|Google co-founders: Larry Page and Sergey Brin.|
NEW YORK (FORTUNE) -
Google will stumble in 2006.
I knew that would get your attention. Anything and everything Google is at the height of fashion right now. With a market capitalization of $127 billion, every move that the company makes--like the advertising deal an obsessed press says it will announce with Time Warner's (Research) AOL unit tomorrow--gets a lot of attention in the press.
But what goes up must come down--especially in technology, the most volatile industry the world has ever seen. Yes, I love Google, but my first prediction is that a year from now we won't think that the search company is the invincible behemoth that we do now.
One reason for this a new concept known as "community-powered search." Yahoo is forging an early lead over Google in this fast-evolving technology with its acquisition last week of del.icio.us for a rumored $35 million (the actual amount was undisclosed). Del.icio.us operates on principles similar to the popular MySpace. But whereas that social network site helps members find dates, form groups, and share music picks, del.icio.us helps members find hot information--websites that others have found useful. (News Corp. (Research) recently bought MySpace, for $580 million.)
Soon we will see a new form of results, like "What Others Liked," on all search engines. It's how Amazon tells its customers what others have bought, except that these search results involve information. In many cases, community-powered searches will let members find what they're looking for more quickly than they would on a purely computerized type of web search, which Google does so superbly. Yahoo was already introducing community-based searches with My Web 2.0. Of course, Google is surely working on its own alternatives.
Amazon's next ambition
My second prediction is that Amazon (Research) will re-emerge as one of the web's most powerful properties, and provide increased competition for Google (Research) in 2006. Amazon has done a nice job grabbing more and more commerce dollars, but it has bigger ambitions, and a savvy tech strategy.
For instance, this week it opened up the entire database of its Alexa search engine. Basically that means that any ace programmer can create his or her own search engine without having to own thousands of servers. Amazon will charge programmers for the use of its processors or storage, at reasonable rates, and all they have to bring is their own search software. Web pundit John Battelle has a good and effusive take on this development. Like I said in a recent column, "Google, Yahoo, and eBay: Next-Generation Conglomerates?", I see six companies all vying for the same big multi-industry opportunity. I call them GEMAYA--Google, eBay (Research), MSN, Amazon, Yahoo (Research), and AOL.
Telcos ramp up Internet access
My third prediction is that telcos will become more powerful Internet service providers. Mark Anderson, who writes the Strategic News Service newsletter and has a keen sense of communication trends, says cable companies, telcos, cell phone companies, and other ISPs are becoming generic "bit providers" that will compete solely on how cheaply they can deliver digital content--from phone calls to TV shows.
But telcos may have some advantages over the other players. Wolfgang Ziebart, CEO of Infineon (Research), recently told me that the German chipmaker will ramp up production of its so-called VDSL2 chip in early 2006. This chip can send data at the Holy Grail rate of 100 megabits per second over ordinary copper phone wire for distances of more than 600 feet.
That may not seem very far, but it represents a much greater capacity to transmit data than has previously been available on copper wires. This will enable phone companies to avoid stringing expensive optical fiber all the way to consumers' home computers. Instead, telcos can install optical fiber cables to hubs and then use traditional pre-existing copper phone lines to connect them to nearby households. Texas Instruments (Research) and other chipmakers are working on similar technology.
Apple to ring up cell phones
My fourth prediction is that Apple is likely to introduce a cell phone next year. I say this only because one of the consumer technology problems that most begs to be solved is the MP3/cell phone combination. The Motorola (Research) ROKR iPod phone that came out this year, using some of Apple's technology, hasn't captured consumers' imagination. We all hate it when the phone rings while we're listening to music. We need both capabilities in the same device so the music stops as soon as the phone rings, like it does on the ROKR. The genius of Steve Jobs and his ace designer Jonathan Ive can make this combination work in an Apple branded device.
Here are the rest of my tech predictions for 2006:
• TV viewing on cell phones will become routine--everywhere, that is, but in the U.S. It won't become possible here for most users until 2007.
• AMD (Research) keeps kicking Intel's (Research) butt. AMD CEO Hector Ruiz told me this week that the company will announce its next big fabrication plant by next summer, earlier than most had expected. Another giant state-of-the art factory (it only has one now) could help AMD better compete with Intel.
• Microsoft's big software launches next year—the Vista operating system and the next version of Office--won't generate much excitement. Remember a decade ago how people queued up at stores to get Windows 95? Those days are over. Even Microsoft (Research) acknowledges that software is shifting away from desktop applications towards web-based ones.
• Cisco (Research) may be the big-company investment of the year. This company's stock has flat-lined for 18 months, but every single trend that matters involves more bits flowing through more Internet-protocol pipes. As video online—the most data-intensive web application of all—becomes more pervasive, bit traffic will grow. Cisco remains so dominant in the business of building Internet-protocol infrastructure that its earnings growth could wow investors in 2006. Juniper (Research), another network equipment manufacturer, won't do badly either.
Everyone is gunning for Google: Click here.
For more on Amazon's new strategy, click here.