has become more prevalent, the notion of of measurable results has gained mainstream acceptance among advertisers and they are now demanding similar types of metrics from other business and TV station find themselves in the cross-hair.

This is another effect of IPzation. As more and more businesses get transacted over the Internet, the common standards created around IP technology force the companies to rethink their approach. IPzation is ruthless in its dissection of core business practice because it is technology and, ultimately, technology does not care about people because it is not sentient.

This is the third article in a 6 part series. You can read the following parts here:

• Part 1: Intro
• Part 2: Always on
• Part 3: IPzation
• Part 4: Sensors
• Part 5: Participatory Applications
• Part 6: Conclusion

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Future Tense — IPzation. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Broadband penetration

Broadband penetration will continue to increase in the United States and Europe. Large scale deployments of city-wide broadband efforts in several large cities will start making internet access similar to phone or electric service, widespread and the type of thing few people think of. On the bleeding edge of the Internet access development world, some large scale networks, most probably coming from phone companies, will break the 10-Mbps barrier and close in on the 100-Mbps speed, making internet access on par with regular local network access.

The downside of this widespread deployment of high-speed internet access will be in the phone industry, where next generation (3G) rollouts of high speed wireless networks will prove costly and offer lackluster service considering its high price. This will force a drastic reduction in prices towards the end of the year or early 2007, in an attempt to recover some revenue from the large investments.

Implications of increased broadband penetration

The increase in broadband penetration will have several large implications, including the rollout of more voice over IP services, video services, and the infrastructure security.

Voice Over IP

Voice over IP will continue to see widespread deployment and large phone companies will start migrating their full networks to IP-based traffic. This will make VoIP the primary form of telephone communication for wired lines by the end of 2006, though few people will be aware of the change as it will largely happen behind the scenes, not touching people’s independent system.

Telephony services will increase as the VoIP phenomenon continues to increase. Expect early efforts in video telephony to start rolling out and becoming more mainstream towards the end of the year. Also expect to see the rise of wireless devices that can bridge the gap between computer and regular telephony, providing access to the network in a number of different ways.

Video

Video over IP will be very hot in 2006, with several major changes in the industry. First will be the announcement, by Apple, of its new mac-mini intel-powered platform designed specifically for the living room. Following on the success of the iPod, Apple will market the device less as a computer and more as a video consumption tool that will include stunning high definition resolution and will offer direct access to the iMedia store (formerly known as the iTunes music store) where one will be able to download movies and TV shows, as well as content created by amateurs.

Google, in partnership with AOL (and its sister companies within the Time-Warner world), will offer a pay-per-view system, mirroring some of the iMedia store offerings. The system will be available both in the AOL closed garden client (where it will use some level of acceleration to speed up delivery) and on the web through a new client package offered by Google and largely developed by the AOL client software team. The strength of the move will generate enough positive buzz for AOL that Time-Warner will be able to spin-off the unit and will be considering an IPO towards the beginning of 2007.

Seeing their advertising revenues eroding, TV stations will start offering more content online, also sponsored by advertising. New types of online video ad insertion and tracking system will be created by several companies, with Google, Microsoft, and Yahoo! offering aggregated model based on something similar to Google AdWords but offering not only targeting based on keywords but also based on certain demographic information.

New video aggregators will start appearing, offering a way to customize your own TV station. Some will be acquired by the major portals (unless the portals themselves have already developed that capability by the time this trend manifests itself). Meanwhile, Tivo will recast itself as one of those portals and will be acquired by Microsoft and merged with MSNTV (unless it is acquired by Sony, and merged with the PlayStation 3, or Panasonic, and kept as a standalone.)

Having lost in the bidding war for Tivo, Yahoo! will decide to acquire NetFlix and merge it with some of its video offerings, providing not only distribution of DVDs but also online streaming of content.

On the strength of revenues from online ads, some small cable or local TV stations will start offering their complete programming slate online, for free, and adverting supported. This will rankle a few of the cable companies and syndicators who looked to those companies as another revenue stream. Meanwhile, on the same basis, most local TV news will be available online for free through an advertising supported model. During one major story, a local TV station’s feed will compete with the national networks in terms of reporting, as more viewers flood its website than watch the same story unfold on television.

The competition for those types of stories will continue to increase, as citizen journalism provides raw unscripted video of events. Videocasting, following on the success of podcasting, will start seeing some traction with a few podcasting and vidcasters signing deals with traditional media. Traditional media will look at it as an interesting set of development but one that ultimately won’t be trusted by the public because they do not have the right seal of approval; their prediction will turn out to be wrong.

Infrastructure

The rise of broadband and the increasing numbers of basic services running on the internet infrastructure will give rise to fear that the infrastructure is under-protected. From a technical policy viewpoint, electronic infrastructures will become a major national security matter with fears that the very openness of the internet could represent a large security risk. This will be seized upon by the network providers (phone companies, cable companies) and some security consultants as a way to push for policy that will allow those incumbent communications services to administer their networks with tighter control, with decision as to what they are willing to let run on the network and what they are not willing to. A subsequent battle will ensue as VoIP companies and media companies will complain about the network providers squeezing them out. No decision on any of this will be made in 2006 but the debate will continue through 2007 and beyond.

Growth and Scalability

2006 will be an explosive year in the Web 2.0 sphere. Explosive because it will see triple if not quadruple digit growth in number of users but also explosive because it will see several popular sites unable to deal with the capacity issues relating to that explosion.

On the RSS end, the explosion in growth will really start when Internet Explorer 7.0 becomes a priority upgrade on windows stations. The inclusion of some RSS feeds as defaults in the browser will prove to be too much for some sites which had not expected the onslaught of millions of new hits. Readership from RSS readers will increase as more users realize that they can get their favorite sites delivered to them instead of going out and checking to see if they are updated.

As more people discover RSS, more of them will start valuing blogs and many will start their own. However, the concept of becoming a professional blogger will decrease as many people who thought they could make money off their blog will find that the effort in doing so was higher than they had expected and will abandon their blog.

