Venture capitalist offers look at '05 hot spots

By Howard Anderson, Network World, 01/10/05

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Let's get right to it. Let's see what this year portends:

1. 2005 will be worse than '04 for technology companies, but not bad. What do you mean you didn't notice last year's recovery?

2. PC growth will be in double digits, but barely - good for Dell, good for HP. It's time to trade up. Still, the market growth will be only two-thirds of what it was in 2004. Aren't you embarrassed by your Sony Viao, and don't you really want to upgrade?

3. Cell phones are booming; we will soon hit 1.5 billion worldwide. New data services will abound, and you will find a reason to upgrade. But cell phone growth will only be 10% more than 2004, down from 30% growth in 2003. Saturation is rearing its ugly head. The cell phone is the new display device. Don't you want a GPS phone with a built-in Palm/camera and iPod? Of course you do!

4. The Internet is back . . . not like 2000, but some of those ideas are cooking. The Internet is still a revolutionary technology, and now that the worst ideas have been shaken out, it's on the move.

5. Application service providers - like Salesforce.com - will re-emerge. Everyone wants to buy by the drink; no one wants to own the bar. Lots of start-ups. The pricing model destroys the economics of the older line firms, but it's the way companies really want to buy.

6. IPOs start warm and then get hot. There are too many companies that need to raise money and that have a track record to prove it. No Googles but no Pets.com, either. These fledgling IPOs are backed up like airplanes on a rainy Friday afternoon at LaGuardia.

7. Storage is up - isn't it always? No corporation will throw away any data - ever. The problem is that the price of storage is down. Gotta love EMC.

8. Tech spending by big companies will be up 4% or maybe 5% - about half the growth of the economy. The trouble is, every firm has forecasted a 10% increase in market share. IBM grows in single digits.

9. Texas Instruments will continue to kick butt with its Display Systems Protocol chips in cell phones and its digital light processing chips in large TVs. You are about to enter the world of high definition, and size does matter.

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