The coming year should be a fascinating one for the technology industry. Several markets have at last reached a certain level of maturity and are ready for a shakedown (accepting, of course, that such a young and fast-paced industry can be said to have any maturity).
And for those who love a good drama, the industry has several lively corporate stage shows lined up.
The dominant technology theme for 1998 is a no-brainer: Internet. From its early "What's cool? What's new?" days, the Internet now has business written all over it. Last year, was the end of the critical-mass phase: the audience is there, and it is no longer just pimpled 14year-olds downloading "Doom". The consumers are there. Business is there. You should be there.
By the end of this year, a quarter of all American households will be online, a trend which will later be mirrored in Europe. Some analysts peg European Internet growth as outstripping that in the US: two of the fastest growing world Internet markets are Britain and Germany. International Data Corporation (IDC) predicts the online audience will jump to about 100 million in 1998.
E-commerce will come into its own this year. Last year's online transactions totalled $8 billion (£5.5 billion), a blistering 1,000 per cent growth over 1996. Forrester research predicts that that will jump to a staggering $327 billion over the next four years, hitting around $20 billion in 1998. Building on 1997 trends, one of the key drivers for e-commerce is going to be business-to-business transactions (another reason why you should be online).
From the IT side, you can expect to see the key players in the technology industry making the Internet and Web a premier feature of their merchandising efforts and approach to enterprises. For example, IBM has just begun a major advertising drive along these lines; Microsoft's recently launched BackOffice Server is designed to handhold nervous companies through creating an Internetworked business place. Other predictions? Oracle will approach the Net aggressively both through server products and via its NC (Network Computer); Sun, which has high visibility in general in the Internet space because of its Web-hip Java programming language and applets and its servers, will probably try for a greater share of the corporate space. In 1998, Web and handheld appliances will take off like a shot. The huge American electronics show Comdex was swamped with appliance products. Everyone wants to capitalise on the surprise success of 1997's toys-for-boys item, the little Palm Pilot handheld computer. Expect to see Microsoft gain a slice of this market, with its Windows CE operating platform (Windows designed for appliances).
The Internet will also seriously affect the PC business in 1998. First, expect to see a growing market for computer below $1,000. Just as everyone thought all we wanted was the biggest and best and most feature-packed home computer, it turns out that an awful lot of us have reached digital overload.
This very-low-end niche for PCs was a surprise winner at the tail end of 1997 as consumers look for simplicity with just enough muscle for Net access. But it's a low-margin region for manufacturers and not many will be able to stay this particular course.
Likewise, many PC manufacturers will feel growing pressure on the bottom line from new selling paradigms. According to analysts, Dataquest, PC companies are entering a new cycle because of the success of online sellers Dell Computer.
Dell entered and conquered the online sales market first, averaging a stunning $3 million in sales daily, with some holiday-season peaks of $6 million.
Dataquest expects some manufacturers to fold up their tents in 1998 if they can't switch to a similar just-in-time manufacturing model. Businesses and consumers will want to have PC orders turned around quickly, and only the nimble will survive.
As for corporate high drama in 1998: Top of the list, just easing past usual front-runner Apple Computer, is Microsoft. As 1997 draws to a close, the monolith is under increased pressure from around the globe to "cease and desist". The volleys will continue to boom back and forth between Microsoft and the US Department of Justice, but what was first seen as ineffectual governmental caterwauling has actually turned into a lion's roar.
Microsoft's arrogance and flippancy in responding to Department of Justice ripostes and court orders not to mention a spoiled-child attitude has alienated huge swathes of Americans who normally might admire the company's business acumen.
Yanks can respect a robber baron, but they really hate a whinger.
Momentum is building and Microsoft may have underestimated its foes. An adjunct to this is the battle for browser share with Netscape.
Of course, Internet Explorer will continue to eat away at market share but expect Netscape to fight hard to consolidate its other (more lucrative) corner: enterprise servers.
Then, Apple. It makes the best-loved computer in the world (PC owners are notoriously agnostic) but will it ever get its act together? San Francisco's MacWorld Expo begins next week; Apple said it won't be announcing a new CEO or launching its expected Mac Network Computer, so what else is there to say? Mac fans will grimly hang on and hope for the best. My bet is that another company will buy Apple either in 1998 or 1999. The world would be a sadder place without the Mac; let's hope Apple makes it through the coming year.
Oracle: who would have expected the 29 per cent dip in the value of its stock which closed 1997? The darling of Wall Street has weathered crises before in the late 1980s. Flamboyant CEO, Mr Larry Ellison, probably will benefit from the chastening but we'll definitely be hearing from him in 1998. Expect a slow rebuild and further attempts to ignite the damp NC market.
Sun Microsystems: will Java or won't Java? The jury is definitely out on this one, and Sun's programming language still has a lot to prove. Sun hasn't exactly been as open as it likes to claim with its open platform. On the other hand, Microsoft needs a serious competitor, and with the gelding of Apple, Java is its only real threat. 1998 is the year in which potential Java developers and users will say, "Show us the money".
And finally, three easy predictions: 1) the Asian market fallout will cause some serious and potentially deadly turbulence in sectors of the technology industry throughout 1998; 2) panic will begin to seize businesses and state agencies as the Year 2000 deadline rumbles ever closer; 3) Bill Gates will make money.
