PBS | I, Cringely . January 12, 2006 - Win Some, Lose Some

PBS | I, Cringely . January 12, 2006 - Win Some, Lose SomeNow for this year's predictions:

1) This one is easy: Apple will eventually announce all the products they were supposed to have announced at this week's MacWorld show, but didn't, including a bunch of media content deals, a huge expansion of .Mac to one TERABYTE per month of download capacity per user, a new version of the Front Row DVR application, and two new Intel Macs with huge plasma displays, but with keyboards and mice as options -- literally big-screen TVs that just happen to be computers, too.

2) The reason Apple changed its MacWorld announcements at the last minute was because the company sued little Burst.com a few days before, trying to invalidate the Burst patents. But since Apple sued Burst, Burst shares have gone UP by 30 percent. The market is rarely wrong. Suing Burst was an enormous mistake for Apple, casting a pall on their video strategy and potentially costing the company strategic alliances with networks and movie studios. Apple realizes this now and is struggling internally to find a way to change course and put a positive spin on the course correction. Apple will lose and Burst will win, and Apple won't be able to afford to wait for the courts to decide anything, since time is critical in staking out Internet video turf. I predict that Apple will eventually take a license from Burst, that is UNLESS SOME OTHER COMPANY (Google? Real? Yahoo?) doesn't snatch up Burst first.

Here's something I've noticed lately: Big companies believe in patents as long as they are talking about THEIR patents. Because Burst is three guys in an office in Santa Rosa, companies like Microsoft and Apple tend not to take them seriously. They forget that Burst spent 21 years and $66 million developing that IP, and the company has code that is still better than anything else on the market -- code not even Microsoft has seen. Unless someone buys the company first, Burst is going to win this and eventually license the world. They are in the right, for one thing, and in practical terms they now have as much money for legal bills as any of their opponents. Apple can't win this one.

3) But Apple WILL make some inroads against Microsoft. The new Intel Macs will run Windows XP unofficially, and Apple Support acknowledges that they are only days from running XP officially, too. So Apple finally has a solid argument why Windows-centric companies and homes should consider trying a Mac. The best case, though, says that Apple sells an additional million units, which aren't enough for Steve Jobs, so I see him going into a kind of stealth competition with Microsoft.

Here's how I believe it will work. Apple won't offer versions of OS X for generic Intel hardware because the drivers and the support obligation would be too huge. But just as you can buy a shrink-wrapped copy of 10.4 for your iMac, they'll gladly sell you a shrink-wrapped Intel version intended for an Intel Mac, but of course YOU CAN PUT IT ON ANY MACHINE YOU LIKE. The key here is to offer no guarantees and only limited support, patterned on the kind you get for most Open Source packages -- a web site, forums, download section. and a wiki. Apple will help users help themselves. With two to three engineers and some outreach to hackers and hardware makers, Apple could put together an unofficial program that could easily attract two to three million Windows users per year to migrate their old machines to the new OS. Imagine the profit margins of three engineers effectively generating $300-plus million per year in sales.

4) Enough about Apple. Google will continue to roll out new products and services as it builds out its infrastructure for a huge push in 2007. They'll need money, of course, so I predict a supplemental stock offering timed with a 20-to-1 stock split. 2006 is a building year for Google.

5) Still no good news for Sun. Those Galaxy servers are very nice, but they aren't enough to support the company and Eric Schmidt is too smart (I hope) to bail out his old firm.

6) IBM will get in trouble with its customers as it becomes clear that Sam Palmisano didn't learn much, if anything, from Lou Gerstner. Gerstner's fat-cutting is long forgotten, so all IBM knows how to cut these days is customer service.

7) Microsoft still sucks at security and users suffer for it. My best guess is they are planning on putting all this new technology in the "next" operating system, which seems to be yet another year behind schedule. The important question the world will soon be asking -- "Do we need another Windows operating system?" In 2006, Windows XP gets another service pack and/or facelift. Nothing more.

8) Sony's PS3 hits the market with a dearth of games. Howard Stringer loses his job, not because of the game problems but because he's undermined by the Japanese parts of his company. But there is good news for Sony, too. Internet video and viral marketing hit new mobile platforms like the PSP, which will become a medium in itself for the school age set. Imagine downloadable advertiser-paid TV shows for tweenies.

9) WiMax is still 12 months away. It will take until then for Sprint-Nextel to get its act together and put further downward pressure on broadband pricing.

10) Embedded devices will hurt Media Center PC sales, which will continue to be pitiful.

11) TiVO will be bought by another company.

12) Intel is spending $2 billion to re-brand itself as a consumer electronics company because the future is in being cheaper, not faster. The next big consumer market will be a network computing appliance. When it hits anyone's processor can be used and Intel will be$2 billion behind.

13) Google WON'T go head-to-head with Microsoft for a desktop operating system or a cheap PC.

14) EBay stumbles with Skype, which won't contribute much to the company in 2006 OR 2007, though the whole VoIP segment will boom.

15) Whatever we expect from Google might just as easily appear from Yahoo, too. With so much attention on Google, Yahoo is operating under the RADAR and will have several surprises for the market while AOL continues to shrink.