Meanwhile, other web 2.0 subjects will fail: Tagging services like del.icio.us will be see as too complicated by the general public (although they will continue to thrive in the more geeky world) but tagging of pictures (as in Flickr) will continue to grow. Most blog networks will fail to attain the amount of traffic required to play seriously in the advertising world and will be forced to either merge or shut down. Meanwhile, companies offering only a set of web services with the idea to generate revenue solely from advertising may find themselves in a bind as advertising revenue will fail to grow at the same pace as the new offerings.

Implications of Growth

The explosive growth in traffic see during 2006 has implications across a number of players in the blogging world and metadata space. It also has implications in terms of scalability, business, and trust.

Blogging, podcasting, vidcasting

As blogging takes better hold in the mainstream (your parents WILL be blogging), the number of subscribers per individual blog feed will drop into the low teens, with blogs being read by close family members and friends only. A few breakout blogs, specializing on particular narrow subjects will manage to increase their readership but the world will largely consolidate around less than 1,000 major blogs: of those, the vast majority will not be from any members of the Technorati 100 or any other such list. The vast majority of those mainstream blogs will be the ones created by mainstream media outlets, which will use their existing reach to heavily promote their own blog.

Radio stations will increasingly start offering podcasts and TV stations will offering vidcasts. Most, however, will do so through centralized hosting capabilities provided by their parent companies. Smaller podcasters and vidcasters will have a hard time to compete with those larger companies as they are forced to look into ways to support their own bandwidth costs and will sign contracts with hosting services promising a share of advertising revenue in exchange for doing the hosting: that share will largely go to the hosting service with many podcasters/vidcasters finding they are not really making more than a few 100 dollars a months from all their hard work.

Crash and Burn

One of the hosting services will crash in a major way, taking with it a few days worth of the hard work of thousands of people who were hosting on it. The provider will initially recover but suffer a subsequent crash that will seal its fate as a doomed company. The majority of its users will leave and join one of the larger hosting services provided by Yahoo!, Microsoft, and Google.

Beyond the hosting world, scalability will also be a hot buzzword as more services, ranging from RSS hosting providers like FeedBurner to search engines like Technorati and Feedster to analytics providers like Google and MeasureMap will experience temporary failures and growth pains.

The cost of upgrading the service infrastructure will be too much to bear for some companies, which will be forced to shutter their door, sell out, or merge with a similar service. Meanwhile, many web-based service companies will fail to generate enough advertising revenue to continue upgrading. A flurry of mergers and closures will happen over a few months, leading people to wonder if this is bubble bust 2.0.

The downside of all those fears about a bust will be in the increased number of negative stories about technology in the mainstream media. Stories will mention the hubris of web 2.0 founders and will showcase Google as a typical example of this hubris, highlighting its free lunches and other things that were thought cool in 205: As a result of all those negative stories (and others but more on that later), Google will loose several billions (possibly even tens of billions) of dollars from the high of its market capitalization, shedding anywhere from 10 to 25 percent off its high.

After the consolidation, there will only be one or two independent players in each of the following (notwithstanding the fact that there will also be offering from the bigger portal players): blog hosting , vlog hosting, podcast hosting (WordPress and Typepad will either be the two in these three sectors or will have merged), blog search, social networks (speaking os social networks, Yahoo! or Microsoft will buy LinkedIn (if it’s Microsoft, LinkedIn will quickly be integrated with Outlook and offer Plaxo-like features).

Meanwhile, a sector which will have been decimated will be tagging. Following slow adoption by the mainstream, largely due to the complexity of adding tags to pages, many tagging companies will fail. Tagging, as a concept, however, will remain and be adopted by most major search engines: as Metadata entry is simplified with the introduction of Windows Vista and Office 12 (both of which will be delivered by Microsoft to a relatively lukewarm market), and tagging becomes a browser feature, it stops being a differentiator.

Trust is hot topic

Fear of Google knowing a little too much about people will bring a slate of bad press for a company that was the darling of the mainstream media in 2005. The introduction of its Google finance service, hooking up into people’s bank accounts and payments systems will be seen as the company becoming too large a player, with fear of it becoming a monopoly. The backlash will first start in silicon Valley, with many tech luminaries starting to tear down the company. It will continue with publications that were once its biggest cheerleader becoming its biggest detractor. As a result, many of the companies that relied on Google for key services (advertising, analytics) will try to distance themselves from it and start looking for other providers (meanwhile, companies looking for funding will excise Google from their business plans, in order to avoid being associated with it by VCs). Yahoo! will pick up some of the adsense/adwords business, along with Microsoft, which will offer a similar service.

Meanwhile, in the analytics space, new companies will be formed and attract a lot of venture capital. Many of them will offer ways to opt-out of their tracking and some will offer added incentive to people willing to provide them with more information. New models in the space will emerge and at least one player will provide a revolutionary approach that will change the analytics landscape.

In the blogosphere too, trust will be a major subject as some of the top bloggers will grapple with issues surrounding defamation of character, libel, accuracy, and reliability after a top-name blogger is sued for something he/she said or linked to. Furthermore, some of the top bloggers will grapple with issues relating to invasion of privacy as they become more famous in the mainstream media.

On the Wikipedia end, anonymous editing will be abandoned after the revelation of a major hack altering minor facts over several months in an automated fashion has rendered a core version of the wikipedia unusable. The wikipedia trustee will revert wikipedia to an earlier date, erasing all changes performed during that period of times and destroying several significant entries on 2006 current events. The mainstream press will pile on about the inaccuracies of wikipedia, bringing back earlier scandals as proof that no information on the internet can be trusted unless it comes from a reliable source (incidentally presented as being a member of the media establishment).

Conclusion

In late 2006, a substantial portion of these predictions will be wrong and some may turn out to be dead on (although most of the ones mentioning companies by name will most probably be wrong).

Meanwhile, on a personal level, 2006 will be a year of big changes. However, I promise it will also be a year of continued writing on TNL.net, even if it is at the same substantial post every week or two rate that readers have gotten accustomed to. I hope you’ll join me for the ride.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2006 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Voice Over IP

The big surprise here was the acquisition game. When I made the predictions last year, i thought that the acquirers would be larger telcos. However, companies like Ebay and Yahoo! have been playing the acquisition game, looking at telecom space as a feature to add to their product set.

It does, however, show the rise of European players in the US telecom market. Skype was clearly a European player that was seen as a major player in the US market, which explains the acquisition by Ebay.

