2006 will bring with it a number of interesting changes. While Apple has always been the “different” PC vendor and never dominant in any category, in 2006 they will be closer to mainstream and clearly are dominant in MP3 players. Microsoft be addressing a number of problems not the least which they are increasingly perceived as being unable to compete with at least one younger company. Finally we start out the year with the Massive CES show and that sets the stage for changes in this market.

Apple a Year of Massive Change

This will be a big year for Apple. Their biggest move is adopting the Intel platform but here we’ll see a combination of what Apple does very well and what the do very poorly. Which ever trait wins out will probably decide whether this year is a success or failure for them.

On the “well” side is their stunning hardware design the products should set the market on its ear with regard to what you can do with Intel technology. The traditional hardware OEMs have complained for years about how Intel constrains them and Apple has a history of leaping over constraints to get the job done, granted this hasn’t been without some reliability problems in the past, but they get the job done never the less.

On the other hand Apple partners very poorly and Intel is also perceived and incredibly rigid and insular when it comes to critical decisions and programs. These two companies, after experiencing a lovely honeymoon apart, will now be thrust together into the reality of each others inter-company policies and behaviors and, personally, I don’t think this is going to go very well at all. Apple has little problem expressing disappointment publicly when a partner fails to meet their expectations and Intel has been accursed of holding back marketing co-op dollars and supplies when they are disappointed. The battle is a given, the big question is will they be able to work out their differences without a messy divorce. AMD is clearly hoping not.

The big anticipated product is Apple’s move into the living room with their own spin on a Media Hub. In 2005 they made a baby step in this direction and in 2006 they are expected to jump in with both feet. Timing of this product will be interesting as they clearly will want to bring it out early in the year but this type of product typically moves aggressively in the 4th quarter.

Finally, the new iPods aren’t expected until mid-year and clearly more capacity in their flash and hard-drive based products coupled with increased video capability for the Nano class. The Shuffle will likely be discontinued and be replaced by similarly priced product with a display and possibly a radio. Issues for Apple will be increased third party attempts to get around their music service lock in and falling iTunes revenues suggest some major changes there as they ramp up video access.

Microsoft:

This is the year of Windows Vista and early on we get to see what the feature complete product will look like. Xbox hits its stride as manufacturing catches up with demand and we find out if people really will buy a $400 game system in the same volumes that they bought $150 systems. Any weakness on price point won’t bode well for the PlayStation 3 either which is rumored to be delayed into 2007 anyway. As PC prices continue to fall the delta in price between a PC capable of gaming and a game console has dropped from 90% premium for the PC to 50% premium and this difference will continue to fall putting massive pressure on the following generations of gaming consoles.

Tablet and Media Center Editions did not meet expectations in 2005. However with education taking to Tablets strongly market penetration should continue to increase, albeit slowly, for that platform over the near term. The Media Center product remains disconnected from the market requirements for the segment which better favor an embedded offering. 2006 will see a significant increase in the competition for the digital living room and while the Media Center products remain better funded the embedded Windows offerings continue to showcase inherent advantages in the segment. This inability to create the ideal product, largely due to internal conflict, will continue to haunt Microsoft in 2006 though recent organizational changes do suggest the possibility for a favorable resolution.

Open Source

This will be an interesting year for the Open Source community, increasing pressure to show profitable outcomes rendered suggests the market is getting bored with the anti-Microsoft rhetoric and beginning to ask “where’s the beef”. With a complete lack of success on the desktop and a realization that a broad cross section of the initiatives are embroiled in never ending conflicts or under-funded the trends don’t look good.

SCO has all but dropped into complete obscurity as that company struggles for the funding to actually get into court let alone winning the case and with the loss of that focal point has been deeply felt. Even the old stand-by Microsoft is not proving to be the rallying cry it once was as that company moves to embrace UNIX tools and has all but eliminated verbal attacks on Linux. It appears that working people are tiring of the rhetoric as they are being asked to demonstrate results and, much like it was with Client/Server in the 80s, are rediscovering the pain of overstating benefits.

While there is a huge focus on Linux for the desktop the problem remains that it is not profitable for OEMs to deploy it and that problem is simply not being addressed. Support costs are dramatically higher for OMS doing Linux and IT buyers expect deep discounts removes the funds necessary to pay for the increased support charges. Currently the only firms who can do this profitably are those with large services organizations which pass this cost back to the IT shops but they are getting dramatic push back as these costs exceed budgeted amounts. Linux on the desktop may have to wait for a disruptive change like Thin Client to take hold as it will remain a non-starter in 2006.

On the server there is another story as this platform remains favored for UNIX migrations, Microsoft’s response doesn’t show up until the Vista based server platform in 2007 and while it may have some impact towards the end of the year (as companies trial beta product and defer decisions) the major impact, if there is one, will be in 2007/8 and be based on feedback from the beta trials.

Security

This is the year of vastly improved user authentication. With everything from phishing attacks to bogus eBay scams, and increasing identity thefts consumers and financial institutions have never been more ready to accept major changes in this area.

Traditional Virus checking products are moving to heuristics as a way to more quickly address a broad cross section of threats and we will increasingly seen blended products in 2006.

Data leakage will continue and the rules surrounding privacy will become less absolute as the threats another terror attack drive lawmakers to move aggressively, once again, to stop crimes before they are committed. Activity on the net will increasingly become less private as a result and data overload will continue to be the biggest problem for law enforcement agencies.

Increasingly products will be offered for the home and small business that are largely services based and often subsidized for low entry price points so that they can be updated for security threats.

Consumer Electronics

This is largely connected to our CES coverage in December but a couple of trends stand out. First a move to some type of central media repository in the home. Second a move to “connected” products that share this data widely ranging from personal devices to automotive platforms. And third, the entry of a broad services component that will include both service and content to compete with the cable based services offerings already in place. Success or failure will largely be based on a combination of pricing, user interface, and content access. All eyes turn to Cisco as the potential company to beat here.

Please check related stories:

• A Look at the Software, Hardware Battles of 2005 and 2006 (19-Dec-05) http://www.technewsworld.com
• Forecast '06: Major Tech Trends and Companies to Watch (12-Dec-05) http://www.technewsworld.com
• Forecasting Declines for Sony, Google, IBM, Oracle, RIM and Apple (05-Dec-05) http://www.technewsworld.com
Have a Happy New Year!