IT Predictions for 2009: The Economy Dominates

Absent from this year's list of 10 prognostications is an entry about Microsoft finally buying at least the ad-search business of Yahoo, if not the whole company. We left that one off the list for next year because we still expect it could happen in 2008. With that in mind, and in no particular order:

The economy will limp along

OK, no surprise that the economy is going to dominate the news for at least most of 2009, if not the whole year. There's something to this comment from Gordon Brooks: "I'm convinced nobody has any idea" how long the downturn will last, says the president and CEO of Symphony Service Corp., a product engineering services firm steeped in the outsourcing market. He's been talking to bankers, listening to economists and digesting all he can stomach as he navigates his company through the recession. But we'll edge out on the limb and predict that we'll see signs of improvement by midyear and go with Brooks' assessment that while the whole of 2009 will be rough, by year's end, an upswing will be under way.

That said, along the way, we'll find "a purging of our inefficiencies and of things that had gotten out of whack," as Brooks expects. That can only mean more layoffs, and while IT departments overall are more likely to stumble through the recession in reasonable shape, we expect that some market segments, notably hardware and consumer electronics, are going to be hosed for much of the year. We'll leave particular percentage predictions for growth rates, or the lack thereof, to analysts such as Fitch, which is forecasting no growth to a 3% drop in worldwide PC units as companies hold off on upgrading.

But there's good news ...
Economic downturns tend to drive innovation and spur rollouts of new technologies and products to lure users to spend money. This has been particularly true over the years in the DRAM (dynamic RAM) market, where companies are focused on trying to get DDR3 out as quickly as they can. They have to get motherboard, chip set and microprocessor companies on board to support new memory chips, so that's what is slowing them down. But we see DDR3 becoming the new mainstream DRAM chip in 2009.

... And more good news
Netbooks have generated a lot of buzz (and no little bit of hype) of late as more of the small, low-cost, lightweight, energy-efficient laptops hit the market. That will continue apace, but we also expect that the average price of $400 to $500 will drop to the $200 to $300 range. Part of the price plunge will owe to volume production because the price of parts will drop as more netbooks are made.

Long live the iPhone
We're in accord with market research firm IDC that "it will be a grim year for mobile gadgets -- as volume growth flattens in mobile phones, as netbook PCs expand the market but threaten notebook pricing and margins, and as consolidation looms in personal navigation devices." However, we think that the iPhone is going to play a major role -- perhaps single-handedly -- in keeping the smart-phone market afloat, even if it's going to need to be thrown a life preserver along the way. (That's meant metaphorically and not as a prediction that smart-phone makers will be next in line for government bailouts.)

Oh, and we also think that IDC's prediction that portable media player shipments will show a first-time drop is spot on, given market saturation and that there are only so many ways to improve on the players that will induce people to buy new ones.

See ya!
Sun Microsystems Inc. will find a new CEO to replace Jonathan Schwartz. We're torn between the view that he'll be ousted and the view that he'll decide it's just time to go, but either way, we don't believe he'll be Sun's CEO at the end of 2009, if he even makes it past the first quarter or so. And Sun will cease to exist in its current incarnation, perhaps being part of a blockbuster acquisition, perhaps going private.

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