Asterisk also experienced a banner year with deployments increasing in the small and medium enterprise market. It has not yet broken into the large scale enterprise market so I get only half points for this prediction.

Entertainment Convergence

The convergence I predicted in the post is now in full swing. the introduction of the Xbox 360 as a convergence device and the rise of the video iPod as a way to move television into the arena of small consumer electronics has turbocharged the space.

While MP3 has not yet become the standard for mobile phone, it is starting to emerge. The disastrous release of the Motorola ROCKR has probably slowed progress in that area but I still content that it will happen in the future. Pass on this one.

Meanwhile, the prediction that the movie industry would start suing is starting to come true. They’ve started with a campaign trying to convince people of the evils of illegal downloading. However, the MPAA seems to have learned, to some extent, about the disastrous effect of suing one’s customers and is being careful to not follow in the footsteps of the RIAA.

Also as predicted, legal downloading of television shows is happening. It came from an unexpected source in the form of Apple, which is now taking the formula it applied to music into the rest of the space.

The decision by both XM and Sirius to offer a combined solution that includes both Internet streams and satellite feeds in the same package is following my prediction that radio is about to be upended.

The rise of user-created content is also one of the big stories of 2005 and I believe it will continue through 2006. While no star has broken out of the podcasting and videocasting world, I believe we’re on the cusp of seeing this happen. On the video end, I believe rocketboom will be the first star to break out. Their recent announcement of a partnership with Tivo is just the beginning. On the podcast end, the space is getting more complicated: the entry of the mainstream players into the market could act as a buffer, keeping new players away or at least protecting the status quo.

Business

Large mergers did indeed take the forefront in the 2005 year, however none of the mergers I predicted actually happened. A lot of money went into merger and acquisition budgets and has increased greatly in 2005.

Also impressive is the fact that many of the smaller players were the target of acquisition. It seems the new exit scenario for web 2.0 companies is not to go the IPO route but to find a larger company that will gobble you up.

Apple

This one is way off. Most of my predictions were off base: Apple did introduce a video player, to critical and consumer acclaim, and an iWork product suite, but they did not introduce any photo camera, a recording player, or a way to send images straight to printers. Their partnership with a phone company (Motorola and the ROKR) was fairly disastrous, showing the company still prefers going at it alone than trying to partner up.

Development

Service oriented architectures, trust and security did take to the forefront this year. Meanwhile weblogs and content management systems have not merged yet. However, more and more large companies are starting to take a look at weblog software, with RSS become a major distribution channel. This trend will continue to accelerate into the new year.

Personal

On the personal front, I made a commitment to blog more often. While it looks like this commitment will not come true (I didn’t create more entries), it comes with a substantial disclaimer. This year, I tried to focus on longer, more analytical types of pieces. My decision of doing it that way was largely due to a decision to try to add to the overall discussion instead of rehashing what other people have been saying. The interesting thing is that this approach has actually resulted in more readership. You don’t have to blog a lot to get people to read you; you just have to craft quality blog entries.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2005 Predictions: Keeping the Score. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The power of the network and links

Many in the blogosphere say that traffic is not a good measure of what blogs are but that conversation, as represented by links and indexes like Technorati, represent a more accurate view of the value of a blog. As a result, I decided to look at how may sites were linking to sites in the WeblogInc empire. Jason and Brian have been doing a great job at building a stable of blogs but it seems a large portion of their success comes from a single blog. Let’s dig into the numbers.

In the following table, I took a look at the list of blogs listed on the weblogs Inc. main site and ran the Technorati site numbers against them (duplicate entries in the weblogsinc list were removed as well as entries that pointed to sites which no longer exist).

Once you have this data, you can start doing some quick analysis. For starters, I started to analyze what percentage of the overall network linkage each blog represented. I then took that percentage figure and used it against three different financial scenarios which have been floated around: some people say the company received 25 million dollars in the acquisition, and others have mentioned a figure of 30–40 million dollars. The details look as follows:

However, in order to get a cleaner picture, I started to dig into more details. First, I analyzed the different segment performance:

What’s interesting here is that the consumer segment is responsible for the majority of linkage so I dug in much further. What I found is that the sum of the EnGadget linkage represents over a third of the overall network traffic (the actual number is 15,529 links for a 35.07% share of the network).

Data for the rest of us?

In acquiring Weblogs Inc., AOL has now provided us with some numbers traditional media are willing to pay for a blog. Looking at the numbers above, one can try to guess at the value of a link from an external site. a single link on the weblogsinc network represents 0.002258559942180087 percent of the overall network.

At the different rumored price points from AOL, it looks as follows:

I don’t know if those values are based on any real rationale but it’s nice to dream up the value of one’s blog based on this.

Should we now assume that traditional media companies are willing to pay between $500 and $1000 per site that links into a blog?

Not quite. The incremental value is in the size of the network and the underlying tools. Jason and Brian have been working on developing a blog authoring technology, called BlogSmith, that sits at the core of their network and one has to believe that AOL saw some value in the software too. However, one can easily say that blog valuations are going to be easier to make after this deal since it provides the first yardstick in that space.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Doing the numbers on the AOL-WeblogsInc deal. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The problem is one of, well, scale. Let’s say that I want to make a movie that will rival Star Wars in terms of special effects and will have a plot that will take the story all over the world. So I can look at the aggregated model to make that movie. I’ll put the word out on my site and, hopefully, people will contribute money and/or services. Granted, this process will take time as I’m not a movie insider and have no proven track record in terms of making movies. So, I now have to limit my ambition and make a short demo.

I do that and it’s good enough to convince some people but not good enough to convince enough people to raise the funds. Let’s assume, for argument’s sake that I manage to aggregate 10,000 people and they are all willing to chip in $100 towards making the giant movie. That’s really great, I now have a fund of $1 million. However, the ambitious project needs 10 times that. What do I do then?

In the scale world, one of the people who sees the demo is a development person for a major studio. They like the demo, believe that there’s an audience for the story and throw $10 million behind the project. Somehow, I manage to get this project done on that budget and have a completed movie. The next thing is marketing it… Generally it takes a lot of money to market but, there’s one thing: if you’re with a movie studio, it’s likely that the studio already has pre-established relationships with media and can get me interviews, which help promote the product. It’s also very possible, in these days of media consolidation, that the studio which sponsors my movie actually owns some other media and can use those for cross-promotional effort, therefore lowering the cost of marketing.

