NICK DENTON: e-mail from the valley

NICK DENTON: e-mail from the valley - Last year was a dismal year for forecasters: for economists predicting that the US would avoid recession, and for technology pundits, whose reputations lie bloodily scattered in the office parks of Silicon Valley.

by NICK DENTON, founder-chairman of Moreover Technologies;
Last Updated: 31 Aug 2010

Last year was a dismal year for forecasters: for economists predicting that the US would avoid recession, and for technology pundits, whose reputations lie bloodily scattered in the office parks of Silicon Valley.

The technology industry is particularly unpredictable. It is subject to the increasing returns phenomenon, in which new software creeps up to a critical point of market acceptance and then suddenly sweeps all before it, and to infectious fads, such as online music-swapping. And technology marketing is especially prone to hype. The lines are blurred between forecast, self-fulfilling prophecy and marketing spiel.

Technology predictions have been awful since the stock market turned down in 2000. Technology stocks ignored the buy recommendations of once-adulated analysts; the much- hyped wireless internet did not take off; and broadband access providers went bankrupt.

And the forecasters have paid the price. Henry Blodget, the internet bull who forecast a doubling in's share price, left Merrill Lynch after a series of investor lawsuits. Journalists who raced to discover the future first are now being told by sober editors to focus on companies with real revenues. And those who said the internet changes all the rules have egg on their face.

So it is with trepidation that I venture forecasts for the industry in 2002.

Military technology: The technology-industrial complex has leapt to identify business opportunities arising out of the 11 September attacks. To that end, a wave of investments in ventures offering high-tech security. My bet: most extra funding will go to traditional defence manufacturers to build traditional military equipment.

Instant messaging: This software, which allows internet users to chat online with friends in real time, is central to the online experiences of US teenagers. With instant messaging built into Microsoft's latest version of its Windows operating system, the habit will be taken up by professional users the world over. Employers will worry about time wasted on office gossip.

Remote working: The September attacks made people more nervous about working in large buildings, but a bigger influence is the availability of high-speed internet links. I'm writing this from a village in Thailand.

It may not have a cashpoint machine or even a surfaced road, but the internet is available everywhere. Remote working is an old idea whose time has come.

New mobile devices: Small screens, letterless keyboards, expensive connections: hardly a recipe for mass adoption. But there is a device I'd have liked for Christmas: the elegant new 'hiptop' from Danger, which acts as a mobile phone and lets the owner pick up e-mail and send instant messages to friends.

With expectations of the mobile internet now lowered, such products may be competitive.

Web services: Techies, venture capitalists and entrepreneurs will still talk about applications that can be harnessed together over the internet.

For example, a catalogue shopping system can be welded to a payment system developed by a different firm. But practical uses will be rare.

Enterprise software: Due for re-evaluation. Many VCs pushed their portfolio firms to sell to the IT departments of major corporations because that was where the money was. But, as the Fortune 500 cut costs, they are questioning spending on expensive systems such as CRM. In a recession, spending on enterprise software shows questionable returns.

Unemployment: The internet generation of entrepreneurs and VCs will come back to earth with a bump - many of them are functionally unemployed, and the brutal truth is that they are often unemployable.

Piracy: Despite the suppression of Napster, all attempts to stop online music and video piracy will fail. Official online music sites, such as MusicNet, will falter, because they fail to offer the range of music available on pirate services. Music labels will merge their services yet find it impossible to compete with free. It will become as easy for a consumer to 'rip' a DVD as it is to strip digital music from a CD. And after music, Hollywood.

Revenge of the dot.coms: The real story in 2002 will be the resurgence of dot.coms. The survivors are still growing and internet usage is increasing.

And in 2002, the internet may actually have a revenue model. The spread of services like Paypal, which lets users e-mail money, may allow internet companies to charge just as mobile phone firms do.

Scepticism: Expect to see more doubt cast on forecasts. For instance, Red Herring sees nanotechnology, the engineering of objects on a microscopic scale, as one of its top 10 trends for 2002. This smacks more of VCs in search of a sector whose potential returns are so far in the future that their funds will not need to prove themselves for at least half a decade.

Nanotechnology, genomics, microgenerators, distributed computing as the next boom ... I don't think so.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Interview ghosting: Stop treating job seekers like bad dates

Don’t underestimate the business impact of a simple rejection letter.

5 avoidable corporate disasters

And the lessons to learn from them.

Dressing to impress: One for the dustbin of history?

Opinion: Businesswomen are embracing comfort without sacrificing impact. Returning to the office shouldn't change that....

How to motivate people from a distance

Recognising success in a remote or hybrid environment requires a little creativity, says Insight SVP...

What pushy fish can teach you about influence at work

Research into marine power struggles casts light on the role of influence and dominant bosses...

The traits that will see you through Act II of the COVID crisis ...

Executive briefing: Sally Bailey, NED and former CEO of White Stuff.