Granted, I used a movie as an example but what about retail. I want to get a product out. This means designing the product, putting it together, marketing it, and selling it. I could aggregate those functions (and in many cases, it is being done) but it depends on the market. For example, if I wanted to introduce a new computer, would I be more successful as an independent player starting from the ground up or as a player within an established organization (let’s say Dell or Apple, for example) which already has all the parts?

Going beyond computing, would I be more successful introducing a new cereal as an independent firm, aggregating relationships across several industries, or as someone working for a large scale player, which already has all the parts?

Telecommunication actually works within the model Jeff proposes but more because it is a single service/technology built on top of other tech (ie. the Internet infrastructure is enough to support it and has been built and VoIP can now ride as an extra on a multi-use network)

Labor may look like a perfect model for aggregation but the maintenance part and tracking needs to be emphasized here. Also to be taken into account is the level of experience of the laborers. For example, I can aggregate and offshore an IT project but I can’t ask the same people to do my taxes or build a car. Why? Because of a skill gap. Offshoring is interesting but, in every offshoring project I’ve heard of or have been involved in, one of the key success or failure factor has been skills and training… and on a small project, aggregation is more expensive than dedicated workers.

Politics could be a place where the model works but that one will depend on which country you are dealing with. A good example of the failure of an aggregate model was the French presidential election, where the left decided to present many candidates and many messages. The right, on the other hand, presented two large-scale choices: a center-right candidate, and an extreme right one. In an open primary model (where the top two candidates are the one to go on to the next round), the right defeated the left, leaving the main event as a choice between center-right and extreme right.

In the US, because of the way most primaries are set (on a per-party basis), aggregation doesn’t work as well as scale. The last presidential campaign showed two large scale organizations (Democrats vs. Republican) and a billion small scale groups that could aggregate (or not). 99+ percent of the votes went to the large scale organizations, which both offered a different “one-size-fits-all” message.

I believe there is some truth to the aggregation model for non-tangible assets industries. For example, in the digital assets world, aggregation makes sense. If your product has already been built and is only needing distribution, aggregation works (one of my concerns around the long tail is that it doesn’t seem to take into account the cost of production and efficiency of return on investment), then scale may not matter as much but, in a lot of case, scale can accelerate work because it does not require to take the extra step of actually generating and managing aggregated models. In a lot of way, scale is about pre-aggregate models you can just plug into.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Why Scale Matters. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Voice Over IP

VoIP experienced tremendous growth in 2004 but it was just the beginning. This year, much more will happen in that space.

Cable providers will start deploying VoIP services on their networks and phone companies will start bundling VoIP services with their DSL offering as a way to compete. By year end, all major broadband providers, whether they are offering services over cable or DSL lines, will have a VoIP service bundled with their access service.

Unable to compete with the larger telcos, some smaller players in the market will merge on order to lower their cost per subscriber by bringing their infrastructures together. Also, independent VoIP companies will sign peering agreement with each other in order to bypass traditional telcos and lower the cost of connectivity from one independent VoIP company to another.

Further pressure will be put on all players on the American market as overseas companies will start targeting U.S. customers. Before year-end, at least one company will offer an unlimited calling to several countries plan. Other plans will provide unlimited calling to each continent. This will start putting pressure on established government monopolies in several countries, especially in Europe.

VoIP will also experience strong growth within the enterprise, with companies looking to open-source solutions like Asterisk to replace their PBX infrastructure with a lower cost alternative.

As all this happens, equipment will not only become cheaper but will also become much easier to use and install. Along with it, new sets will come out, with cordless VoIP offerings becoming much more common. Competition in this space will be on features available in new handsets.

With substantial portions of the phone network switching to VoIP, video telephony will start taking hold. However, the price of equipment will still be too high for those services to experience the kind of growth other sectors in the VoIP market will experience.

Entertainment Convergence

The convergence of the computer and other entertainment forms (television, radio, gaming, mobile phones) will continue, further blurring the lines in the convergence world.

With broadband now being the major way to access the Internet in the United States, Internet usage for new forms of entertainment will grow. Along with it, however, will be a continuing challenge to the established media order.

The challenges faced by the music industry with the introduction of Napster will now be the new reality for the movie and television industry. Five years ago, I started seeing the phenomenon emerge and believe the four step process of the digital asset dance will be full blown for the MPAA this year. The MPAA will spend part of the year suing companies and users for downloading movies. However, they are also better prepared that the music industry in that they are already offering legal download services like MovieLink.

While litigation will be one of the ways convergence appears on the front page, many providers will find a way to mine this new world for new dollars. Expect some companies to start offering legal download of television programs for a fee. As the Internet becomes the standard telecommunication infrastructure, content will start getting carried more heavily. Phone companies will start using this to offer bundle TV services with their DSL offering as a way to compete with the cable TV companies that have invaded the telecom turf. Before year end, at least one traditional telco will offer TV over IP. All that content will be protected by DRM systems, getting people more and more used to having less and less rights over the content they receive.

Meanwhile, on the wireless end, the introduction of more powerful mobile phones and the introduction of faster mobile phone networks will also play out in the favor of content producers. As voice traffic revenues continue to decrease, expect mobile phone companies to push data services such as downloadable movies and downloadable music more heavily. By year, MP3 will be the standard format for cellphones and Apple will offer a mobile phone version of the iTunes music store, allowing users to download music from the store and customize their phone with the latest hits.

On the non-Internet end of things, video on demand will continue the strong growth it experienced in 2004 and more programming will be offered in HDTV format, prompting an increase in sales of televisions and tuners that can receive those signals. Meanwhile, radio will follow the path taken by cable television in the early 80s. As satellite radio takes hold as the new “edgier” alternative to traditional radio, people will get more used to the idea of paying for radio. However, they will also require that those services be offered over the Internet as well as over the proprietary networks like XM and Sirius.

But not all content will be coming from big corporations. The grassroots will also play a key role in the distribution of online media in 2005. While podcasting has been the domain of a few geeks in 2004, easier to use tool will bring the phenomenon to the forefront and expect more audio services to be available from regular users. Following on the tail of this phenomenon will be an increase in videocasting from individuals. Much of it will be disappointing but a few gems will emerge, creating new stars who will emerge from the Internet and move on to more traditional media, based on the fame of their online offerings.

Business

Mergers and acquisitions will dominate the software world this year, as more companies realize that the only way into the enterprise is through a complete set of offerings. Expect several multi-billion dollar mergers and/or acquisition. In my mind, McAfee will be acquired or merge with either Symantec or CA; SAP will be acquired by Microsoft; Business Objects will be acquired by Oracle. As holds true for such precise predictions, none of this will actually happen the way I predicted it.

In late 2004, IBM left the personal computer business, selling its unit to Lenovo, a Chinese manufacturer. Expect the same to happen to at least one other PC vendor this year as the margins on personal computers continue to decrease, turning them into commodities.

Apple

Apple, which to date has resisted the price pressures other computer manufacturers have experienced, will introduce a cheaper version of their Macintosh. This, however, will not stem the continuing loss of market share they are experiencing. As Linux continues to grow, the Apple story in the computer business becomes more and more difficult and the company will increasingly rely on the consumer device business as its savior, building a new economy around the success of the iPod and iTunes music store.

The company will not, however, release a video player this year. Among some of the new features I would envision coming from Apple are:

• A flash-based iPod, which will be even smaller than the iPod mini and will be in the $100-$150 price range
• A partnership with a phone company to create a phone that will be able to download music from a special version of the iTunes music store and play MP3 ringtones
• An iPod with audio recording built-in
• A portable camera with iPod-like features
• A new way to send pictures from the iPod directly to printer via Airport express

While it focuses on the music business, Apple will not spend much time updating its laptop business. Adoption will drop in that part of the business as PC vendors start selling sub-$500 laptop PCs, making the iBook look expensive by comparison. Apple will try to enter the low cost market but not with a laptop: they will introduce a mac without monitor for under $500, offering integration with the iPod, and plugs to attach the computer to a television as its major features.

On the software end, the company will introduce a Word Processor and Spreadsheet program. They will release them, along with Keynote, as a complete package named iWork which will be aimed at students and small businesses. The package will be available for free on new computers.

Development

Blogs and RSS will continue their growth and will move strongly within the enterprise space. Adoption of RSS will continue its explosive growth but crest in 2005 as users start trying to find ways to cope with the information overload. New components in RSS readers will attempt to help organize RSS feeds but those basic efforts will initially fail and discussions will be set towards the end of the year as to the effective way to organize large amounts of data.

Weblogs and content management systems will start covering some of the same ground and enterprise will start using weblogs internally at the departmental level. Meanwhile, external employee weblogs will start becoming the focus of more litigations as corporation try to retain their intellectual property and fight the kind of transparency that comes from having employees talk openly on the web. Internal rules and regulations will be set in how employees can use blogs.

Meanwhile, in the development world, Service Oriented Architectures will continue being the approach to delivering next generation services. SOA will grow largely internally but some companies will start exposing some web services via XML to their partners. A new set of interesting new applications will come out as a result of those exposures.

Security and trust will continue to be big subjects and I suspect that trust will become an even bigger one with new standards emerging around the concept but no general agreement as to the best implementation.

Open source software will continue its strong growth, getting into more and more specialized fields. With the delays in delivery of Microsoft’s next operating system, Linux will continue to grow but complaints about price will start to arise. While the open source movement has offered free software, there will continue to be an increase in the price of supported version of the software.

Personal

I’ll promise to update the blog more often, will do OK for a little while and will then fall back into my regular pattern of a couple of updates a week. Or not… Either way, only the new year will tell.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2005 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Apple

Scored well on the introduction of the Apple mini, which represents Apple’s entry into the lower end market. However, no video iPod this year, only a photo one, leaving Apple far, far, away from the movie downloading world.

On the computer end, Apple did not introduce a G5 portable. Wishful thinking on my part, true, and still a wish I hope to see fulfilled in 2005.

Convergence: Music Stores

As expected, Apple has solidified its relationship with AOL, offering the iTunes store under an AOL login. However, the store is not fully integrated within the AOL service.

As predicted, the world of online music is now divided into two camps: AAC and Windows Media. However, the surprising move was from Real Networks, which was the first company beyond Apple to adopt the AAC format.

Convergence: Voice Over IP

As predicted, voice over IP has had tremendous growth in 2004. AT&T’s exit from the consumer market can be seen as a move to reorganize around land-line offerings. Also of significance this year was the introduction of VoIP services from most of the big telco player.

Regulatory discussions are now exploding, with telcos pushing for deregulation as “a way to compete” against the new players in the field. At the same time, the same traditional companies are pushing for regulation of VoIP businesses.

Wireless: Wi-Fi phones

Dead wrong on that one. Maybe next year!

While WiFi continues to progress at high speed, the introduction of phone services using such service is limited.

Business: Revenge of the Internet companies

Google did its IPO as expected and that went very well. Other Internet companies also went public this year but one can hardly talk of coattail effect.

On the bright side for investors, my predictions about the decline in stock prices for the big players did not pan out. However, I still maintain that the stock prices of companies like Ebay, yahoo, and amazon are too high.

Business; Sun in Trouble

As expected, SUN continues to have trouble financially but I have to admit I was wrong in terms of what I expected them to do. They are still in the SPARC business and are still pushing Solaris as their main OS.

Development: Standards at the forefront

This one was an easy one. As sites like ESPN and Wired moved to new standard formats, more and more people and companies are getting interested in more standard compliant code. Not a headline grabber but definitely a strong move.

Society: Social Networks at the core

Wrong, wrong, wrong. Social networks were slowly moving but not really getting more important this year. Their integration with search could, however, yield great potentials.

Politics: Internet comes of age

The Internet did come of age in this election cycle but Howard Dean did not win the democratic candidacy. However he, and other groups, managed to use the Internet to mobilize millions of people. The Republicans, on the other side, used the power of conservative bloggers to attack candidates (for example, the Swiftboat veterans for truth) and then take on the establishment (Dan Rather and Memogate).

Coming Soon: My predictions for 2005!

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2004 predictions: Recap. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Microsoft

Of course, everyone will focus on how this move puts Google and Microsoft in a competitive situation. Microsoft representatives have said they considered search an important space, potentially putting Google on the defensive. The interesting thing in the way Google approached this is that they did not react as Netscape did, launching into announcements about the future irrelevance of Microsoft; they did not take Microsoft head on in a market (Operating Systems or web browsers) that Microsoft currently dominates. What they did was leverage off a market in which they had the advantage: Search. While they did not come out and say it out loud, the message is clear: you can have search in Longhorn when it comes out or you can have it now. Try Google today and maybe you’ll want to stick around in the future.

Apple

Apple has already announced an interest in search, with the unveiling of Spotlight, a new search feature available in the next version of their operating system. Google has not released a product on the Mac platform but I would not be surprised if that were coming… after the product is available for Linux. The continuing decline of the Mac platform seems to push it further and further into irrelevance. Now, Google attacks the mac platform by taking a feature that was supposed to be a differentiator, compared to Windows, and making it available on the Windows platform. This is potentially dangerous to Apple, a company trying the monolithic approach at offering solutions: Use Apple and that’s all you need.

Modular by Design

I recently highlighted what I call the Modular by Design approach, which is predicated on 6 basic key points: standards, focus, flexibility, speed, communication, and stealth. In unveiling this new tool, Google seems to be adopting the approach as a competitive advantage. If you consider Google as the standard for search (and it seems there is a consensus agreement that, for the time being, that’s the case), they are following a pretty standard-based approach. Their focus is on search, obviously. Their flexibility comes from the ability to adapt that focus to target key markets. In terms of speed, it is hard not to see the speed of growth of the company (which did not exist 7 years ago and has rolled most of its new offerings in the last 2–3 years). From a communication standpoint, they are involved in getting feedback from their user community, often releasing products as very long beta (for example, Google News and Froogle, their shopping search engine, are still in beta even though both have been out for over a year). And moves like the announcement of Gmail and today’s new offering show a strong ability at operating stealthily.

On the relevancy of the Operating System

Almost as important in the blurring of the lines between desktops and the web, as illustrated by Google desktop, is a discussion about the long term relevancy of the operating system as an application platform. It seems that increasingly, the application platform is becoming the web, with operating systems being roughly a way to run connected software. Already today, more and more of our daily tasks are running through the Internet, whether it is communication (email, IM, VoIP), research (web surfing, information consumption from news sites and blogs), creation and distribution (weblogs and their extensions like podcasting, photoblog, etc..) or entertainment (music, movies, games…)

From there, then comes two potential areas of interest for new software developers: tools that can help the creation of new things (weblogs, photo-editing software, music editing software, other data-type creation tools like Flash), tools and protocols that can help their distribution (RSS, search tools, servers), and tools that ease their consumption (Newsreaders, picture-viewer, plug-ins, etc…) Most of those, however, seem to be increasingly able to run within the context of a web browser. So what happens when tools that bridge the gap between the browser and the desktop become more important? Google desktop does provide one of those points of integration and if you look closely, it seems that Google is placing itself at the other end, providing tools for creation (Blogger, Picasa) and organization and discovery (search). This could be a pretty large marketplace for them and could help them control a substantial part of the digital future. At the same time, the move of those tools continues to erode the relevance of the operating system as the platform as more and more services move to browser-based systems. Google firing this shot across the bow of the Microsoft ship is not only aimed at Microsoft but also at other OS vendors.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Blurring the line: Google Desktop. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Traditionally, telephone service was offered on a land line and was divided into local service, long distance, and extra features like caller ID, call forwarding, etc… The model was predicated on the concept of one device (the phone) receiving a package of services.

The mobile phone business started having an impact by untying the phone lines from the wall, making the concept of localization a relatively moot point. Once localization was broken, the differentiation between local and long distance disappeared which left a division only between connectivity and extra features. Since most of the signals going over the air became digital, the cost of delivering extra services dropped to almost nothing, destroying the competitive value of such offerings.

While mobile phone service made headway against traditional land lines, a new set of telephone offerings appeared on the Internet: Voice over IP. With VoIP, telephone just becomes a software issue, unbundling telephone from the concept of a telephone network and dropping the connectivity issue altogether. While mobile phones were tied to a particular phone network, VoIP phones are not tied to any network: they can run anywhere as long as they are running on an Internet infrastructure.

It is due to this realization that AT&T abandoned the consumer market. Since services like Vonage are redefining the concept of telephony by moving the phone away from the lines and away from the device. Vonage service runs on a number of platform including telephones, computers and will soon run on PDAs equipped with a wireless card. This means that companies which were once relying on the bundling of a line, a device, and a set of features can no longer do so. It also means that the concept of overseas long distance will eventually disappear since one could easily run a telephone service on their computer with a local number in a foreign country.

For example, I can envision a time when I will have a phone number in France that will relay my calls to my computer, phone or PDA wherever I am, making it impossible to guess whether I am in the United States, Europe or Asia at any given times. However, I may sound sleepy in the middle of the caller’s daytime because I could be in a time zone where it is the middle of the night.

With this model now in place, the challenge of telephony is no longer a local one but a global one. Telephone companies will have to fight against companies all over the globe in order to retain their customers and since the delivery of those services does not rely on the introduction of expensive networks in order to provision service, it will soon be possible for small companies to provision phone services. One can expect countries like China and India to be the recipients of such outsourcing and your telephone company could well be located in one of those countries in the future.

How does one solve this issue? By providing cheaper products, emphasizing customer service, generally doing right by the customer or getting out of the competitive space. The power base has shifted to the consumers and the only way to fight it is to serve them better than a competitor could.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Modular by Design — Telephony. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

The news of banners poking fun at Microsoft made people think that the new operating system would be something to contend with. With statements like “This should keep Redmond busy”, one would expect some radical improvement to this new OS… but most of the changes were under the hood and most of them showed a company that seems to be on the defensive. Let’s look at what they offered and what are the hits and misses in this new OS:

the Dashboard will probably be the feature that most people talk about as it is the most visual new component to the new version of this operating system. Put simply, it is a collection of widgets that can sit on your desktop, similar to the third-party produced Konfabulator, a company that will now have a hard time competing with Apple. It also seems to be a defensive move to counter the power that XAML will offer to its developers. Beyond the issue of Apple running over one of its own development partners (ie. Konfabulator), the fact that their dashboard does not seem to offer any programming interface and does not seem to offer a way to integrate rich Internet client applications (what I call hybrid applications) seems like a fairly tremenduous gap. Why not open it up to developers so they can start coding applications now so that, when the new OS comes out, an increased number of widgets is available?

Safari RSS is another one of those features where Apple runs over one of their own developers. This is a big win for RSS, similar to the news that Microsoft is building RSS into their tools. It may be a leap but I believe that Microsoft will have an RSS reader in their OS too. A couple of missed opportunities in the implementation Apple is highlighting, though. First, why keep it limited to Safari? It seems that this is the perfect kind of service to integrate with .mac in order to compete with something like my favorite RSS reader, bloglines. The problem with keeping it limited to a desktop app is that I don’t spend all my time on a mac (I know, I can hear the shock and dismay in Cupertino) but want to be able to read my RSS feeds from different computers and devices. How about integrating it with their own ipod line?

New Search Technology: There seems to be a trend in operating systems about making better use of search. Longhorn is looking to offer better metadata and search handling, merging Internet and hard drive search in a single tool. Apple is trying to restore parity on this front with a new feature. At this time, it provides a nice set of file types to search for. Noticeable in this queue is the lack of support for search of windows media files, and what looks like a lack of interfaces to allow other developers to offer their data types as part of the scope. On the Microsoft side, the way they handle this is through some changes to their file system (a new file system called WinFS will sit at the core of the new operating system) with a richer metadata set. A question here is whether Apple is changing the underlying file system of their operating system to support this. It would be nice to know as nothing was said about backward compatibility.

Another improvements is Automator, a new visual interface to scripting repetitive tasks into your OS (basically, you could call it Applescript++). This is actually a pretty nice thing and I hope that Microsoft will include something similar in their next OS. It could greatly simplify things. I guess this is one of those cases where a photocopier could be useful in Redmond.

Another feature that Redmond should copy is the iChat AV product, a competitor of MSN messenger. Apple understands that those chat products are used for collaboration and Microsoft needs to learn from that. Desktop sharing, audio and video conferencing, complete with VoIP integration is a product that will become key in the enterprise market in the future.

A significant announcement is the support for 64-bit processors. While this is not a huge market right now, it is evident that Apple is placing big bets on its G5 product line. This could be a good move in terms of getting more involved with the research community. Great for number crunching but I don’t know what apps will run on this beyond the scientific community. Similarly, announcements of improvements to their rendering technology and support for advanced video coding will probably appease members of the creative community who have generally been at the core of the Apple market. These two announcements are aimed at market protection and are a good move.

Finally, while most people tend to focus on the desktop, let’s not forget that there is also a server product. OSX v10.4 server is Apple attempt to compete in the enterprise space. The introduction of blogging software blojsom into this server shows that Apple understand that blogs are now an important feature of the server enterprise space. This is another significant win for RSS and for the blogosphere as it adds legitimacy to the concepts of syndication and blogging. Also of interest in the server product is the fact that Apple is bundling NT migration tools. If Apple attempts to keep quiet their goals of displacing windows machines, this might not be the way to do it.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title OSX 10.4 preview: hits and misses. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Apple

Apple will come out with a new lower-powered, lower-cost version of the iPod. The idea here is that they want to extend their lead in the digital music space and use the iTunes music store as a leverage for selling more iPods. From there, I suspect they will introduce a new low-end iPod which will follow the existing iPod line and offer less hard drive space at a lower price. In conjunction with this announcement, they will introduce a new line of iPods that offer support for both audio and video. From there, we might see a tentative move into the digital video space, with the possibility of their extending the offering on the iTunes music store to include downloadable music videos. Later on in the year, rumors will go uncofirmed as to whether Apple plans to introduce a downloadable movies service.

Apple will also announce the release of a new class of laptops powered by the G5 chip but offering lower speeds than their desktop counterparts, due to issues relating with chip cooling.

Convergence: Music Stores

As more music store follow Apple’s lead, we will see at least one other site (probably Wal-Mart’s) offering downloadable AAC files and follow Apple’s lead. On the other side, Apple will announce that it is solidifying its relationship with AOL and offering the iTunes music store as a component of AOL.

The recognition that the online music business is a low margin one will force many players to reassess their strategy, with consolidation ensuing in that market and solidifying across two standards: Windows Media Player files and AAC files.

Convergence: Voice over IP

2004 will be a big year for Voice over IP with many companies offering Internet telephony products in both the small and medium business arena and the consumer one. As major telephone companies unroll their offering in that arena, thoughts will go to redefining what a telecommunication company is about and new consolidation and splits will see phone companies reorganizing around two business models, either as utility providers, providing the infrastructure (the hardwired lines that go into a house or office), or as service corporations, providing services that run over those lines (the voice telephone will begin to be thought of as a service instead of a utility).

By year end, there will be a lot of discussion as to what those companies are about and calls to reshape the regulatory dialogue on what a telecommunication infrastructure is about. The other discussion on regulation will go towards figuring out how to deal with pricing models on communication services as the new services will destroy the concept of local and long distance.

Wireless: WiFi phones and integration everywhere

A big surprise will be the rise of mobile phones that use Wireless Internet connectivity (Wi-Fi) and voice over IP to allow users to place calls using the Internet infrastructure.

Data services will become more prominent in mobile phones, led by camera-phones, which will increasingly be used for multimedia messaging, and the introduction of some videophone services. As mobile phone companies see more pressure on their voice services, due to the introduction of WiFi phones and continued pressure relating to number portability, they will look to data services as a new source of income.

Business: Revenge of the Internet companies

Internet business will be in the headlines again as Internet companies show they have built successful business models based on profit instead of promise. As a result, investor confidence in Internet stock will return with an increase on stocks of companies that show they can use technology to lower costs and increase productivity.

In parallel, venture capitalists will start investing in new technology companies. Much of the money that has stayed dormant for the last few years will be invested in new companies that focus on services in the infrastructure, security, and interconnectivity arenas.

Of course, the big initial public offering of the year will be Google, which will generate enough excitement in the investment community to have a coattail effect on other Internet stocks.

On the downside of the investment picture, the stocks of Amazon, Ebay, and Yahoo will loose value as investors realize that their price/earning ratio are out of proportion compared to the rest of the market. Amazon will try stemming the losses in their share price by announcing that they are moving to a new strategy: offering a complete set of hosted services for retailers who want to lower their cost, instead of just being an online retailer on its own.

Business: Sun in trouble

Sun microsystems will see itself in a difficult situation as it finds itself squeezed on the lower end by Linux, which will continue to eat Solaris’ marketshares, and on the higher end by Linux, which will increasingly be seen as the way to go when it comes to large scale applications. Companies like IBM and HP will offer utility computing as a “better approach” for large scale applications, running them on mainframes instead of large numbers of blades.

On the educational end, Sun will lose marketshares to Apple, which will be pushing its G5 and OSX platform as a better alternative.

In a dramatic announcement to save the company, Scott McNealy will announce that Sun will abandon Solaris and move completely to Linux by the end of 2005. The company will also look to sell its SPARC processor business, with either HP or IBM picking it up, and announce that it is moving to a new hardware architecture, based on chips produced by another company.

Development: Standards at the forefront

Many large scale businesses will realize the value of building Internet applications on open standards like XML, XHTML, and CSS. As a result, the redesign of many major corporate sites will support those standards and an increasing amount of time will be devoted to making websites more accessible.

RSS will also experience a major growth curve as more and more people become aware of the power offered by such a subscription model. Much discussion will be paid to defining business models for delivery of RSS with media organizations trying to figure out how to distribute advertising in their RSS feeds. Initially, the Internet community will denounce the introduction of ads in RSS feeds but will come to admit it as a necessary evil later on in the year.

Society: Social Networks at the core

While services like Friendster, Tribe, Ryze, and pluggedin received a lot of coverage in the tech sector last year, many investments in the sector will fail as companies just look at social networking as yet another feature to add to their site. The existing players will either merge or be sold to companies like AOL, Yahoo, or Microsoft, which will add social networking as another component in their online product offerings.

Apple will be the surprise player in this new arena, using OSX as the basis for a new social networking platform that will merge their address book application with mail, calendaring and chat services to provide an end to end solution on user’s desktops and offer added services through their .mac platform.

Politics: Internet comes of age

Much of the US presidential campaign will be using the Internet as a political tool to organize supporters and raise funds. The early lead taken by Vermont Senator and democractic presidential candidate Howard Dean will help him win his party’s nomination. Using the same tools during the general election, Dean will try to ignite the general democratic base in a fight against George Bush. The Republican party will enter the election season with a similar set of tools and much of the campaign will be fought online with some potential scandal arising out of one of the candidate’s site being hacked. As a result of the Internet battle, record numbers of voters will show up at the polls in November.

Of course, TNL.net will continue reporting on all this and show how wrong all those predictions were at the end of year.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 2004 Predictions. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

At $30/month, Wi-Fi service can currently be seen as an expensive toy for the mobile worker. But if you consider the possibility to make phone calls for the same price, the price seems low. Compared to most cellular phone programs that offer a few hundred or thousand minutes every month for roughly the same price, the idea of unmetered service could represent a huge growth opportunity for anyone offering a hotspot. However, the issue will then become one of available bandwidth. As more and more hotspots are added, the pervasiveness of Wi-Fi makes the possibility to bypass the phone network more real.

The next step in that evolution would be for the Wi-Fi protocol to include some kind of mechanism to check the strength of signal. If you think of the cellular phone system, you will realize that your cell phone conversation moves from station to station as you are moving. Every second, the cell phone checks where the nearest antenna is and changes access accordingly. This ensures that you get the highest signal possible and allows for the phone to stay connected even as you get further away from the original antenna you used. Wi-Fi does not currently have that checking capability in place but when it does, Wi-Fi phones could become more common.

It is interesting to see this happen as cellular phone companies might find themselves displaced in much the same way they are starting to displace land lines. New technologies keep cropping up that disrupt the way business is done and put more pressure on revenues (because they are, invariably, introduced to users at a cut-rate price in order to gain market shares).

However, the economics of wireless networks rely on a limited use of equipment (for example, as more people sign up for a mobile phone service, the quality of the service drops because more people are trying to use the same equipment). With the rise of Wi-Fi and the introduction of small operators (coffee shops, etc…) it will be interesting to see what will happen. My guess is that we will eventually see all the large mobile phone operators introducing Wi-Fi plans over the next 12–24 months. We will then see the rise of one or two new companies that will hook up smaller operators into a different set of networks. As the cost of providing the service increases (because more bandwidth will be required), the smaller players will shake out of the market. Once that has happened, the winners in that fight will start to increase prices again.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Disruptive Technology. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

First of all, by acquiring Linksys, Cisco gets a strong foothold in the small office/home office market as well as the hobbyist/consumer market. Why? Largely because this is where Linksys’ strength is. What Cisco gets out of this is a new source of revenues in a market it has had troubles getting into. The announcement that they will not change the name of the company and will let it run as an independent unit seems to point to that end.

Second, it provides Linksys with strong support in enterprise sales. Linksys has been getting into the enterprise largely through the back-door, with employees installing cheap wireless routers in offices. Now, with Cisco’s backing they can get into the enterprise as part of a more complete solution.

The next question is what this does to Cisco’s strategy as a telecom vendor. Linksys already sells voice over IP products. There may be some people at Cisco edging their bets in terms of the telecom bet. It could be that they figured that VoIP could also come in through a cable connection, which in itself would undermine sales of equipment to large phone companies and move more telephone traffic into the hands of cable companies. Alternately, Cisco could start selling solutions that would allow for a complete end to end solution for VoIP: Large offices would use Cisco’s existing solutions and smaller branch offices could take advantage of the Linksys offerings.

However, the real prize in this acquisition is in the wireless space. Linksys has already established itself as one of the strongest players in that market and Cisco will probably take advantage of those gains, eventually demising its own offerings in that market. The advantage for them is consolidation of product lines and an early toe in the 802.11g arena.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Cisco acquires Linksys. You can follow him on twitter here or receive his weekly newsletter by subscribing here.